Market wrap: dollar recovers despite poor data - Westpac

Analysts at Westpac offered a market wrap.

Key Quotes:

"Global market sentiment: US interest rates fell on disappointing US durable goods data. The USD also responded negatively but more than recovered later on.

Interest rates: US 10yr treasury yields fell from 2.16% to 2.12%, while 2yr yields fell from 1.35% to 1.33%. Fed fund futures continued to price the chance of a December rate hike at around 45%.

Currencies: The US dollar index initially fell sharply in response to the weak durable goods orders data, but started recovering two hours later to end the day up 0.2%. EUR initially bounced from 1.1172 to 1.1220 before retracing to 1.1176. USD/JPY initially fell from 111.70 to 111.36 before rebounding to 111.95. The underperforming yen appears to have led the rebound. AUD jumped from 0.7568 to 0.7599 but later retraced to 0.7583. NZD similarly jumped from 0.7262 to 0.7311 before retracing to 0.7287. AUD/NZD consolidated between 1.0384 and 1.0425.

Economic Wrap

US durable goods orders were weaker than expected, falling 1.1% in May (-0.6% expected) and the prior month was revised down a touch. Core capital goods orders and core capital goods shipments were also both weaker than expected, both down 0.2% (+0.4% gain expected). Q1 GDP expectations will be trimmed on this."