The dollar is the lead gainer across the board, holding at the highs for the day now as equities slide while bond yields are marching higher. The hotter-than-expected UK CPI data earlier is stoking inflation fears in broader markets again and that is benefiting the greenback as traders see a less dovish Fed outlook. Here’s the evolution of the Fed funds futures curve since Thursday last week:
While traders are still convinced that there will still be one more rate hike in May, the supposed three rate cuts priced in for year-end seen on Thursday has been reduced to two now. And we are even seeing the implied rate for November and December climb further this week by over 10 bps as of time of writing.
This is seeing USD/JPY move up to clip 135.00 at the moment, where there might be sellers trying to make a stand. However, a firm break above that will tee up a potential move towards the 200-day moving average next at 137.10 with the 8 March high at 137.91 also in the crosshairs.
Meanwhile, EUR/USD is also marked down 0.4% to 1.0927 in a drop back below its 200-hour moving average of 1.0953. That is putting sellers back in near-term control again.
Elsewhere, AUD/USD is down 0.4% to just below 0.6700 after failing to get above its 200-day moving average at 0.6740 while NZD/USD is down 0.5% to 0.6175 and nearing a test of its own 200-day moving average at 0.6160 at the moment.