Psychology for major markets Apr 23

EUR/USD – Sticking in the mid-1.06s and holding close to the correlation with short term yield spreads. Little movements likely without some information to change market expectations about Fed o ECB policy.

USD/JPY – Still testing the highs on firm US yields and positive risk sentiment. BoJ action might be seen to cap gains in the short run, but a turn lower in US yields looks necessary to turn the trend.

EUR/GBP- Stabilising above 0.86 after stronger PMI offset last week’s dovish comments from MPC’s Ramsden. Focus on Pill speech today.

AUD/USD – AUD finding some support below 0.64 but underlying sentiment remains slightly negative as long as US yields hold at higher levels.

EUR/CHF – Retreated from the 0.9849 high as EUR yields fell back while softer equity tone on the back of expectations of a less dovish Fed and geopolitical concerns also suggest topside now more limited, but support below 0.97.

Equities – Higher US yields have sent indices lower, but risk premia are still low and growth numbers solid, so a renewed decline in yields could see a retest of the highs.