Psychology for major markets May 8th
USD mostly steady but JPY edging lower again despite intervention threat
EUR/USD – Holding the mid 1.07s after rallying when US yields dipped following FOMC. Upside now favoured especially if recent evidence of European recovery gets further support.
USD/JPY – Downside risks persist on threat of BoJ intervention, despite move back above 155. Move into the 140s possible if US yields hold at lower levels.
EUR/GBP- EUR/GBP edging above 0.860. Risks still look weighted to the upside with BoE still having potential for more aggressive easing than is currently priced in.
AUD/USD – Moved above .66 supported by Chinese data and equities, but fell back from resistance at .6644/50 after RBA meeting. More US yield declines may be required for a break higher.
EUR/CHF – Retreated from the 0.9849 high and stronger Swiss CPI knocked it lower after a retest above 0.98. Stronger EUR/USD and positive Eurozone sentiment required to take it towards parity.
Equities – Regaining momentum after FOMC and payrolls. Risk premia are still low and growth numbers solid, so a further decline in yields could see a retest of the highs.