Psychology for major markets November 1st
EUR rangy, JPY showing mild recovery but US events now taking centre stage
EUR/USD – EUR/USD steady in the 1.08-1.09 range awaiting the US employment report and next week’s US election. USD seen weakening on a Harris win, gaining on a Republican clean sweep.
USD/JPY – JPY recovered modestly helped by some mildly hawkish comments from Ueda following the BoJ meeting suggesting the BoJ tightening cycle remain on track. But volatility still likely to be driven by US events.
EUR/GBP – GBP significantly weaker after the UK Budget despite higher yields suggesting an underlying loss of confidence. Risks towards 0.85 if BoE cuts rates next week.
AUD/USD – Struggling against firm USD despite solid domestic fundamentals and more hawkish RBA after strong employment data. But risks on upside provided China news doesn’t deteriorate.
Equities – S&P 500 may be toppy despite solid growth data with US yields still firm and valuations stretched. Market currently seeing upside risks on a Republican clean sweep but likely impact of US election remains unclear.