Psychology for major markets October 29th
USD and GBP still firm, JPY weak but may be bottoming out
EUR/USD – USD remains firm helped by firm US yields, but EUR/USD holding support around 1.0750.
USD/JPY – JPY under pressure due to rising UST yields with JPY sentiment also undermined by political uncertainty after the Japanese election left the ruling coalition without a majority. But verbal intervention increasing and risks of a rate move at BoJ meeting this week is rising. As JPY weakens.
EUR/GBP – GBP holding firm against the EUR despite more dovish BoE stance. Focus on October 30 budget which could trigger GBP gains as GBP still contains some risk premium left over from the Truss budget in 2022.
AUD/USD – Struggling against firm USD despite solid domestic fundamentals and more hawkish RBA after strong employment data. But risks on upside provided China news doesn’t deteriorate.
Equities – S&P 500 may be toppy with US yields still firm despite solid growth data with valuations stretched and risks around the US election.