The final estimate of CitiFX's month-end FX hedge rebalancing flows points to modest USD selling against all other currencies today.

"After gains in the past week global equity indices are once again up month-to-date. Foreign investors who hold US assets will therefore need to sell USD to bring their hedges back in line with increased underlying asset values.

The dominant position of the United States in global benchmarks and foreigners’ tendency to hedge more mean that foreign investors’ USD selling needs will on the margin exceed USD buying by US investors with foreign assets.

However, bond and equity indices have risen outside the US too and this leaves today’s net USD sell-signal at just 0.26 historical standard deviations on average," Citi notes.

*Typically, month-end FX rebalancing flows are seen at the end of the month and usually their impact is felt most near the 4pm London fix on the last trading day of the month.

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