Sentiment boosted and dollar makes four-month highs - Westpac

Analysts at Westpac Banking offered a round up of global market sentiment and currency wrap-up.

Key Quotes:

"Sentiment was boosted by Japanese PM Abe’s plans for further economic reform and stimulus, following his landslide win on Sunday. The Nikkei 225 jumped 4.0% and the S&P500 is up 0.5% to an all-time high, the latter still absorbing Friday’s strong US jobs data.

Interest rates: US 10yr treasury yields rose from 1.37% to 1.43%, 2yr yields from 0.62% to 0.66%. Market pricing of the Fed funds rate increased, implying a 15% chance of a rate hike in September, a 30% chance by December, and an 80% by Dec 2017. The expectation of global economic improvement also hurt the US 3yr auction, the 2.7 bid-cover ratio the lowest since 2009.

Currencies:  The US dollar index rose to a four-month high. EUR ranged sideways between 1.1020 and 1.1075. GBP outperformed, rising from 1.2851 to 1.3018, helped by news of Theresa May’s succession the PM role this week. The yen underperformed in the wake of Abe’s indications of further sizeable stimulus, USD/JPY extending the afternoon’s rise to 102.88 – a 10-day high. Despite the positive sentiment, AUD was held back by US dollar strength, slipping from 0.7570 to 0.7522. NZD was the second worst performer overnight, falling from 0.7280 to 0.7216. AUD/NZD rose from 1.0400 to 1.0440."