Psychology for major markets Apr 12

EUR/USD – New lows for the year as EUR yields drop back and a June ECB rate cut is priced at a near 80% chance, while the first Fed rate cut is not priced until September. But yields spreads don’t suggest much scope below 1.0650.

USD/JPY – Positive sentiment resumes after a break to new 34 year highs following the US CPI data and an absence of Japanese intervention. But still little support for gains in current yield spreads, and intervention still possible if JPY weakens on crosses.

EUR/GBP- Testing support at 0.8530 as the EUR weakens generally and UK GDP data shows a modest improvement. Next week’s UK labour market and CPI data will be the next focus with a break of 0.85 possible if data is strong.

AUD/USD – AUD suffering from higher US yields and weaker equities post-US CPI, but 0.6450-0.65 range remains strong support unless equity weakness extends.

EUR/CHF – Retreating from the 0.9849 high as EUR shows general weakness and market looks for ECB easing. Softer equity tone on the back of expectations of a less dovish Fed also suggest topside now more limited, but support below 0.97.

Equities – US underlying sentiment still positive despite some dips on rising yields, and weaker growth numbers look necessary to trigger a bigger correction.