USD/JPY caught between Fed and stocks
On the one hand, Fed hikes are great news for the dollar.
On the other, the stock market doesn't like it and a bit of risk aversion has run through the market. It's a surprise to see bonds rallying so hard and indicates that some fear is creeping into the market.
The S&P 500 is down more than 1%, which qualifies as a steep loss these days.
What next?
Once the dust settles, so long as US economic data begins to trend higher, the US dollar will follow it. But the shape of the move will be a drift higher followed by sporadic rounds of risk aversion like we're seeing at the moment.
