Market wrap: Yellen sent US dollar up 0.3%, fresh three-week highs - Westpac
|Analysts at Westpac offered a market wrap.
Key Quotes:
"Global market sentiment:
Fed Chair Yellen’s testimony to the Senate opened the door to a March hike, causing US interest rates and the US dollar to jump in response. Equities were unharmed, the S&P500 making a fresh record high afterwards.
Interest rates:
US 10yr treasury yields jumped from 2.43% to 2.50% and 2yr yields jumped from 1.20% to 1.25% in response to Yellen’s testimony. Fed fund futures firmed 1bp-4bp, mostly at the far dates. The April contract is now trading at 0.71% (which is 8.5bp above the current midpoint FFR of 0.625%, which implies around a 35% chance of a rate hike in March).
Currencies:
The US dollar index is up 0.3% to a fresh three-week high. EUR fell from 1.0633 to 1.0561 – a one-month low. USD/JPY rose from 113.25 to 114.50, then yen underperforming all. AUD initially rose to the top of a two-week range at 0.7696 but then fell to 0.7618 post-Yellen. NZD fell from 0.7196 to 0.7135. AUD/NZD eked a slightly higher range of 1.0670-1.0702, the latter a high since 1 November."
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