Psychology for major markets Apr 4

EUR/USD – Extending gains above 1.08 on general risk positive trade with the USD weaker against all the riskier currencies, but hard to see the case for a break above 1.09.

USD/JPY – USD/JPY upside remains restricted by intervention concerns but the decline from the 151.97 34 year high seen last week has been very modest. Yield spreads still suggests significant downside scope, but generally softer USD tone 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.

AUD/USD – AUD benefitting from the generally risk positive market tone, trading above 0.66 for the first time since mid-March as carry trades continue to be the flavour of the month.

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 markets holding close to all time highs helped by strong corporate earnings and the more dovish than expected Fed. Sentiment remains positive despite extreme valuations.