CACIB note some of the well-established FX....>

FOREX: CACIB note some of the well-established FX trends from late 2017 have

gone into reverse in early 2018. This so-called 'January effect' seems to be

magnified by crowded consensus trades - like long-EUR positioning - as well as

the prevalence of range-trading in the FX markets, with investors expecting

mean-reversion. They add, a look at the historical FX performance around the

turn of the year would suggest that AUD and GBP have experienced 'reversals of

fortune' 67% and 60% of the time, respectively. This percentage is lower for JPY

and CAD (56%), NOK and CHF (53%), and EUR (50%). In the case of SEK and NZD, in

most of the cases they saw an extension of December's trends into January. A

confirmation of the 'January effect' could see the recent rally in AUD/USD

stalling and even going into reverse before too long. The same may apply, albeit

to a lesser degree, for GBP/USD. In the case of EUR/USD, while our seasonality

analysis is inconclusive, we are conscious of the growing downside risks ahead

of the Italian election in March.