Psychology for major markets May 14th

EUR/USD – Edging up towards the high 1.07s helped by softer US data and some evidence of European recovery. Upside now favoured especially if recent evidence of European recovery gets further support.

USD/JPY – Downside risks persist on declining yield spread and threat of BoJ intervention, despite move back above 156. Move into the 140s possible if US yields hold at lower levels.

EUR/GBP- EUR/GBP holding close to 0.860. Stronger than expected average earnings data offset by comments from BoE chief economist Pill which were seen as dovish. Focus on CPI data next week with June rate decision still priced as in the balance.

AUD/USD – Moved above .66 supported by Chinese data and equities, but fell back from resistance at .6644/50 after RBA meeting. More US yield declines may be required for a break higher.

EUR/CHF – Retreated from the 0.9849 high and stronger Swiss CPI knocked it lower after a retest above 0.98. Stronger EUR/USD and positive Eurozone sentiment required to take it towards parity. Positioning data suggests market very short CHF.

Equities – Regaining momentum after FOMC and payrolls. Risk premia are still low and growth numbers solid, so a further decline in yields could see a retest of the highs.