Psychology for major markets Oct 09
JPY retains losses after the election of Takaichi as new LDP leader. EUR maintans softer tone since French PM resignation.
EUR/USD – Pressure on the downside since the French PM resignation, but little momentum and declines limited by solid equity market performance.
USD/JPY – USD/JPY moved sharply higher since the election of Takaichi as new LDP leader. Gains look excessive as it remains unclear whether BoJ policy will be affected, but some action likely needed from Japanese authorities to reverse the rise.
EUR/GBP – Dipped on French PM resignation. Year’s highs at 0.8763 now look out of reach near term, with 0.86-0.87 range likely to be restored.
AUD/USD – Still within mild uptrend since April despite firmer USD, with slightly less dovish RBA supportive, but softer within the range as USD generally firmer, and vulnerable if there is a significant downturn in risk sentiment.
Equities – S&P still making new all time highs helped by dip in US yields but extended valuations mean main risks are on the downside.