Psychology for major markets July 16th

EUR/USD – EUR/USD holding close to 1.09 with the USD still slightly on the back foot despite a brief rally after the Trump assassination attempt, but may struggle to extend gains ahead of the ECB meeting.

USD/JPY – USD/JPY consolidating near 158 after the big drop following US CPI, with speculation about BoJ involvement. Risks look balanced short term although previous episodes have seen JPY weakness resume after a sharp correction.

EUR/GBP – Mild negative bias continues, with some optimism about prospects for improved UK growth helped by the latest GDP data, and some mildly hawkish BoE comments. New 2 year lows seen below 0.84 under threat, but valuation and IMM positioning looking stretched.

AUD/USD – Tone remains mildly positive with RBA one of the more hawkish central banks, with scope for new highs for the year above 0.68 after US yield drop on weaker CPI.

EUR/CHF – Edging up from 0.97 but upside looks limited now with risk sentiment in the balance and short positioning extended

Equities – Valuations getting stretched in the US. Europe less expensive but still challenged by weak growth and some political concerns.