Most of the big banks try to guesstimate month-end hedging flows from asset managers based on relative movements of stock and bond markets during the month. For instance if stock markets rise in a currency, asset managers become overweight that currency and trim holdings to get back to a neutral weighting.
Based on European markets this month, two banks tell us they see neutral EUR flows while to others see mildly negative flows. No one was expecting heavy demand, that’s for sure.
EUR/USD consolidating gains now with support in the 1.2570/90 region on pullbacks.
