Psychology for major markets Sep 30
USD staying soft on government shutdown concerns.
EUR/USD – USD slipping back a little helped by concerns about possible government shutdown. Neutral tone likely ahead of employment report, although this will not be released if government shuts.
USD/JPY – USD/JPY slipping lower helped by a decline in US yields and concerns about the government shutdown. Risks are skewed to the downside but short term recovery likely if Congress passes a funding bill to keep the government open.
EUR/GBP – Holding below the year’s high of 0.8763 but upside risks still dominate, especially if risk sentiment turns negative.
AUD/USD – Maintaining mild uptrend since April, with slightly less dovish RBA supportive, but vulnerable if there is a significant downturn in risk sentiment.
Equities – S&P remains close to all time highs but extended valuations mean risks are on the downside, with a government shutdown potentially a negative.