Psychology for major markets October 3rd

EUR/USD – USD benefiting from safe haven flows as Middle East tension rises. But USD gains have been modest and further EUR/USD declines will likely require a bigger oil price move.

USD/JPY – USD/JPY continues to move higher as Ueda and Ishiba comments sound dovish, while more risk positive regional tone is also JPY negative. But further upside likely depends on the US employment data showing strength.

EUR/GBP – GBP correcting sharply lower on dovish comments from BoE governor Bailey. Still scope for EUR/GBP to advance to 0.85 as BoE easing profile moves towards the ECB and Fed.

AUD/USD – Coming off the highs as risk sentiment weakens on Middle East concerns, but likely to hold above early year highs unless China sentiment deteriorates again.

Equities – S&P 500 slipping back on Middle East related risk aversion and could see a bigger correction as valuations are stretched and election related uncertainty remains.