Psychology for major markets Feb 20

EUR/USD – EUR breaking through the top end of the 1.07-1.08 range which has prevailed since the employment report with relatively strong US data offset by the positive equity market tone.

USD/JPY – USD/JPY holding above 150 helped by strong US CPI and resilient equity markets. Falling US equity risk premia continue to encourage JPY bears, but threat of upcoming BoJ tightening and some risk of FX intervention limit the upside.

EUR/GBP – GBP sentiment weakening after weaker than expected CPI in January and GDP in Q4. 0.85 now looks like a base with scope to explore up to 0.86, although BoE tone remains less dovish than most, limiting the downside for now.

AUD/USD – AUD resilient despite weak employment data helped by strong global equity market performance. But downside risks remain as there is scope for the RBA to turn more dovish.

USD/CHF – CHF falling back after weaker CPI helped by strong equity markets and the SNB no longer providing support.

Equities – US markets remaining close to all time highs but may be vulnerable to any further decline in easing expectations.