Psychology for major markets May 15

EUR/USD – The Euro remain depressed as USD bid remain steady on geopolitical uncertainty. The pair broke 1.17 figure for support and has only seen one way traffic. The next support is almost a figure and half away but a quick test cannot be ruled out as the risk aversion may spiral.

USD/JPY –  Rally is gathering steam with JGB yields jumping in a far end. The lack of joint intervention between U.S. and Japan suggest any intervention will be quite restrained. While it is very likely for USD/JPY to challenge the 160 handle, the threat of intervention is very real. What is more concerning is in the bond market. 10yr and 30yr JGB have jumped by close to 10% in the past week. If the rally continues, we expect the BoJ to announce special purchase operation to keep volatility down.

AUD/USD – The Aussie is broke support circa 0.7190 on strong risk aversion. It is a perfect storm with both risk asset and precious metals are selling off. There could be more ways for the pair to drop, with next support almost a figure away.

Equities & Others –  Broader risk atmosphere is poor as U.S.-China meeting yield little fruit. Market participants are left disappointed and is being reflected in risk asset price action.