Psychology for major markets January 13th

EUR/USD – Hitting new lows below 1.02 as the USD continues to gain ground post-employment report, and risk appetite weakens, but no yield spread support for current weakness, so downside to parity likely to be hard.

USD/JPY – Upside limited as we approach intervention territory near 160. Strong wage data indicate increased chance of BoJ January tightening providing some JPY support, and softer equities post-employment report helping JPY.

EUR/GBP – Testing above 0.84 as gilts sell off suggesting some foreign selling. Weak UK growth and fiscal position undermining confidence, and GBP is at high levels against the EUR, so scope for further declines if markets price in more aggressive BoE easing.

AUD/USD – Making new post-pandemic lows near 0.61 on general USD strength and risk aversion, but hard to justify extent of current weakness without much weaker equity markets.

Equities – S&P 500 slipping back as yields rise post-US employment report. Equities remain very highly valued and vulnerable to any further yield rises, but hard for yields to rise much further at this stage with just one Fed rate cut priced for 2025.