Bank of America Global Research identifies the clearest trends signals after the risk-on rally in November.
"November saw a robust risk-on rally which was last seen in April. We compare the two rallies across asset classes and identify the clearest trends with few pullbacks that are most likely to continue. Compared with the April rally, the November risk-on rally saw clearer directional trends established by falling volatility, coupled with extended moves across asset classes. This coincided with the underperformance of US assets and USD, fuelling foreign equities and the EM," BofA notes.
"The cleanest trends (low vol with sizable moves) are seen among GBP crosses vs "high-beta" pairs. We see the clearest bearish signals for GBP/SEK, GBP/AUD, GBP/NZD, as well as EUR/AUD. The risk to this view is a return of the risk-off environment," BofA adds.