Psychology for major markets Oct 29
USD generally steady, AUD trending higher, EUR/GBP makes new high for the year
EUR/USD – In the centre of the 1.1540-1.1780 range that has held this month but still broadly neutral awaiting this week’s central bank meetings.
USD/JPY – JPY a little firmer after some verbal intervention from cabinet secretary Kihara and some comments from US treasury secretary Bessent encouraging a tighter BoJ monetary policy, but remains at very weak levels awaiting central banks decisions this week.
EUR/GBP – EUR/GBP reached new highs for the year at 0.8814 as markets worry about reports of a reduction in OBR productivity projections which will further increase UK fiscal problems. Also some increase in rate cut expectations at the November 6 BoE meeting.
AUD/USD – AUD stronger on expectations of a US/China trade deal and higher than expected Q3 CPI. Focus back on the top end of the 0.6350-0.6700 range that has held since April.
Equities – S&P 500 made new all time highs on hopes of a US/China trade deal this week. Valuations remain very high, and quarterly earnings from most major tech companies due this week could have an impact.