Psychology for major markets May 19
No Geopolitical Progress Kept Yields High
EUR/USD – The Euro resume downward traction as government yields continue to rise. The rising yield triggered the haven bids for USD and looks likely in coming days if there is no progress in the geopolitical front.
USD/JPY – Rally is gathering steam with JGB yields rising to historical level in a far end. The lack of joint intervention between U.S. and Japan suggest any intervention will be quite restrained. 10yr and 30yr JGB have jumped by more than to 10% since the beginning of last week. We expect the BoJ to announce special purchase operation to keep volatility down soon as it is clearly disruption in their eyes. USD/JPY is also heading to 160 figure.
AUD/USD – The Aussie has failed to gain traction on any recovery and face support now turn resistance just below 0.7190. It is hard to see sustained gains without a change in broad sentiment.
Equities & Others – Broader risk atmosphere is poor as geopolitical tension sees no sign of easing soon. Market participants are left disappointed and is being reflected in risk asset price action.