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Don't buy the risk-dip yet - SocGen

FXStreet (Bali) - Based on the latest market developments, Societe Generale recommends buying European bonds vs US, sell cable, buy USD/JPY, buy USD/SEK, and don't buy the risk-dip yet.

Key Quotes

"The weekend news seems a bit tilted towards the UK - with the Scottish 'yes' campaign closing the gap on those who want to stay in the UK, while the FT reports US banks would move some staff out of the UK (to Dublin?) If the UK were to leave the EU. I don't the pound's correction's over (actually, I think it's way more than a correction)..."

"There is no 'new' geo-politician news, as in no news re: Gaza, Iraq or Ukraine of 'note'. The first two are still unlikely to have much impact on markets (which doesn't mean they aren't important). Friday saw 'geo-political fear' stop the risk rally and trigger a correction but there isn't much to justify any follow-through."

The other big topic of 'news', at least on blogland, has been the need for the ECB to 'do something'. Frankly, praying to St Jude (lost causes) would be about as useful. The ECB's inability to create loan demand has many causes (bank regulation, for starters) and the effect of 'proper qe' from here would be limited by the extent of asset gains since others went down this path. However, the scars from last week's data will still be raw. I don't have any desire to buy the euro, and it's possible Bund yields fall even further.

The main data will be inflation in the Uk (lower) and US (doing nothing. Nothing there to help the pound or hurt bonds.

Overall: Buy European bonds vs the US, even now. Sell cable, buy USD/JPY, buy USD/SEK, and still, don't buy the risk-dip....

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