In case you missed the headlines on Friday, you can check them out here. The dollar was the main mover and recovered well, but was there a significant change in terms of Fed pricing? Let's take a look.
The yellow line depicts the pricing on Thursday while the red line depicts the pricing in Fed funds futures at the moment.
At first glance, you can already see how traders have shifted the curve higher in favour of the Fed holding rates slightly higher. While the overall pricing still doesn't change the current view by markets that the Fed will stop tightening after May, the changes in the curve structure is what is playing a role in impacting dollar sentiment.
The current pricing suggests that market players are not as dovish now as they were on Thursday on the Fed outlook.
This could still change in the days ahead with Fed speakers set to get their last words in before the FOMC blackout period, starting 22 April.
If you think markets are wrong to price in rate cuts so aggressively and that the Fed will stick with its higher for longer narrative, there might be a further shift in pricing here. And that could benefit the dollar more than what we saw already towards the end of last week, as noted here.
