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EUR/USD: The Beginnings of a Turn in Sentiment
By DailyFX Updates | September 24, 2007
Our Currency Analyst David Rodriguez picked this up. We are discussing this on the DailyFX Forum
This from IFR:
EUR/USD: Big Picture - Global Investor Sentiment Shifts
24/09/2007 20:22:00
New York, September 24. Two proprietary flow reports that came across our desks this morning reveal a slowly shifting sentiment by the global investment community in the wake of the Fed 50bp rate cut.
According to a very large European bank that manages significant equity flows, their client base witnessed a flow of $1.76bn into US equities last week, whilst the EZ experienced an outflow of $2.35bn (equivalent). Flows into the US from the UK equaled $0.56bn, and from Switzerland $0.38bn; however there were modest outflows to Japan, $360mn, and Asia Pacific (ex-Japan) $370mn. Foreign clients continued to sell Swiss equities to the tune of USD 1.41bn.
According to EPFR on their weekly “global news release” they witnessed similar flows in the funds they monitor. They noted a global shift of some $10bn out of money market funds into equities; GEM (global equity market) Funds, picked up $1.78bn in flows, and are back in positive territory y-t-d. According to EPFR, both Latin America and EMEA Equity Funds posted modest outflows despite collective performance gains of 6.93% and 4.37% respectively; however all Emerging Market Equity Funds combined (tracked by EPFR Global) had net inflows of $2.5bn during the week; their fourth straight week of inflows.
European Equity Funds were hit with “sizable redemptions” for the eighth time in the past nine weeks as y-t-d outflows broke $13bn. According to EPFR, slower growth, earnings downgrades and fears over the fallout from the US sub- prime crisis are draining sentiment towards the region. There is particular concern over the impact of the weak dollar on both European and Japanese exporters according to EPBR. Given these global “real money” shifts, it seems understandable that traders are getting gun shy now that EUR/USD is losing momentum, another week of similar flows and EUR/USD could start looking heavy. Spot last traded at 1.4080.
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