🇨🇭LIVEDESK: FX Flows

• FX flows continue to be subdued as a reflection of slowing participation towards the year end, despite the approaching IMM date. Clients seem to be protecting their small gains or preventing a dip into negative territory so FX action is very much hindered. Macro names are very interested in buying USDCNH as China's RRR is being tampered with and Evergrande's default seems to solidify. USDJPY remains the focus for asset managers as they pursue a strong net selling bias. Risk sentiment is in a cloudy place amid mixed news of fresh covid restrictions and a milder Omicron variant.

• Despite a strong net selling bias from asset managers, USDJPY flows have been balanced out by macro and retail names. All clients with the exception of bank names are also pushing a net buying bias for EURUSD - perhaps a reflection of a slightly increasing risk-off sentiment as EUR has often been popular in times of trouble during the pandemic. ElsevoihereG10 flows have been quite neutral during a calmer market period.

• Asia EM captures the attention Thursday, as USDCNH leads the pack with a net buying bias from all clients except bank names. 1m vols have climbed up to the 4.0 handle from sitting around 3.9 before Thursday. Then comes USDSGD and USDHKD as the second and third most popular EM currencies with clients respectively - macro and bank names are driving the interest, but net flows in both currency pairs are fairly balanced.

Via UBS