Risk-off remains the ‘base case’ of my FX thinking.

Volatility is the highest it’s been in 2019 as the sporadic nature of geo-politics coupled with a backdrop of a slowing global economy has created a perfect FX risk caldron and one that has us looking at XAU and crosses that are long JPY.

EURJPY remains the cross of choice as risk off coupled with the ECB’s September policy changes should see the cross continuing its 45-degree slide to a consensus view of ¥111.00 by year end.

What is also apparent in this market is there are trades that one should try to avoid despite how ‘appealing’ they might seem. In my opinion Cable is a prime example Brexit is creating a very difficult and unknown lever in GBP/USD which has only amplified since the election of populist Prime Minster Boris Johnson.

His gambit to suspend Parliament by the end of this week to force the House to find a Brexit deal is creating a constitutional crisis of the highest order. It has been attacked by all side of the Parliament and his own Speaker has made it clear how ‘unprecedented’ this move is. In short – this event is as negative as negative could be.

Yet, when you look at the trading in Cable this event has actually seen the pair appreciated, not what one would expect.

If you look at some of the Fibonacci retracement levels there is clear support sub-$1.215. Again, if an event like the Prime Minster dissolving Parliament and pushing a no Brexit deal to the front of the cue of possibilities doesn’t cause GBP/USD fall then what will?

Thus, the clear take out of the global set up currently is choose your opportunity. There is enough volatility to find trades that provide returns, but it also means you need to find trades that have some structure based in either technical or fundamental or both to have confidence event risk wont wipe the trade out.