Traders pare again their dovish bets on the Fed after the optimistic NFP report

Rate cuts by year-end

• Fed: 54 bps (95% probability of no change at the upcoming meeting)
• ECB: 26 bps (88% probability of no change at the upcoming meeting)
• BoE: 53 bps (80% probability of rate cut at the upcoming meeting)
• BoC: 30 bps (72% probability of no change at the upcoming meeting)
• RBA: 77 bps (95% probability of rate cut at the upcoming meeting)
• RBNZ: 31 bps (81% probability of no change at the upcoming meeting)
• SNB: 11 bps (83% probability of no change at the upcoming meeting)

Rate hikes by year-end

• BoJ: 11 bps (99% probability of no change at the upcoming meeting)

The
most notable change was of course on the Fed. The catalyst was the positive US NFP report yesterday which saw traders paring back their dovish bets from 67 bps of easing by year-end to 54 bps now.

There’s been also some change for the SNB and BoJ pricing. The former was influenced by higher than expected Swiss CPI data, while the latter by the lack of progress in the US-Japan trade negotiations (which are key for the BoJ).

This article was written by Giuseppe Dellamotta at www.forexlive.com.