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Market wrap: US dollar weakened - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The US dollar extended a week-old decline, lifting most G10 pairs. Oil also slipped further, capping equity markets.

Interest rates: The US yield curve steepened a few bps via short end yields falling and long end yields rising, the latter perhaps influenced by a hefty auction week as well rising JGB yields. 10yr treasury yields rose from 1.51% to 1.57%, while the 2yr fell from 0.70% to 0.67%. Market pricing of the Fed funds rate was little changed, implying around a 20% chance of a rate hike in September, a 40% chance by December, and 100% not until Jun 2018. FOMC member Kaplan sounded cautious, highlighting potential global risks.

Currencies:  The US dollar index fell to a fresh six-week low. EUR rose from 1.1175 to 1.1234 – a six-week high. USD/JPY fell from 102.45 to 100.68 - a one-month low. AUD quickly recovered from its RBA-cut induced fall to 0.7491, rising to 0.7638 – a two-week high. NZD rose from 0.7200 to 0.7257 – a two-week high. The strong GDT dairy auction result – WMP up 10% - elicited little NZD response but futures has signalled the bounce days in advance. AUD/NZD recovered from its RBA-reaction low of 1.0450 to 1.0540."

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