FX flows are up a healthy 21% from yesterday (-9% vs the five-day average). There was a bias to sell USD across client segments, as the dollar lost more ground. Risk sentiment is also faring better, with optimism over the seemingly milder nature of Omicron variant symptoms prevailing.
In G10 the standout flow was in AUD, with the RBA meeting earlier today. The RBA is prepared to be patient, citing Omicron uncertainty as they kept cash rate target at 0.1% and will continue to purchase government securities at the rate of AUD4 bn a week until at least mid February 2022. AUD rallied and we saw AUDUSD buying across client segments (except retail), with vols just marginally softer. Another noteworthy flow was EURUSD buying by macro names as spot rallied.
In EM the standout flow was USDSGD buying by macro names. In a similar pattern from yesterday, USDSGD spot gapped lower after the open in Asia, with a range of 1.3662-1.3701. Downwards momentum is likely to lead to a test of the next support at 1.3660.
Via UBS
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