HSBC - "RORO ‘risk-on – risk-off’ is the default paradigm under which to analyse market moves and has been since the crisis. However, it is the very strength of this paradigm which leads to such peculiar behaviour of the market with respect to the USD. If the fiscal cliff occurs, we expect that this will lead to a generic risk-off move. For equities and bonds the default risk-off behaviour makes sense. However, buying the USD on such news is an implausible reaction to the news. So one should wait for the dollar buying to abate and to then go against the market. Alternatively one could side step the dollar entirely. Here one would trade the cross rates and sell risk on and buy the risk off. Looking at chart 1 it is perhaps best to sell EM and commodity currencies and buy the JPY."