Add To USD Shorts On Current Impasse In Fiscal Cliff Talks - BNP Paribas

Investors should leverage the latest spike in USD on the impasse in the fiscal cliff negotiations to establish fresh USD short positions or to add to their current shorts at better levels, says BNP Paribas.

"While there is nervousness from the apparent set-back in the fiscal-cliff talks, an agreement remains likely by the end of the year or soon enough in the New Year that the impact on economic activity is likely to be limited," BNPP clarifies.

"This in our view limits scope for the market to sell-off. We therefore view that a rebound in the USD over the holiday period provides an opportunity to add to USD shorts. We favour AUDUSD moving higher in the New Year and also expect the CAD and the GBP to benefit from the USD weakness," BNPP adds.

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