Psychology for major markets Dec 1

EUR/USD – EUR/USD in the centre of its 1.4-1.18 range and unlikely to break out near term. Focus on the Fed rate decision in December. Risks may be slightly to the upside if the Fed eases, although the reaction will also depend on forward guidance.

USD/JPY – USD/JPY correcting from 9 month highs helped by rising hopes of a BoJ rate hike after the latest Ueda comments and a dip in equity markets, but JPY is likely to remain under pressure if risk appetite remains strong.

EUR/GBP – EUR/GBP slipped lower after the UK Budget which proved less contractionary than expected and seemed to restore some confidence in the public finances. However, the relief may prove short lived with GBP risks still mainly to the downside.

AUD/USD – AUD/USD continues to rally after the dip onto the 0.64 handle with yield spreads very supportive. 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.