Markey wrap: US dollar extends rally - Westpac
Analsts at Westpac offered a market wrap.
Key Quotes:
"Global market sentiment: The US dollar extended a two-week old rally, which weighed on AUD and NZD. Slightly weaker risk appetite (S&P500 -0.4%, CRB -0.9%) and disappointing Eurozone data may have contributed.
Interest rates: US 10yr treasury yields ranged sideways between 1.56% and 1.59%, while the 2yr yield slipped from 0.82% to 0.79%. Market pricing of the Fed funds rate was stable, implying around a 35% chance of a rate hike in September, a 75% chance by December, and 100% by April 2017. Fed VC Fischer spoke to Bloomberg TV, saying the economy is close to full employment, but had little market impact.
Currencies: The US dollar index is around 0.5% higher. EUR fell from 1.1175 to 1.1132 – a three-week low. Eurozone consumer sentiment fell, as did German inflation, raising speculation the ECB may ease again. USD/JPY rose from 102.20 to 103.14 – a one-month high, the yen the worst performer on the day. AUD responded to the stronger USD by falling from 0.7570 to 0.7501 – a one-month low. NZD also fell, from 0.7250 to 0.7205 – a two-week low. AUD/NZD fell from 1.0450 to 1.0398."