Psychology for major markets Oct 10
USD still generally firm. JPY stabilising after recent declines, with Komeito exit from coalition creating potential for recovery
EUR/USD – Pressure on the downside since the French PM resignation. Declines limited by solid equity market performance, but softer EZ data also maintaining downside pressure.
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, and Komeito exit from the ruling Japanese coalition also creates doubts over whether Takaichi will become PM.
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.