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Talking Points:

• US Dollar to rise if hawkish Fed-speak cements December rate hike bets

• Euro may decline as soft PMI surveys rekindle fears of Brexit contagion

• NZ Dollar falls on RBNZ view, Pound down as Article 50 trigger nears

The US Dollar outperformed in overnight trade, rising against all of its G10 FX counterparts in a move that appeared corrective following losses in the wake of the FOMC rate decision. The greenback fell as investors focused onthe flattening of the central bank’s projected rate hike path in the immediate aftermath of the policy announcement.

The benchmark unit may continue to build higher into the end of the trading week if scheduled comments from Philadelphia, Cleveland and Atlanta Fed Presidents Harker, Mester and Lockhart echo Chair Yellen’s hawkish tone. The central bank chief all but promised tightening in December at the press conference following this week’s meeting of the rate-setting committee (as expected).

The preliminary set of September’s Eurozone PMI surveys headlines the data docket in European hours. News-flow out of the currency bloc has increasingly deteriorated relative to expectations over the past month, opening the door for soft results. Such outcomes may rekindle worries about the cooling effect of uncertainty following the Brexit referendum, sending the Euro lower.

The New Zealand Dollar lagged the majors in Asian trade, falling alongside front-end bond yields to suggest the move marked follow-through on yesterday’s dovish RBNZ policy announcement. The British Pound also came under pressure after Foreign Secretary Johnson said the UK plans to activate Article 50 of the Treaty of Lisbon “by the early part of next year”, formally starting the Brexit process (although sources within the Prime Minister’s office suggested she hasn’t endorsed this timeline).

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