The Japanese Yen underperformed in Asia Pacific trade, falling against all of its major counterparts as a recovery in risk appetite sent regional bourses higher and undermined support for the standby anti-risk currency. The MSCI Asia Pacific equities benchmark added nearly a full percentage point.

Selling pressure may have been compounded by a brighter view of relative Fed policy prospects. The US Dollar crumbled Monday as improving sentiment revived speculation that a broadening global recovery may yet push top central banks to follow the FOMC's hawkish lead, eroding the greenback's yield advantage.

A more sober interpretation may be emerging. Indeed, if last week's turmoil was an overreaction, the Fed may find greater room to indulge its seemingly growing appetite for faster tightening. Tellingly, similarly yield-sensitive currencies the Australian and New Zealand Dollars likewise traded broadly lower.

Traders would be wise to proceed with caution without presuming follow-through however. News-flow from Washington DC remains a potent source of headline risk and might rapidly alter the prevailing mood, especially amid a lull in top-tier scheduled developments.

ASIA PACIFIC TRADING SESSION

EUROPEAN TRADING SESSION