The risks of extreme appreciation of the USD are rising by the end of the yearpetar skakalov
Citigroup warns of an extreme rise in USD volatility. The bank expects the risks of sharp movements to rise in the coming weeks due to strong demand for US dollars, which will increase volatility, impose liquidity and may lead to sharp movements against major USD pairs of currencies.
“Investors are beginning to prepare for a sharp contraction in liquidity as the end of the year approaches. Concerns come after the Fed’s recent REPO operations were insufficient, with expectations that the central bank is unlikely to be able to increase its cash flow at the end of the year. addressing investors’ needs “. – noted by Citi.
“However, major NYU banking departments are expecting a sharp jump in USD demand in the coming weeks to the end of December. This, in turn, raises concerns that the NY FED will be able to cover demand in a timely manner. If the NY FED failing to deliver the liquidity they need in time can lead to a sharp rise in the US dollar. ” – added by Citi.