Market wrap: US GDP disappoints and dollar tanks - Westpac

Analysts at Westpac offered a market wrap for US closing business.

Key Quotes:

"Global market sentiment: The US dollar and US interest rates fell sharply after a disappointingly low GDP result. Equities rallied, though, on expectations the Fed will delay tightening even further, the S&P500 making a fresh record high.

Interest rates: US 10yr treasury yields fell from 1.56% (post-BOJ) to 1.45%, with most of the fall occurring in the wake of the disappointing GDP data. The 2yr yield fell from 0.75% to 0.65%. Market pricing of the Fed funds rate fell, now implying a 20% chance of a rate hike in September, a 40% chance by December, and 100% not until Jul 2018.

FOMC moderates Kaplan and Williams spoke, the former saying policy normalisation will be challenging given economic growth rates, while the latter still thought 1-2 hikes were possible this year.

Currencies:  The US dollar index fell 1.3% to a one-month low. EUR rose from 1.1080 to 1.1197. USD/JPY fell from 104.00 to 101.97, after earlier shedding 1.5 yen following a disappointing BOJ. AUD rose from 0.7493 to 0.7610. NZD rose from 0.7080 to 0.7229. AUD/NZD fell from 1.0625 to 1.0521."