Psychology for major markets January 15th

EUR/USD – Bouncing modestly helped by slightly lower US yields and firmer equities. Sentiment remains weak but yield spreads point higher.

USD/JPY – Softening helped by some more hawkish comments from BoJ governor Ueda and comments from former MoF minister Yamasaki suggesting there may be efforts to push the JPY higher when Trump comes to office.

EUR/GBP – Holding above 0.84 but falling back slightly on softer UK inflation, which is now seen as positive news for GBP, by reducing concerns about the health of the UK economy. But risks remain on the upside.

AUD/USD – Made new post-pandemic lows near 0.61 on general USD strength and risk aversion, but has bounced strongly and looks good long term value near current levels unless risk aversion increases significantly

Equities – S&P 500 has slipped back as yields rose 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.