Psychology for major markets Nov 27
Rising Fed easing hopes supporting riskier currencies and equities
EUR/USD – EUR/USD edging up helped by increased Fed easing expectations and some hopes of a Ukraine peace deal. But remains well confined to the 1.14-1.18 range.
USD/JPY – USD/JPY correcting from 9 month highs helped by more aggressive verbal intervention and a dip in equity markets, but JPY remains in a downtrend and is likely to remain under pressure if risk appetite remains strong.
EUR/GBP – EUR/GBP slipped lower after the UK Budget which proved less contractionary than expected and seemed to restore some confidence in the public finances. However, the relief may prove short lived with GBP risks still mainly to the downside.
AUD/USD – AUD/USD continues to rally after the dip onto the 0.64 handle with yield spreads very supportive and risk appetite recovering. Upside favoured but still vulnerable to any decline in risk sentiment.
Equities – S&P 500 slide halted by increased hopes of Fed easing with Ukraine peace hopes also seen as a potential positive, but upside now more limited near recent all time highs.