Outside of a quick blip at the New York open, the USD spent the majority of the day continuing to sell off against peers, retracing the dramatic moves earlier in the week as treasury yield grinded lower. Despite the USD selloff; LatAm FX continues to feel the heat, underperforming most major EM EX. USDMXN traded as high as 18.37 before settling around 18.26 for the majority of the NY session. While there were no specific headlines driving this move, the desk saw a fair bit of MXNJPY unwinds from macros going through the morning, likely on the back of the USDPY moves this week. The most notably, the desk saw consistent USDMXN cash buying from real money clients as they exit USDMXN shorts; I will also flag the desk still had LHS interest in USDMXN swaps from the real money community, as they are likely still net short. In the option space, there was macro interest for xxxMXN downside, as they looked to fade the squeeze higher but preferred to remove the USD given recent price action. Elsewhere in LatAm EX, macros were net sellers of USDBRL, though the desk saw two-way Flows throughout the session. Additionally in DI, macros were adding to receivers in the belly portion of the curve.
In G10 EX, the desk continued to see macro interest in front-end cross-WY vols ahead of the Bank of Japan meeting at the end of the month. Real money clients were also net buyers of dollars against the Franc and the Scandies. Lastly, the desk saw an uptick in XAUEUR vol interest from macro clients as gold tests the year-to-date lows.
- UBS Strategy
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