Psychology for major markets 14 Dec

EUR/USD – EUR/USD testing 1.09 after FOMC but near term picture will depend on the perception of the ECB statement as well as the Fed. Risk may now be on the downside. 
USD/JPY – USD/JPY tumbled lower on Ueda’s comments, but was already ripe for a decline after the yield spread moves seen in recent weeks. Still struggling to exceed the sharp dip below 142 even with the dovish FOMC tone but scope for longer term declines as focus shifts to next week’s BoJ meeting.
EUR/GBP – EUR/GBP firmer after weaker than expected UK GDP and labour market data. Scope for the move to extend further beyond 0.86 if yield spreads narrow further on the ECB and BoE meetings 
AUD/USD – Dropped back from 0.66 as the oil price slipped lower and the USD rose after US CPI, but testing early December highs after the FOMC. Still looks attractive versus the EUR if risk appetite holds up.

Equities - FOMC supportive though bond market reaction may be overdone. Retail sales should be watched for confirmation of the Fed view that the economy is losing momentum in Q4. We do not expect any shocks.