Psychology for major markets Feb 26
Positive equity market tone keeping the JPY on the back foot.
EUR/USD – EUR/USD retaining a firm tone on the back of strong equity markets and firmer PMIs, but gains are gradual and 1.09 still represents significant resistance.
USD/JPY – USD/JPY holding above 150 with falling equity risk premia and low vol continuing to encourage JPY bears, but threat of upcoming BoJ tightening and some risk of FX intervention limit the upside against the USD, while JPY continues to make new lows on the crosses.
EUR/GBP – GBP sentiment buoyed slightly by upbeat comments from BoE governor Bailey and further PMI gains, but EUR/GBP upside risks still dominate after weak UK CPI and GDP.
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 helped by strong corporate earnings, but may be vulnerable to any further decline in easing expectations.