USD Pressured, Fed Rate Hike Expectations Pared

The greenback is pressured in Asia as expectations for Fed rate hikes are pared. OIS prices ~23bps of tightening for next week’s meeting, after pricing ~43.5bp of tightening at one point last week. To recap early events in Asia, the Fed have created a new funding operation to stem the risk of a run on deposit taking institutions, while the Fed, US Treasury and FDIC noted in a joint statement that SVB depositors would be made whole.

• AUD is the strongest performer in the G-10 space at the margins. AUD/USD prints at $0.6660/65 ~1.3% firmer today. The next upside target for bulls is $0.6695, the low from 1 March.
• Kiwi is also firmer, benefiting from the improved risk appetite. NZD/USD prints at $0.6195/0.6200, the pair is ~1.1% firmer. Westpac also revised their RBNZ call for the next meeting down to 25bps.
• USD/JPY prints at ¥134.10/20, dealing a touch below the 50-Day EMA at ¥134.23. The pair has been supported on breaks below ¥134.
• Elsewhere in the G-10 space broad based USD weakness is evident. BBDXY is down ~0.8%, having broken its 20-day EMA in early dealing.
• Cross asset wise, US Equity futures are firmer. S&P500 E-minis are up ~1.7%. The US Treasury Curve has steepened.
• There is a thin data calendar in Europe today, the session will be dominated by the evolving SVB situation and continued re-pricing of Fed rate expectations.