Psychology for major markets Dec 9

EUR/USD – EUR/USD holding in the mid -1.16s awaiting the Fed rate decision on Wednesday. Risks may be slightly to the upside if the Fed eases, although the reaction will also depend on forward guidance, and there are risks of a “hawkish cut” which would be more USD supportive.

USD/JPY – USD/JPY edging higher helped by rising US yields. Ueda comments suggesting a December hike is likely provide some JPY support, but significant recovery will likely require a turn lower in equities.

EUR/GBP – EUR/GBP hovering in the mid-0.87s having stabilised after the Budget. Focus on MPC speakers on Tuesday providing clues on next week’s BoE decision.

AUD/USD – AUD/USD rallied back above 0.66 after the dip onto the 0.64 handle with yield spreads very supportive. RBA also turning more hawkish suggests upside favoured but still vulnerable to any decline in risk sentiment.

Equities – S&P 500 slide halted by increased hopes of Fed easing with Ukraine peace hopes also seen as a potential positive, but upside now more limited near recent all time highs.