Market wrap for Friday's US session: USD index weaker - Westpac

Amalysts at Westpac offered a market wrap for Friday's US session.

Key Quotes:

Global market sentiment: Disappointing US economic data (retail sales, PPI) pushed interest rates lower, as markets reduced already slim expectations the Fed could hike in September.

Interest rates: US 10yr treasury yields fell from 1.54% to 1.48% after the disappointing US data, but later retraced to 1.52%. The 2yr yield fell from 0.73% to 0.67%, retracing to 0.70%. Market pricing of the Fed funds rate fell, implying around a 15% chance of a rate hike in September, a 44% chance by December, and 100% by Nov 2017.

Currencies:  The US dollar index is slightly weaker. EUR jumped from 1.1150 to 1.1221 after the US data, but later slipped back to 1.1160. USD/JPY fell from 102.20 to 100.83, AUD popped from 0.7680 to 0.7725 post-US data, but more than fully retraced later to 0.7646. NZD did a round trip from 0.7190 to 0.7255 and back. AUD/NZD fell from 1.0685 to 1.0620.