Most of this week was spent trying to understand the implications for Powell's Jackson Hole speech where he explicitly disconnected the taper with the rate path. UBS economists believe that the tapering announcement, when it comes, will not have a long-lasting impact on the USD — if taper comes earlier than expected the USD may find support particularly vs EM.
Now that the summer break is over, the desk's flows are starting to pick up — roughly 5-10% higher than last week and with a clear bias this week for macros and real money to sell USD (after a neutral week last week).
This week (pre NFP) the desk saw macro and real money clients sell —$3.5bn (vs last week completely flat). Interestingly retail clients were buyers of USD both last week and this week (ri$1.2bn each) the vast majority against EUR and GBP. Post a very weak NFP (driven by leisure and hospitality) the team has seen limited follow through to the kneejerk USD weaker reaction.
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