Psychology for major markets Apr 10

EUR/USD – Still in the middle of the range coming into the US CPI data. Mild upside bias if data as expected, with positive risk sentiment favouring the EUR.

USD/JPY – USD/JPY upside remains restricted by intervention concerns but the decline from the 151.97 34 year high has been very modest. Yield spreads still suggest significant downside scope, but generally softer USD tone or more risk negative trading will likely be required to turn the trend lower.

EUR/GBP- EUR/GBP showed a more positive tone post-BoE MPC meeting, with the market seeing more chance of a rate cuts as early as May, but latest UK data is strong and suggests the 0.8550-0.86 range will be maintained near term, with pressure on the downside while risk sentiment remains strong.

AUD/USD – AUD came off the highs on heightened Middle East concerns but has bounced and now looks to have potential to extend above 0.66 unless strong US CPI derails the risk positive tone.

EUR/CHF – CHF fell sharply after the SNB cut rates, and has fallen further after soft March CPI. CHF becoming the favourite funding currency as rates fall, with JPY downside more limited by intervention concerns.

Equities – US underlying sentiment still positive and a worse growth/inflation trade-off looks necessary to trigger a bigger correction, with CPI data the prime focus.