Psychology for major markets June 3rd

EUR/USD – 1.08-1.09 range trading seen ahead of ECB meeting this week. Focus will be on prospects for future arte cuts with June cut fully priced.

USD/JPY – Downside risks persist on declining yield spread and threat of BoJ intervention near 158, but small gains possible in low vol environment as carry trading continues.

EUR/GBP – Holding just above 0.85 with optimism on the European economy supporting the EUR. June UK rate cut prospects now priced out so limited upside for GBP unless ECB meeting increases EUR rate cuts expectations.

AUD/USD – Better commodity/China sentiment providing some support but US yield declines likely to be required for a break above 0.67.

EUR/CHF – Shying away from a test of parity and dipping lower on strong Swiss GDP data, but still has upside potential if confidence in European recovery builds.

Equities – Still well supported by improving European growth prospects and with little further scope for higher yields downside looks limited in the absence of shocks.