Only a 54% current chance of July hike - Scotiabank

Analysts at Scotiabank explained that the USD itself was mixed, which was a little surprising considering the apparent endorsement for higher rates given by Fed Chair Yellen on Friday.

Déjà Vu: Will the Fed actually hike?

Key Quotes:

"In a friendly and rather informal environment, avoiding the monetary policy topic all together would not have surprised."

"But given the opportunity to comment on the rate outlook specifically, Ms. Yellen suggested that higher rates would be appropriate in the “coming months”. Speaking in Asia, Fed Governor Bullard said that the markets appeared well-prepared for a summer rate hike, helping maintain the tighter policy drumbeat."

"Latest pricing suggests a 54% probability of a Fed rate hike priced in for July so markets perhaps have a little more work to do yet. We expect the repricing of the short-end of the US yield curve to support the USD over the balance of the year."

"Developed market bond yields are 1- 3bps higher at the 10-year sector of the curve on the day in response to Fed risks."