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However, market pricing for a June/July rate hike was trimmed slightly and the DXY dollar index pulled back from its intra-session highs. US regional manufacturing surveys have not been toeing the upbeat line proffered by the Fed with the Empire and Philly Fed surveys both showing contractions in May. Despite these intimations by the Fed, the market continues to remain skeptical over the likelihood of rate hike in June or July. Nonetheless, rate hike concerns have continued to weigh on the equity markets and risk off sentiment looks set to dominate the open in Asia.
The DXY Dollar index has risen 2.9% since the start of May. Overnight, the DXY rallied up to $95.6, but has since pulled back to $95.3. It may be ready for a bit of a pause at these levels while the market waits to see if US data will hold up enough for the Fed.