In the first full week of 2013 it is becoming clear that the collective investor mindset is changing. Volumes that we have seen in FX markets are at their highest for a year. Defensive trades are being passed over in favour of risk: carry, commodity currencies and USD Asia are all doing well. Broad-based JPY weakness remains a major theme despite worryingly extreme momentum readings. Finally, 2012 safety trades, like long CHF, are being squeezed; expect EUR/CHF short covering above 1.2170.
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Barclays Capital