Market wrap: dollar outperforming all currencies - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: The US dollar rose overnight, as did some US interest rates, and the Dow Jones equity index made a fresh record high.

Interest rates: US 10yr treasury yields ranged between 2.30% and 2.33%, but is currently unchanged at 2.30%. There was more movement in short term rate: the 2yr yields rose from 1.53% to 1.56%, and Fed fund futures yields firmed, now pricing the chance of a December rate hike at 92%, suggesting the possible appointment of a more hawkish Fed Chair has been priced in. Bloomberg reported that Trump plans to an announcement before 3 November.

Currencies: The US dollar index is 0.2% higher on the day, the USD outperforming all major currencies. EUR fell from 1.1780 to 1.1736 before rebounding to 1.1775 late in NY. USD/JPY rose from 112.10 to 112.48 before retracing to 112.15. AUD fell from 0.7860 to 0.7818 before retracing to 0.7845. NZD fell to 0.7147 before retracing to 0.7173. AUD/NZD ranged sideways between 1.0920 and 1.0960, not too ruffled by the disappointing GDT dairy auction.

Economic Wrap

US industrial production rose 0.3% in Sep (as expected), partly depressed by Hurricane Irma. October is likely to be affected by Hurricane Nate and the California fires. Homebuilder sentiment (NAHB) rose from 64 to 68 (vs 64 expected), boosted by rebuild prospects post-hurricanes. FOMC member Harker said the labour market had little slack nationally but there were soft patches regionally.

The GDT dairy auction saw prices fall 1.0% overall, with WMP falling 0.5%. The latter was a disappointing result compared to futures pricing which had predicted a 3% rise. SMP had a larger 5.6% fall, and butter was down 2.5%."