Psychology for major markets 30 Jan

EUR/USD – EUR stabilising as Q4 GDP shows a flat reading so that the Eurozone just avoids an H2 recession. With an April rate cut fully priced in to the EUR curve, there is little scope for further EUR yield declines, so the focus shifts to the FOMC.

USD/JPY – USD/JPY coming off new highs for the year and looking all the more stretched as yields fall in the US on geopolitical tension. Focus on FOMC where unchanged US yields would suggest scope for further JPY gains.

EUR/GBP – Underlying sentiment GBP positive as UK inflation is perceived to be more persistent than elsewhere, and UK PMIs continue to outperform, but better than expected Q4 Eurozone GDP has allowed a bounce. 0.85 will likely prove good support.

AUD/USD – Better global equity performance helping the AUD to recover after recent weakness due to China concerns. Gains continue to depend on improving global and regional risk appetite.

USD/CHF – CHF benefiting from Middle East unrest, but a retest of the lows below 0.93 would likely require something that significantly undermined confidence and growth expectations.

Equities – US market remaining close to all time highs but may be vulnerable to any decline in easing expectations. FOMC therefore could prove negative