Psychology for major markets May 6th
USD tone softening as as softer non-farm payroll sustains yields drop post-FOMC.
EUR/USD – Edging further above 1.07 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, but organic decline still likely to require lower US yields.
EUR/GBP- EUR/GBP edging above 0.8550. Risks still look weighted to the upside with BoE still having potential for more aggressive easing than is currently priced in.
AUD/USD – Moving above .66 supported by Chinese data and equities, eyes on resistance at .6644/50. More US yield declines may be required for a break.
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.