The USD is already showing signs of unwinding its shallow ISM move.USDJPY is down towards 113.80 after hitting 114.00 and EURUSD, is back above 1.2500. USDCAD has also backed down from the 1.1320 area and AUDUSD, found support below 0.8700. NZDUSD was also saved ahead of support at 0.7680/90.The bottom line: Its choppy times. Trade nimble and Keep the big picture in mind.
Two themes emerge from CitiFX Global Flows this week: JPY should see follow through selling, but the pro-carry and high-beka view has become consensus, and the risk/reward is no longer as strong as 3-weeks ago. In the past week, the JPY selling recorded was the largest investor flow for all G10 and EM FX, but our data has captured equal or greater amounts many times since 2012. For risk demand, leveraged AUD and ZAR buying has reached overbought levels, implying they are consensus views and at risk to swings in sentiment. For EM FX in aggregate, inflows from investors continue, but they remain light. CEEMEA positions hold the highest risk given recent positioning and macro calendar this week.