BNY iFlow data shows increased risk aversion, with bond purchases centered around G10 and euro zone debt, while selling emerging market sovereigns. Foreign exchange flows highlight INR and EUR outflows relative to demand for CNY and ZAR. Concerns over energy import difficulties and fiscal responses are driving foreign exchange selling in many surplus economies, with the KRW and JPY the only remaining APAC currencies that are overvalued.
iFlow signals a defensive position
“Of the ten currencies we consider to be in the financing category, most are undervalued due to low yields.”
“Currently, only KRW and JPY remain overvalued, but purchases are low, while many surplus economies face foreign exchange sales on fear of import stress and short-term fiscal stimulus to reduce energy burdens.”
“INR, TRY, EUR and SGD outflows stood out against the backdrop of strong demand in CNY, ZAR, PLN and COP.”
“Investors show increased risk aversion, with iFlow Mood accelerating to negative -0.088.”
“The pace of bond purchases has increased while demand for stocks has declined.”
(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)
