Cable, AUD and JPY from SocGen

Societe Generale Research discusses the markets' conditions and some of its tactical views.

"Wednesday's FOMC meeting is being written up as the week's big event, though a rate change is highly unlikely. We think they'll confirm that the Fed's balance sheet run-off will end this year, though they may not give us a lot more detail than that. As for rate policy 'patience' is the watchword.

The biggest driver however, will be Brexit. There will be a meaningful vote on Mrs May's withdrawal agreement tomorrow, but only if she thinks it's likely to pass. The Times leader says "May woos Brexiteers but still faces defeat" in which case uncertainty drags on. Anything other than no-deal should support sterling, but uncertainty can hold it back for now," SocGen notes.

"Tactically, all this leaves us still liking longs in NOK at these (oil) prices. Short USD/NOK and short EUR/NOK both appeal. On charts, AUD/USD is a better short-term buy than EUR/AUD is a sell, and AUD/JPY is even better, even if concerns about Australian (and Canadian, and global) house prices aren't going away any time soon. The yen, like the Canadian dollar, is doing nothing to encourage its fans. Risk on markets and weak exports data are a horrible combination for a yen bull and a good reason to look at something else for now," SocGen adds.

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