Psychology for major markets Oct 13
USD dipped on renewed Trump tariff threats but has recovered most of the lost ground. EUR focus on French politics, JPY still undermined by Japanese politics.
EUR/USD – Pressure on the downside since the French PM resignation, with softer EZ data also maintaining downside pressure. Another French confidence vote this week could determine near term EUR sentiment.
USD/JPY – USD/JPY has moved sharply higher since the election of Takaichi as new LDP leader. It remains unclear whether BoJ policy will be affected, and there are also some doubts over whether Takaichi will become PM. Weaker equity markets on renewed Trump tariff threat should be JPY supportive.
EUR/GBP – Dipped on French PM resignation. Year’s highs at 0.8763 now look out of reach near term, but still potential for a break higher if expectations of easier BoE policy return.
AUD/USD – Still within mild uptrend since April despite firmer USD, with slightly less dovish RBA supportive, but softer within the range as USD generally firmer, and vulnerable if there is a significant downturn in risk sentiment.
Equities – S&P dipped on renewed Trump tariff threats but still close to all time highs despite valuation concerns expressed by IMF and others. Downside risks increasing but no immediately obvious trigger to turn the trend.