Psychology for major markets May 24th

EUR/USD – Dipping towards 1.08 after the stronger than expected US PMI, but limited scope for movement as long as European data remains solid.

USD/JPY – Downside risks persist on declining yield spread and threat of BoJ intervention near 157, but JPY still soft after strong US PMI data.

EUR/GBP - EUR/GBP dropped back to test 0.85 after the stronger than expected UK April CPI, with June rate cut now seen as very improbable. Softer UK PMI helped trigger a bounce but upside limited by relative policy picture.

AUD/USD – Moved above .66 supported by better China sentiment, and tested resistance at 0.67, but knocked back by weaker regional sentiment. More US yield declines may be required for a break higher.

EUR/CHF – New 1 year high reached at 0.9915, and further upside still possible if expectations of Eurozone growth continue to improve. PMIs will be a focus.

Equities – New highs in S&P 500 undermined by recovery in US yields but strong earnings picture still limits downside.