Market wrap: US dollar surged - Westpac

Analysts at Westpac offered a market wrap with a surge in the greenback.

Key Quotes:

"Global market sentiment: The US dollar surged overnight, responding partly to a fall in equities (S&P500 -1.4%) and oil (-1.3%), which in turn hurt NZD/USD and AUD/USD. A major Russian oil producer said it would not cut production.

Interest rates: US 10yr treasury yields rose to 1.78% (were 1.72% pre-holiday) although did slip back during the NY session to 1.74%. Company Institute data showed money was flowing from money market-based funds into government bond funds at an unprecedented rate, catalysed by new regulations which are effective from this Friday. Fed moderate Kashkari repeated his preference for patience in raising rates.

Currencies:  The US dollar index surged to a seven-month high overnight. As a safe-haven instrument, it has benefitted from concerns regarding the US elections and Brexit, as well as the looming Fed hike. EUR extended its fall from 1.1140 to 1.1049 – a two-month low. GBP fell further, to 1.2090 – not far off Friday’s “flash-crash” low. USD/JPY slipped from 104.00 to 103.18, the safe-haven yen outperforming. AUD ground slightly lower, from 0.7570 to 0.7534. NZD similarly fell to 0.7047 – a 2 ½ month low."