Psychology for major markets 22 Jan
USD holding firm as S&P makes a new high
EUR/USD – Strong USD tone fading slightly but hard to see much USD weakness while geopolitical concerns rise and US equities outperform.
USD/JPY – USD/JPY coming off new highs for the year and looking stretched. Any weakening in risk sentiment would suggest scope for significant JPY gains on the crosses.
EUR/GBP – EUR/GBP slipped lower after higher CPI for December, but gains were briefly halted by weak retail sales data. Underlying sentiment GBP positive as UK inflation is perceived to be more persistent than elsewhere, but yield spreads suggest EUR/GBP risks are higher.
AUD/USD – Rallying after weak employment data on general USD correction, but employment data and weak China sentiment makes upside scope look limited.
USD/CHF – CHF looks toppish here as SNB turns more dovish and halts FX selling.
Equities – US market making new all time highs but may be vulnerable to any decline in easing expectations.