Psychology for major markets Apr 18

EUR/USD – Stabilising in the mid-1.06s helped by recovering risk appetite, but sentiment still negative with market seeing widening yield differentials.

USD/JPY – Holding near 34 year highs despite Japanese authorities protests, with little real threat seen from intervention. Rising US yields and declining equity risk premia remain the drivers of JPY weakness.

EUR/GBP- Tested support at 0.8530 helped by slightly stronger earnings and CPI data, but comments from BoE governor Bailed reversed gains as he indicated that the data were in line with expectations. It will be difficult to break below 0.85 without some hawkish BoE commentary.

AUD/USD – AUD finding some support below 0.6450 as US yields retreat, but lows sub-0.63 could still be under threat on any renewed equity weakness.

EUR/CHF – Retreating from the 0.9849 high as EUR shows general weakness and market looks for ECB easing, with safe haven status also CHF positive given Middle East tension, but support below 0.97.

Equities – Starting to look like we may have seen the top, as geopolitical tension and rising US yields have produced three weeks of declines in the S&P. Return of expectation of Fed summer rate cuts needed to restore stability.