Psychology for major markets Oct 14
USD remains firm helped by political uncertainty in France and Japan, with Trump's tariff threats to China undermine riskier currencies
EUR/USD – Pressure on the downside due to French political uncertainty and softer EZ data. Another French confidence vote this week could determine near term EUR sentiment.
USD/JPY – USD/JPY remains significantly higher since the spike on the election of Takaichi as new LDP leader. Finance minister Kato’s verbal protests at “one-sided” moves have had little impact, but weaker equity markets on renewed Trump tariff threat should be JPY supportive.
EUR/GBP – Signs of weakness in UK labour market data push EUR/GBP back above 0.87, but 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.