The month of May was different than previous months: currencies made significant shifts towards the dollar and the yen and away from all the rest. Also stock markets haven’t been that stable, especially not in Europe.
Many money managers need to readjust their portfolios to the new conditions, in order to meet their commitments. This leads to some correction. For now.
The month has already ended in Asia, and is about to end in Europe and the US. When all the world will be in June, the necessary adjustments to portfolios will already be over, and the trends seen in May could resume in full force – more flows out of the euro and into the dollar and yen.
With no new hope in Europe and a slowing China, some had hoped that the US would be the locomotive of the world and push global growth on its own.
Recent US signs haven’t been encouraging. Nevertheless, markets could wait just a bit longer, for the release of the all important US Non-Farm Payrolls for the really big moves. This is always an event that causes tension before the actual release.
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