Commodity currencies AUD and NZD are feeling the pressure from rising expectations for a more hawkish Fed after the release of the US NFP report in the previous session. At the time of writing, AUD/USD is trading at around $0.708.

On Friday, a better than forecast nonfarm payrolls report for January caused the currency pair to lose 0.9% of its value and slide back to the $0.70 level. Meanwhile, NZD/USD weakened by 0.7% in the previous session, sliding closer to $0.66.

The bearish moves in the risk sensitive currencies came as traders bought into the US dollar on the back of anticipation for faster rate hikes by the Fed. The strong employment report caused US Treasury yields to soar, further supporting the greenback and exerting pressure on other leading currencies.

AUD/USD is especially being weighed down as the RBA has failed to offer much hope for a rate hike anytime soon, playing down these sentiments despite soaring inflation across Australia. However, with the Fed expected to turn more aggressive, the Aussie central bank may have no choice but to follow suit to stabilize the AUD from further weakness. Traders now expect the RBA to implement its first rate hike to 0.25% by as soon as June, and then take it up to 1.25% by the end of the year.

On the other hand, January’s NFP report from the US has reinforced hopes for a 0.50% rate hike next month. In addition, investors expect the Fed to bring rates up to 1.50% by the end of 2022.