Barx: seeing some decent interest here to re load on USDJPY topside structures following latest announcements and overnight moves. front end vol had a good move on this. 1mth over 1 vol up current mid around 10.05.. RR is small favouring topside now at 0.1 over for calls (1mth).
Citi Global flows – overview: Investor flows post-ECB suggests EUR has further to fall, both against the USD and the crosses. 50% of the USD’s bought last week can be explained by EUR selling, a larger percentage than normal. As year-end approaches, long-term flows (real money accounts) will rise in importance. Hedge funds have a tendency to lighten positions and volumes typically decrease into December. RM, so far, has remained less bearish on EM than leveraged clients. The dominant flows in the G10 are selling of EUR, JPY and AUD. In EM FX, outflows have remained mild in aggregate, but it is a stock picker’s world in EM. Flows imply underperformance of HUF and potentially KRW, while outperformance of MYR and MXN.
Citi – Strongest directional bias: Sell EURUSD – Our strongest directional signal shifts from USDJPY to EURUSD this week, as JPY reaches oversold levels. EUR flows, on the other hand, highlight increased bearishness (see Theme 1, page 2) and further room for momentum selling.
Citi – Regional summaries:
· G10 – Investors continued to sell EUR and JPY. Recent buying in AUD reversed.
· Asia – The region registered outflows in line with broad USD strength. KRW and PHP saw net outflows while SGD and TWD saw inflows. Positioning seems cleaner now.
· CEEMEA – Leveraged account flows have been quicker to re-adjust to a new wave of USD strength. Cautious investment sentiment towards the EUR continues to limit general leveraged account willingness to establish new CE (Central Europe) FX longs.
· LatAm – BRL and PEN had outflows from the investor community. MXN inflows picked up after NFP. CLP benefitted from leveraged inflows after high CPI.