From SG, their overarching theme is its time to diversify out of US assets (but to stay with treasuries)
These are from Société Générale September 'Best of investment ideas' (these on a 3 month to 3 year horizon)
Its a detailed piece, but in brief, the 7 'key calls' and their FX implications:
1. Some assets have been hit hard, but we believe it is time to cherry pick after the capitulation:
- Long copper, short AUD
2. Further polarisation between best and worst performers in the EM complex
- Short BRL and AUD versus MXN
- Short ZAR and BRL versus RUB and MXN
3. Seek protection against rising trade tension
- Short KRW and EUR versus JPY
4. Plenty of politics ahead, elections, Italy, Brexit … The UK is becoming a sweet spot for us, presenting an asymmetrical risk profile.
- Long GBP/USD
- Long MXN/BRL
5. Pressure on credit spread
- no FX implications noted
6. Late stage economic cycle
- Prefer oil to Russian rouble
7. And finally a nod to low probability events - significant US slow down, Trump impeached
- long EUR/USD
(ps. on point 7, don't get your knickers in a twist all you Trump fan bois, LOW PROBABILITY, K? Comments focused on this will be dealt with as irrelevant politics)
And, just to go back to the beginning on this, these are 3 month to 3 years views … please keep in mind
