Societe Generale ran a study on 87 reserve managers and their findings give them (and now us) a likely path for various FX flows over the next quarter.
They see managers diversifying out of the US dollar and into other currencies as follows;
- EUR 67%
- JPY 11%
- AUD 11%
- GBP 5.4%
- NZD 2.5%
- + some other smaller currencies
Over the next few quarters they will then likely buy fewer euro’s and more kiwi, aussie, yuan and won as they go looking for yield in emerging economies for lack of returns in Europe
It gives us some idea of what’s ticking in reserve managers minds, even if it’s not overly actionable trading wise immediately. It will go some way to explaining any freakish moves we get at quarter end and year end as that’s when the money starts to flow, and highlights the ongoing chase for yield.
