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The U.S. dollar bobbed against most currencies in early Asian trade on Wednesday, as the market focused on what might happen next after the global shake-up set off by Britain's vote to leave the European Union.

The pound, euro, and the Australian dollar were little changed from their London closing levels. Asian currencies were marginally stronger against the greenback.

The U.S. dollar retreated Tuesday after its big run-up following last week's Brexit referendum. It remained under pressure as skepticism began to take root over the pre-Brexit consensus view that the U.S. Federal Reserve would raise interest rates at least once this year. The Fed last raised its key benchmark interest rate in December.

On Tuesday, the CME Federal Funds futures indicated traders were pricing in a 17% chance of a U.S. interest rate cut by September instead. By early Wednesday, traders were pricing in just a 7% chance of such a cut.

The market is looking to the Fed as a beacon through the Brexit fog. The possibility of a U.S. rate cut may be slim, but it is emerging as a theme among traders.

Global central banks appear to be testing their options to prevent a bigger fallout from the Brexit vote.

Japan's Finance Ministry has given the green light to the Bank of Japan to intervene in foreign exchange markets should the yen strengthen substantially more. On Tuesday, South Korea's government announced a $17 billion stimulus package to support the economy. Earlier this week, central banks in China, India, and Singapore were believed by market observers to have been in the market to support their currencies.

Jerome Powell, a U.S. Fed governor, said Tuesday that the Brexit vote has added new uncertainties to the global outlook. His were the first remarks from a Fed official since the U.K. referendum, but didn't reveal much about the timing or direction of the central bank's next move, as Mr. Powell said it was far too early to determine Brexit's effect on the U.S. economy.

With the change in market sentiment, the U.S.'s S&P 500 rallied 1.8% Tuesday, lifting Asian equity markets. The price of gold was a little higher, but well off its post-Brexit peak. The yields on safe-haven Japanese government bonds appear to be stabilizing after hitting record lows recently.

The risk-on theme may not last however, as much uncertainty still lingers over the negotiations for Britain's actual exit from the European Union.

The pound was trading at $1.3320, the yen was at ¥ 102.45 to the dollar, and China's yuan was at 6.6525.

Write to Ewen Chew at ewen.chew@wsj.com

(END) Dow Jones Newswires

June 28, 2016 23:55 ET (03:55 GMT)

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