Psychology for major markets Oct 08
JPY extends losses after the election of Takaichi as new LDP leader and PM. 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 continues to move sharply higher since the election of Takaichi as new LDP leader and PM. Gains look excessive as it remains unclear whether BoJ policy will be affected, but some action needed from Japanese authorities to stem 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.