Psychology for major markets Dec 18

EUR/USD – EUR/USD edged up after FOMC with US yields slightly lower. Positive tone but weaker EZ PMIs suggest limited scope for gains, so 1.18 top end of the range should hold near term.

USD/JPY – USD/JPY slipped back on general post-FOMC USD weakness, but JPY remains weak on the crosses, still making new all time lows against the EUR. BoJ rate hike expected on Friday, but unlikely to be enough to generate major JPY gains.

EUR/GBP – EUR/GBP firmer after weaker UK CPI. Scope for more gains if BoE comments around the expected rate cut indicate greater scope for easing.

AUD/USD – AUD/USD slipped back a little after weaker than expected Australian employment data but remains well supported by yield spreads and has prospects of testing the year’s highs above 0.67.

Equities – S&P 500 made new all time highs on December 12 but has slipped back since on AI uncertainty. Valuations still look very generous.