Psychology for major markets Sep 17
USD soft, EUR firm as Fed easing expectations maintain USD weakness. FOMC awaited
EUR/USD – EUR/USD steady near the highs of the year above 1.18. FOMC meeting awaited, with a focus on the new “dots” and projections with a 25bp rate cut fully expected.
USD/JPY – USD/JPY testing the low end of the range seen since July at 146 ahead of the FOMC. Yield spreads continue to suggest further downside risks.
EUR/GBP – Still stuck in a 0.86-0.87 range, but testing the top end on EUR strength. Little chance of an easier BoE stance near term, so any break likely to be due to global factors.
AUD/USD – Trading at the highs of the year above 0.6650 on improving yield spreads and strong global equities, with further scope to the upside if risk sentiment remains positive.
Equities – S&P continues to hit new all time highs on the back of lower US yields, but downside scope for yields now very limited and valuation is very extended.