USD, EUR, JPY flows: Steadier markets suggest scope for fiirmer USD short term

There’s very little on Monday’s calendar, and not much FX movement in Asia, but the USD is stating the European session a little firmer. US GDP and employment data will be the focus this week, but before then markets are likely to be relatively quiet. We regard US equity markets as being towards the top end of their range, currently defined by 4800-5800 on the S&P 500, so favour the safe havens over the week, as we see no real case for a break to the upside of the range. The US Q1 GDP data could well be negative, and while there has been some easing of US-China trade tensions, the existing tariff position will have severe effects in the coming months even if we see some reduction. We therefore see USD/JPY as toppy near 144, and EUR/JPY similarly as toppy near 164. However, for today there is unlikely to be a great deal of news, and in calmer conditions we may see some USD correction of recent losses against the EUR, with a target at 1.1250.