Psychology for major markets Mar 7
USD generally weaker with JPY and AUD leading
EUR/USD – EUR/USD testing the top of the 1.08 -1.09 range, reflecting a generally softer USD tone following the Powell testimony on Wednesday. Scope for some further gains if the ECB retains a hawkish tone, effectively ruling out an April cut.
USD/JPY – USD/JPY weakening significantly as evidence of stronger Japanese wage settlements mounts and markets start to speculate on the possibility of an early BoJ tightening, with yield spreads still pointing lower..
EUR/GBP- GBP still stuck close to 0.8550, but showing a softer tone in the run up to the ECB meeting. Longer term mild upside bias still seen given greater risks of a downward repricing of UK rate outlook.
AUD/USD – AUD breaking above 0.66 for the first time in more than a month reflecting a generally softer USD tone and resilient equity markets.
EUR/CHF – CHF risks still on the downside with EUR/CHF reaching its highest since early December. More upside still possible as SNB remain one of the more dovish central banks.
Equities – US markets remaining close to all time highs helped by strong corporate earnings, but may be vulnerable to any further decline in easing expectations. Focus on Powell testimony and employment report.