🇨🇭LIVEDESK: FX FLOWS

• Currency markets are trading sideways awaiting Fed Chair Jay Powell's testimony in Congress later on Tuesday. His prepared comments reiterated the Fed's view that inflation will drop back to target but do little to counter hawkish comments from Fed's Kaplan and Bullard on Monday. This has helped the USD slowly grind higher, although flows show FX volumes down 30% from Monday and directional flow is mixed — there are some USD buyers versus EM and sellers against G10.

• The main buying has been of GBP, driven by retail names into the dip, ahead of the Bank of England meeting on Thursday, in possible anticipation of a hawkish tilt, following the FOMC. Vols are grinding lower as retail supply returns while USDTRY gaps lower with no news to explain the move.

• The dollar had been better bid against Asian currencies but as New York opens some offers are lining up; that is pushing most pairs off the highs seen during the Asia close. Flows are light after continuous short covering on Monday with a focus on USDTWD, USDINR, USDKRW and USDCNH. Activity during Monday's New York session was more mixed with risk sentiment noticeably improving during the session and that might be a key driver again on Tuesday.