USD May Fall Further As Fed Rate Hike Bets Continue To Moderate Outlook

Talking Points:

  • US Dollar May Continue to Decline on Moderating Fed Rate Hike Outlook
  • Australian, New Zealand dollars Underperform as Markets Digest US Payrolls Data

The Australian and New Zealand Dollars narrowly underperformed in otherwise quiet overnight trade, falling as much as 0.4 and 0.5 percent against their US counterpart. The moves tracked a decline in the benchmark US 10-year Treasury bond yield, pointing to digestion following Friday’s disappointing US payrolls data as the catalyst behind price action.

Looking ahead, most European markets will closed for the Easter holiday, which seems likely to make for lackluster activity until Wall Street comes back online. On that front, the spotlight is likely to point to the ISM Non-Manufacturing Composite data release and scheduled commentary from New York Fed President Bill Dudley.

The ISM gauge is expected to show the pace of service-sector activity growth slowed to the weakest in three months in March. For his part, Mr Dudley tends to lean on the dovish side of the policy spectrum. If his commentary compounds soft data flow in fueling bets on a longer delay in the onset of the first post-QE Fed interest rate hike, the US Dollar may come under renewed selling pressure.

Asia Session European Session & Critical Levels

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