USD Pressured As Fed Rate Hike Bets Continue To Ease

Heading into today’s European trading session, markets are leaning risk-on. Asia-Pacific indices are positive across the board, measures of volatility are subdued, and safe-havens pressured.

Leading Asia-Pacific indices to the upside is the Nikkei 225 at +2.19%, followed by the Hang Seng at +2.04%, the Topix at +1.86% and the ASX 200 and CSI 300 at +1.45% and +0.57%.

In the FX complex, expectations for further easing of lockdown restrictions in China supported the risk tone and antipodeans. AUD is leading the majors to the upside, followed closely by NZD.

In contrast, it’s USD and JPY leading the majors to the downside, with the former the session laggard. Alongside the risk-on tone, another notable factor weighing on USD is the FOMC’s rate outlook, with reports suggesting market participants are scaling back their Fed rate hike bets.

Looking ahead, today’s economic calendar is light on tier one data. As such, expect the prevailing risk tone and ongoing themes surrounding the global economic outlook, monetary policy outlooks and China’s lockdown to remain the dominant influences for price action.