Psychology for major markets January 24th
USD softer as Trump rows back on China tariff threats and European PMI data improves
EUR/USD – Continuing its recovery helped by Trump seeming to row back on tariff threats and stronger than expected PMI data. Upside still favoured but vulnerable to Trump renewing tariff plans.
USD/JPY – Dipped on the BoJ rate hike but supported by risk positive response to Trump comments and stronger PMIs. Downside still favoured but progress likely to be slow as long as equities hold firm.
EUR/GBP – Still biased higher as risk weighted towards BoE easing more than expected and market remains concerned at UK fiscal position.
AUD/USD – Made new post-pandemic lows near 0.61 on general USD strength and risk aversion, but has bounced strongly and looks good long term value near current levels unless risk aversion increases significantly and/or tariffs threats to China are renewed
Equities – S&P 500 recovered as yields edged lower, but upside limited by high valuation and worries about trade wars.