Psychology for major markets January 16th
USD generally steady, JPY benefiting from more hawkish BoJ tone
EUR/USD – Bouncing modestly helped by slightly lower US yields and firmer equities. Sentiment remains weak but yield spreads point higher.
USD/JPY – Softening helped by some more hawkish comments from BoJ governor Ueda and comments from former MoF minister Yamasaki suggesting there may be efforts to push the JPY higher when Trump comes to office.
EUR/GBP – Edging higher after weak GDP data after falling back following softer UK inflation, which is now seen as positive news for GBP, by reducing concerns about the health of the UK economy. But risks remain on the upside.
AUD/USD – Made new post-pandemic lows near 0.61 on general USD strength and risk aversion, but has bounced strongly and looks good long term value near current levels unless risk aversion increases significantly
Equities – S&P 500 recovering as yields edge lower. Focus now on Trump’s initial executive orders after next week’s inauguration