- Shares in Asia and European futures surged on Friday as traders increased their wagers that the Federal Reserve will decrease interest rates this year.
- The MSCI Asia Pacific share index rose for the third straight session after a surprising drop in US producer prices on Friday strengthened expectations that the Fed may decrease borrowing costs in the coming months. Contracts for European equities rose 0.4%, while those for the United States remained stable.
- The dollar and Treasury futures were little moved in Asia, with overall trade volumes being low due to Monday's national holiday in the United States.
- According to data, swaps traders believe the Fed's easing cycle will begin in March, up from roughly 62% last week.
- "This week's US economic data will either reduce or validate money market expectations of aggressive Fed funds rate cuts," Win Thin, global head of currency strategy at Brown Brothers, wrote in a note. "Given extreme market positioning, we believe the dollar's downside is limited with the risks skewed to the upside," the analyst added.