Global FX Strategy: FX and month-end equity rebalancing: July ‘26

Research evidence excerpt

Global FX Strategy: FX and month-end equity rebalancing: July ‘26

Global Research

24 July 2026ab

Global FX Strategy FX

GlobalFX and month-end equity rebalancing: July '26

Alvise Marino

Strategist

Figure 1: Month-end FX trading signals limited outside of USDJPY and GBPUSD alvise.marino@ubs.com

+41-44-237 8440

D Shahab Jalinoos

Mo nt h- en d F X t r a shahab.jalinoos@ubs.com

+1-212-882-5532

ding s

Benjamin Jarrett

ignals Strategist

limit benjamin.jarrett@ubs.com

+44-20-7567 5430

ed out

Meena Bassily

side o

f USDJ meena.bassily@ubs.com

+44-20-7567 1145

PY and

GBPUS

Source: Bloomberg, UBS calculations

MTD relative equity returns point to USDJPY and GBPUSD selling at month end.

July 2026 has thus far seen the S&P 500 underperform most G10 peers (Figure 2ThusfarJuly2026hassenUSequityindicesunderperformotherG10pers,otherthantheNikei); equity

rebalancing flows are therefore expected to drive USD buying at month end. Our model,

which produces month-end FX trading signals based on MTD relative equity returns,

suggests these flows are likely to be relatively more impactful in GBPUSD, with a sell

signal of -2 magnitude (on a -5/+5 scale) generated for the pair. The exception to these

pro-USD dynamics is USDJPY, as large MTD Nikkei underperformance vs the S&P 500 in

July is yielding instead a 'sell USDJPY' month-end trading signal of -3 magnitude (on a

-5/+5 scale).

Trading signals from expected rebalancing flows are modest in strength. While

the trading signals our model generates are relatively stronger in USDJPY and GBPUSD

than in other key G10 pairs, the broad thrust of month-end trading signals from MTD

relative equity returns is modest in July 2026, with signals of -1/+1 magnitude in most

G10 FX pairs.

Still low explanatory power from relative equity returns for FX trading.