Psychology for major markets Apr 24

EUR/USD – Sticking in the high-1.06s and holding close to the correlation with short-term yield spreads. More positive EUR tone after relatively weak US PMIs, but more evidence of US weakness needed to spur further gains.

USD/JPY – Still testing the highs on firm US yields and positive risk sentiment. BoJ action might be seen to cap gains in the short run, but a turn lower in US yields looks necessary to turn the trend.

EUR/GBP- Stabilising near 0.86 after stronger PMI and mildly hawkish comments from Pill offset last week’s dovish comments from MPC’s Ramsden.

AUD/USD – AUD boosted by stronger than expected Q1 CPI with RBA now not priced to cut rates this year, but softer US yields still required if AUD is to test up to 0.66.

EUR/CHF – Retreated from the 0.9849 high but stronger than expected EUR PMIs have restored a mildly positive tone.

Equities – Higher US yields have sent indices lower, but risk premia are still low and growth numbers solid, so a renewed decline in yields could see a retest of the highs.