Fed's Dudley steals the show
The Fed's Dudley wasn't even on the calendar today but he stopped by CNN International, dropped a hawkish hint and sent the market in a tizzy.
Fed funds probabilities of a March 15 hike have surged to 72% from 50% earlier today. US 2-year yields have jumped to 1.27% from 1.20% as well.
USD/JPY has also jumped to 112.75 from 112.20 in response. To me, this has the makings of a very tradable double bottom in anticipation of a return to 115 or above. With support just 100 pips below, it's very compelling on a risk-reward basis.
I think the market would be buying up dollars now if it wasn't worried about Trump but the US President is most-likely to be a cheerleader for the economy in a no-details speech and that will be enough to kick off the upside.
