🇨🇭LIVEDESK: FX Flows

• AUD has remained under pressure after RBA Governor Lowe played down rate hike expectations and inflation. Broad USD strength has continued to weigh on the pair. AUDUSD overnight went up to 0.7535-40 before stalling and reversing as demand for the greenback picked up in the US session. Play the range with a sell-rallies bias below 0.7550-65. The more important resistance is at 0.7600-15 while initial support lies into 0.7445-50 ahead of 0.7400-15. Flows were mixed on Wednesday with a very mild sell skew from macro and retail names. A touch of macro supply persists this morning in Asia.

• Mexico CPI came just a touch above expectations with headline 0.2 versus 0.2 consensus and core 0.21 vs 0.18 consensus. This print will likely be discounted by market participants as it comes just after the Banxico rate hike. The main event on Thursday remains the Banxico minutes at 10:00 New York as the market looks to further guidance on whether the June 24 hike was a one-off or the start of a more meaningful cycle. Flows this week have been mixed in forward with macro names paying fwd-fwd and systematic accounts receiving along the curve. In spot the desk has seen net better buying of USDMXN this week led by macro accounts and options-related flows.

• JPY, AUD and CAD vols are much higher on the equity and oil weakness resuming, along with the increased volatility in rates markets. lm USDJPY last trading 6.0, up about a .6 on the day, similar to AUDUSD where lm is now trading at 9.2. Interests are concentrated in short-dated contracts with market seemingly heading into a pocket of short gamma on this move. JPY pairs in particular is bid as the desk has seen some interest for downside AUDJPY, CADJPY over the past few weeks and market is certainly getting shorter there on this move, as realized is picking up.

• USD/Asia retracing off the highs as risk sentiment improves into the New York open. Asian currencies have been underperforming peers during local hours again with USDCNH and USDKRW taking the lead. CNH might continue to underperform given the headlines yesterday about a potential imminent rate cut. USDKRW took out the 1140 resistance yesterday and quickly traded to 1150 Thursday morning where some resistance now is coming in. Mostly right hand side flows with main volumes going through in KRW from a mix of names.