Market Wrap: US dollar index is unchanged on the day - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

Global market sentiment: FX and interest rate markets were fairly stable overnight. Oil and equities firmed slightly.  

Interest rates: US 10yr treasury yields remained stuck in a 2.14%-2.16%, while 2yr yields slipped from 1.35% to 1.33%. Fed fund futures continued to price the chance of a December rate hike around 40%.

Currencies: The US dollar index is unchanged on the day. Underperformer EUR slipped from 1.1178 to 1.1139. USD/JPY rose from 110.96 to 111.45. AUD slipped from 0.7560 to 0.7535. NZD firmed from 0.7250 to 0.7274. AUD/NZD fell from 1.0410 to 1.0372 – a five-month low.

Economic Wrap

US jobless claims for the latest week rose 241k (vs 240k expected), continuing the tight trend. The Kansas Fed manufacturing activity survey rose from 8 to 11 (vs 9 expected). FHFA house price index rose 0.7% in April (vs 0.5% expected).

Fed non-voter Bullard said balance sheet normalisation should start “sooner rather than later” but added that the projected rate hike path could be overly aggressive. The recent softening in inflation is a concern. Powell also spoke, but mainly on regulatory matters, saying there’s room to relax the Volcker rule.