Asian equities could trade mixed as Wall Street has been volatile this week, especially after some hawkish bits from the FOMC Minutes called attention to the comment that “a few participants” favoured a 50bps hike in February”. The USD is back trading higher against major FX pairs amid recent hawkish Fed repricing and the Euro and JPY weakness due to the recent dovish tilt from European and Japanese Central Bankers. Fed terminal pricing has continued to push to between 5.35-5.36% for July, with near-term Fed meetings swaps, pricing a 30bps hike for March and a cumulative 55bps for May. Going ahead, traders will be watching and reacting to any US data point as the current Fed’s forward guidance is setting the policy path to be data-dependent.
Traders will also be watching the geopolitical space as any escalation from Russia could trigger some defensive moves across markets. Recent remarks from Russian President Putin could add to the mixed mood after the Asian markets open as he noted that Moscow will pay increased attention to strengthening the country’s nuclear forces and will begin mass deliveries of Zircon sea-launched hypersonic missiles.
