The Japanese yen leads the charge
Markets are still digesting the Fed decision and Powell's press conference yesterday but the verdict is very much a less dovish-than-expected Fed in terms of a dollar reaction, but overall still rather dovish in terms of rate hike expectations for next year.
However, for risk it was a totally different narrative as it started with a "not so dovish" Fed before turning into what seems to be a "the Fed is making a mistake" narrative currently. The latter sentiment is what is weighing on equities as the worry here is that the central bank is not pausing the tightening cycle - or at least gave no solid indication that it would - and that would continue to pressure the economy to the downside and weigh on global growth.
The major moves in the currencies space so far has been risk-related with the aussie and kiwi taking the brunt of the beating. The kiwi also dropped on disappointing Q3 GDP data earlier in the day.
Meanwhile, the yen is leading gains as equities sentiment remains sour with Asian equities and US equity futures tumbling as we begin proceedings here. E-minis are currently down by 0.7% but we saw the Nikkei fell by 2.8% as the Topix index entered into a bear market following today's close.
European equities are expected to carry the red baton into the next session so expect the risk-off theme in currencies to prevail. As for the dollar itself, it is looking rather mixed as it gains against risk currencies but is slipping against the others as markets are still digesting what a dovish Fed would mean for rate hikes next year following the knee-jerk reaction higher in the dollar after a less-dovish-than-expected decision.
