🇨🇭LIVEDESK: FX Flows

• USD weakness abated on Tuesday despite equities continuing to plug lower and a bearish session for USTs. The EUR retraced much of its losses seen in Asian trading hours, helped by a strong ZEW survey. The desk was a small better seller of the EUR in the London morning, but EURUSD topside demand persists mainly via vol conservative structures with topside KOs around the lm-2m region, with the skew having moved better bid for topside and hence offering attractive discounts.

• Looking further out the curve, the 1y date now captures all potential French election dates and there has been interest from relative value vol names to fade the premium priced into the vol and skew.

• In EM, the flows have been mixed with USD buying against Asia FX amid concerns around covid (reimposed restrictions in Taiwan and the situation in India). USDZAR is the standout flow. This week, there has been real money selling of USDZAR and ongoing selling via forwards from systematic names. The desk believes short USDZAR positioning now has been built up to a reasonable size.