Psychology for major markets Jan 14
USD still firm but gains have slowed on Fed independence talk. JPY remains weak despite intervention threat
EUR/USD – Still hovering in the mid-1.16s, with USD upside progress braked a little by the Fed independence concerns. US retail sales data and a potential Supreme Court decision on tariffs could generate volatility today.
USD/JPY – USD/JPY broke to new 18 month highs above 159 on concerns about a potential Japanese election being called in February. Risks of intervention rising but pressure remains on JPY downside.
EUR/GBP – EUR/GBP has broken below the 0.87 level but GBP upside still looks very limited given soft UK real sector data.
AUD/USD – AUD remains well supported by yield spreads and can continue to press higher but remains dependent on good equity sentiment.
Equities – S&P 500 made a new all time highs on January 12 and remains well supported by solid US data despite overextended valuations and heightened geopolitical risk.