Psychology for major markets May 20
No Geopolitical Break/Through
EUR/USD – The Euro resume downward traction as government yields rose. The pace of weakness has slowed as yields also moderates. The lack of geopolitical tension is giving us a relatively quiet trading day.
USD/JPY – With JGB yields still at historical level in a far end, it clearly indicates market participant's confidence eroding in the Japanese fiscal picture. We expect the BoJ to announce special purchase operation to keep volatility down soon or indicate a slowing of bond purchase tapering. USD/JPY is ready to challenge the 160 figure.
AUD/USD – The Aussie has failed to gain traction on any recovery and face support now turn resistance just below 0.7190. It is hard to see sustained gains without a change in broad sentiment.
Equities & Others – Broader risk atmosphere sees some lie but there is no sign of geopolitical tension easing soon. Market participants are either consuming all the hopium they have or just have no way to go with their cash.