Societé Generale - "The SG Sentiment indicator is deep in risk averse territory, and the FX positioning indicator consequently dollar positive, recommending dollar longs against all G10 currencies except NZD and SEK, and most of the EMFX space as well (notably MXN, KRW TRY, HUF and PLN). We are long USD against AUD, JPY and GBP, and long EUR/NZD (much less comfortably than we were).
The sentiment Indicator seems to me too bearish, and this still looks like a mild risk correction rather than a turn towards a fresh bear market, but defensive trading and investment strategies are warranted anyway. The 'buy on dips' view depends on a couple of factors: Firstly, that the Fed debate is interesting but the doves hold all the cards - indeed those of a Machiavellian disposition can be argued that the Fed is deliberately taking some air out of asset bubbles; And secondly that the US economic recovery is not under threat. The February payroll report will tell us more on that subject. With Martin Wolf welcoming a weak pound on the front page of the FT, short GBP/USD either already is the market's favourite short risk position, or will be by tea-time."