Dollar strengthened as comments from Fed officials added to speculation of the chance of rate hike in June. Fed fund futures are now pricing in 15% chance of June hike, comparing 4% chance a day ago. Dollar index is back at 94.75 at the time of writing and is heading back to last week's high at 94.84. The greenback is also notably higher against Euro and Swiss Franc. Meanwhile, US equities tumbled on rate talk with DJIA closed down -180.73 pts, or -1.02% at 17529.98. The index is pressing key near term support level at 17484.23 and a break there could trigger steeper selloff. Similar picture is seen in S&P 500 which close down -19.45 pts, or -0.94% at 2047.21. Asian markets are mixed though as Nikkei is supported by the mildly weaker Yen. Meanwhile, WTI crude oil extends recent rally to as high as 48.76 so far and gold continues to consolidate in range around 1280.
San Francisco Fed president John Williams reiterated that June FOMC meeting is "live" and "the data to my mind are lining up to make a good case for rate increases in the next few meetings, not just June, which means it's very live in terms of that." Williams also clarified that gradual policy accommodation removal means "two to three rate increases this year". Atlanta Fed president Dennis Lockhart insisted that he wouldn't take June hike "off the table". And he still assumed that there will be "two, possibly three" rate hike this year. And, "the markets are certainly more pessimistic than I am." Dallas Fed president Robert Kaplan said that "whether that's the June or July meeting I don't know, but we're making enough progress where I think it's appropriate for me to be advocating removing some level of accommodation." The FOMC minutes to be released later in the day will be scrutinized further for the odds of June hike.
Elsewhere, Japan GDP grew much more than expected by 0.4% qoq in Q1 versus consensus of 0.1% qoq. GDP deflator, however, rose 0.9% yoy and missed expectation of 1.0% yoy. New Zealand PPI inputs dropped -1.0% qoq in Q1 versus expectation of 0.3% qoq. PPI outputs dropped -0.2% qoq versus expectation of 0.4% qoq. Australia Westpac leading index rose 0.2% mom in April while wage cost index rose 0.4% qoq in Q1. UK job data and Eurozone CPI will be the focuses in European session. Canada will release international securities transactions and US will release FOMC minutes.