Nordea notes that the US dollar has been consistently rallying into month-end
Two days before the end of the month is pay-day for the US dollar bulls.
Nordea has uncovered an interesting pattern where the US dollar has been consistently climbing two days before the end of the month and they may have an explanation.
It may be all about the new US tax law. It encourages US firms to repatriate funds held overseas. Much of that money is held in dollars but some is in euro and the theory is they're being repatriated for buybacks. In order to move the funds into US dollars, it may need to make the trades two days in advance of month-end.
They note that the US dollar has strengthened against the euro on the second trading day before the end of the month in eight out of nine months this year, with an average gain of 0.3%. This month, that would mean weakness for EUR/USD on Monday, Oct 29.
I'm not entirely sure the explanation makes sense but it will be something to watch early next week.
