Dollar Faces Asymmetric Risks as Fed Hike Odds Rise to 38%

The US Dollar is experiencing diverging themes versus Developed Market and Asia-ex Japan currencies, driven by expectations of Fed action.

DBS Group Research's Philip Wee notes that the futures market is pricing a 38% chance of a surprise rate hike at the upcoming FOMC meeting under Chairman Kevin Warsh.

This high probability has led to some USD bulls expecting a boost, but Wee cautions that if the Fed stays on hold and ends forward guidance, these expectations could be disappointed.