Market wrap up, market pricing in a Fed hike? - Westpac

Analysts at Westpac offered a wrap up for the currency and interest rates.

Key Quotes:

"Interest rates: US 10yr treasury yields rose from 1.45% to 1.53%, 2yr yields from 0.65% to 0.69%. Market pricing of the Fed funds rate increased further, implying a 20% chance of a rate hike in September, a 40% chance by December, and 100% by Dec 2017. The 10yr auction, like yesterday’s 3yr, was weak, the 2.3 bid-cover ratio the lowest since March 2009. FOMC member (and recent dove) Bullard agreed with market pricing reflecting only one more hike over the next year.

Currencies:  The US dollar index was largely directionless. EUR’s initially rise from 1.1080 to 1.1126 gave way to a fall to 1.1063. USD/JPY rose from 103.00 to 104.94, the safe-haven yen underperforming. AUD rose from 0.7580 to 0.7658 – a 2 ½ month high. NZD rose from 0.7260 to 0.7325 – a one –year high. AUD/NZD ground slightly higher, from 1.0425 to 1.0470."