End of quarter, end of month
Today is the last day of June and the second quarter, which is usually one of the busiest trading days in a year, as passive managers will rebalance their portfolios by selling the outperforming assets and buying the underperforming ones.
Analysts at Barclays think that month-end rebalancing of currency hedges in bond and equity portfolios may drive dollar buying as US assets have relatively underperformed to the rest of world on the speculation that the Fed may start tapering bond purchases if the economy and labor market improve as forecast.
The S&P 500 stock index has rallied 2.6% over the past 3 days, the most since Jan. 4 and paring its decline for June to 1.1 percent. The index lost more than 5% from May 21 through June 24.
Strategists at RBC say that their month-end model will probably send USD-bullish signals against GBP, AUD and CAD.