Psychology for major markets June 18th
EUR stabilising as French risks seen as priced in for now. JPY still pressing the lows
EUR/USD – Sentiment and EUR/USD stabilising with France/Germany spreads but hard to see a significant EUR recovery this side of the French election.
USD/JPY – USD/JPY continues to push on significant technical levels above 158, despite there being little obvious trigger for further JPY weakness. Intervention risks rising but action only likely if BoJ sees market as overstretched.
EUR/GBP – Stabilisation in the mid-0.84s as French risks now seen as priced in. UK CPI and BoE MPC statement this week carry some GBP downside risk.
AUD/USD – More hawkish RBA statement than expected providing support, with some further upside scope if market prices out rate cut expectations.
EUR/CHF – Heavy CHF short positions suggest further downside risk but some stabilisation likely near 0.95 if French political risks are seen as priced in.
Equities – New high seen in the US as yields dipped after CPI but valuations getting stretched and European political uncertainty undermining sentiment.