CitiFX Strategy thoughts at the start of......>

FOREX: CitiFX Strategy thoughts at the start of the week:

- We think the current financial market set up (elevated risk asset prices,

remaining longs in risk and carry assets, low liquidity during the summer,

renewed US-China trade tensions, maturing central bank trades) favour defensive

positioning across markets it is too early to buy the dip. We foresee to

eventually buy the dip and still have a soft landing as our base case but watch

downside risks for growth and trade tensions carefully.

- We don't expect a quick resolution of US-China trade tensions. There remains

plenty of scope for the US to push back or avoid the Sep 1 deadline to increase

tariffs on China, but we don't expect China to rush to avert it and think it is

plausible that tariffs could in fact be imposed, which reinforces our current

caution.

- The July FOMC was more hawkish than we expected. But this remains a very

dovish Fed, which is likely to ease again in September, and the hurdle for

further easing remains low so we don't worry much about Fed hawkishness.