Psychology for major markets October 18th

EUR/USD – USD remains firm but with limited momentum despite firm CPI and a more cautious tone from Fed speakers. ECB meeting produced nothing new, but EUR bulls may be encouraged by the failure to break below 1.08.

USD/JPY – JPY under pressure with UST yields still firm but 150 tough to break with yield spreads still suggesting current levels are too high and verbal intervention starting to be heard calling the recent moves one-sided.

EUR/GBP – GBP softened after weak CPI suggested more significant BoE easing but has risen strongly after stronger retail sales data taking EUR/GBP below 0.83 to its lowest since April 2022. But GBP is expensive here and downside now looks much more limited

AUD/USD – Better bid after another strong Australian employment report but still significantly off the recent highs despite better China sentiment. Upside risks dominate.

Equities – S&P 500 may be toppy with US yields still firm despite solid growth data with valuations stretched.