A Temporary Bounce In FX Land But There Is A Pattern Here - SocGen

There’s a pattern for Monday mornings to extend moves of the previous week before Tuesday sees everyone take stock. I know a technical analyst who removes Friday afternoon and Monday morning data from his charts to compensate. That’s the context in which we should look at market moves overnight. ZAR, NZD, KRW, PLN and AUD have bounced in FX-land (even the pound is up) and Treasury yields are a couple of basis points higher.

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Sterling can bounce - GBP/USD to 1.35 is possible for example- but the UK has no Government and no plan for the future. GBP/NOK and GBP/SEK in particular are attractive shorts at these levels and more so, on any bounce.

I’ll just reiterate that this is short-term relief, and pointing at the USD/CNY rate, I’ll also re-iterate a preference for oil-supported currencies (CAD and RUB at two extremes) over China-sensitive ones (eg, NZD and ZAR).