FXStreet (Bali) - According to Société Générale, month end flows could have a positive impact on the Euro this time around.



Key Quotes



“Demand from foreign reserves is likely to be a lot weaker than expected as the threat of QE spooks reserves into staying in USD, keeping the UST curve well bid, particularly in the front end and distorting the price signal even more. There will be divergent flows from portfolio rebalancing (demand for euros) and diversification."



“This will be weaker if tactical asset allocators increase their EUR short position or more broadly if they decide not to rebalance their portfolios leaving them longer equities and shorter EUR”



“The threat of ECB QE and negative rates in the front end of treasuries in Germany or France, reserve managers with risk averse profiles will likely be extending duration as much as they can in EUR, not buying and even selling to some very mild extend”



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