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According to analysis by  Société Générale (SG), there are seven key points that will be affecting markets in the medium- to long-term on a horizon of three months to three years across the range of issues.

Key highlights

After recent market action, some asset groups have taken a pounding, but SG sees cherry-picking opportunities in the weeks and months ahead, and are looking at long positions on copper against short positions on the AUD.

On emerging markets, SG sees short positions beginning to come into play on the BRL and AUD against the MXN, while a more complex basket sees SG going short on the ZAR and BRL against both the RUB and MXN.

With trade tensions falling away for the interim, the trade war rhetoric still remains close to the surface, and without any hard solutions in place SG is seeing a potential hedge against tariff tensions in shorting the KRW and EUR against the JPY.

In Europe, political tensions over both Italy and the still-unresolved Brexit negotiations sees opportunities in longing the GBP/USD, as well as the MXN/BRL.

Credit spreads continue to remain under pressure, but no direct FX pairs can be used to accommodate this scenario with the US Dollar currently facing renewed pressures as well.

With the global economy seeing the potential for entering a late-stage cycle, SG suggests playing crude oil prices against the RUB.

On the matter of low-probability events, including a potential ‘significant’ economic slowdown in the US, or an impeachment of the current president, long EUR/USD positions on a long-term basis could serve to hedge against any potential pitfalls regarding major events that have low odds of occurring  (for the time being).