Psychology for major markets July 3rd
EUR firmer after more dovish Powell comments. JPY remains under pressure
EUR/USD – EUR/USD slightly on the front foot after the more dovish Powell comments on Tuesday, but remains in the 1.07-1.08 range
USD/JPY – USD/JPY uptrend continues with new 38 year highs and still no sign of intervention. Downward revision in Japanese Q1 GDP and weak services PMI helps maintain negative JPY sentiment, but IMM short JPY positioning at highest since intervention in late April.
EUR/GBP – EUR bounce after French election turned sentiment more neutral and stabilisation likely in the 0.8450-0.85 range ahead of the UK July 4 election.
AUD/USD – Tone remains mildly positive with RBA one of the more hawkish central banks, but easier Fed expectations still look necessary to break above 0.67.
EUR/CHF – Retaining its more positive tone of the last week after a positive reaction to the French election result, but 0.97 likely to be the middle of a new range so limited scope for further gains from here.
Equities – Valuations getting stretched in the US and Europe reversing post-French election gains.