The Euro steadied through Asian trade today following Monday’s riotous start to the week that caused the EUR/USD to drop. The USD profited from Fed speakers maintaining their hawkish stance that saw stocks undermined.
An increase in China’s Covid-19 cases also weakened risk assets with fears that serious lockdowns may continue. The Federal Reserve Presidents of San Francisco and Cleveland, Mary Daly, and Loretta Mester, respectively, reaffirmed that rates would be increased, but perhaps at a slower pace.
Numerous Fed speakers used slightly more hawkish language last week, but the message seems that rates will increase, potentially less aggressively.
After several previous rate rises of 75 basis points, the market has a 50-basis point hike priced in for next month’s Federal Open Market Committee (FOMC) meeting.