Psychology for major markets Feb 9
JPY weak, AUD firm as strong equities and low vol encourage carry traders
EUR/USD – EUR stabilising in the 1.07-1.08 range, although risks remain on the downside as European data continues to underperform the US.
USD/JPY – USD/JPY breaking above 149 as US equities hit new highs and low FX vol encourages carry traders. But short JPY positions looks risky given low JPY level and potential BoJ tightening in the spring, while easing is likely elsewhere.
EUR/GBP – Underlying sentiment GBP positive as UK inflation is perceived to be more persistent than elsewhere, and UK PMIs continue to outperform, but positioning may be becoming a little extended.
AUD/USD – AUD finding some support on the crosses from better equity performance while a more hawkish RBA has also helped halt losses.
USD/CHF – CHF falling back a little as equity markets rise with SNB no longer providing support.
Equities – US markets hitting new all time highs but may be vulnerable to any further decline in easing expectations.