Psychology for major markets Oct 16

EUR/USD – Steadying in the mid-1.16s as French politics calms a little. More gains possible if the government survives a vote of confidence today.

USD/JPY – USD/JPY remains significantly higher since the spike on the election of Takaichi as new LDP leader, although the make-up of the new government is uncertain. Finance minister Kato’s verbal protests at “one-sided” moves have had little impact, but future prospects could hinge on US equity market performance.

EUR/GBP – Signs of weakness in UK labour market data pushed EUR/GBP back above 0.87, but GBP has rallied since and the highs of the year above 0.8760 remain out of reach for now.

AUD/USD – Dipping to test the gently rising trend seen since April as risk sentiment dips on concerns around Trump’s China tariffs, but key 0.64 support area likely to hold in the absence of more clearly risk negative news.

Equities – S&P dipped on renewed Trump tariff threats but still close to all time highs despite valuation concerns expressed by IMF and others. Downside risks increasing but no immediately obvious trigger to turn the trend.