BUZZ-COMMENT-Dollar buying to be backed by short-term flows
Dec 27 (Reuters) - As today is corporate month-end, dollar flows look set to keep the U.S. currency in the ascendancy. Corporate month-end occurs two days before the final trading day of the month, where large U.S. corporations hedge global revenues, which typically coincides with dollar strength.
This is most notably observed against sterling and the yen, shown in the charts below. Both of which are down over 7% and 15% respectively against the dollar since 2010.
That said, with volumes on the lighter side during holiday thinned trading conditions, flow-driven moves may be somewhat exaggerated. In which case, this leaves cable at risk of breaking 1.25 to test the December lows at 1.2470, while pressure on USD/JPY is likely to remain on a breach of 158.
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(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
((justin.mcqueen@thomsonreuters.com))
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