Asia Pacific Market Open – Fed, US Dollar, S&P 500, Nikkei 225, Japanese Yen
- Deteriorating 2019 Fed rate hike bets sent the US Dollar, S&P 500[1] higher on Friday
- Asia Pacific benchmark stock indexes may follow Wall Street higher as Yen weakens
- Despite weakness in the greenback, the dominant uptrend still remains intact for now
Check out our 4Q forecast for the US Dollar in the DailyFX Trading Guides page[2]
The US Dollar traded lower on Friday, bringing its weekly performance to the worst it has seen since the middle of September. Fed Vice Chairman Richard Clarida amplified the selloff as he noted that the central bank ‘has to factor in the global outlook’ going forward. His commentary echoed on notes from Fed Chair Jerome Powell who earlier this week said that slower growth abroad is a headwind.
For evidence of that, look no further than China where in the third quarter, its economy grew at its slowest since 2009. Weakness in the greenback was accompanied with a deterioration in the implied Fed rate outlook priced in by futures[3]. Now, the markets are envisioning less than two hikes next year which is below the central bank’s outlook of perhaps three in 2019[4].
Not surprisingly, Wall Street cheered prospects of slowing rate hikes as the S&P 500 and Dow Jones[5] finished the day about 0.22% and 0.49% higher. Meanwhile US government bond yields declined. The Euro[6], Australian and New Zealand Dollars were quick to take advantage of weakness in the greenback. The latter were particularly boosted as
