Psychology for major markets Oct 17
USD softer against safe havens on US bank concerns
EUR/USD – Moved above 1.17 helped by near term political stability in France and US bank problems, but looks likely to hold fairly steady in a 1.1550-1.18 range near term.
USD/JPY – JPY gaining ground on weaker risk tone triggered by US bank problems, but remains lower than it was pre-LDP election. Latest Ueda comments also mildly supportive, so JPY upside favoured, but politically driven volatility likely in the coming week.
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 and US bank problems, but key 0.64 support area likely to hold in the absence of more clearly risk negative news.
Equities – S&P dipped on US regional bank concerns, 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, with bank issues unlikely to be systemic.