Talking Points:

- Fed funds now pricing in a 65% chance a Fed hike in December.

- EUR/USD, AUD/USD, and GBP/USD all posted bearish outside engulfing bars on Friday.

- August is typically a bad month for risk and a good month for the US Dollar - see the August forex seasonality report.

It's a quiet day thus far in FX markets, with the UK on bank holiday and with it generally being the last 'unofficial' week of summer (Memorial Day to Labor Day). The good news for traders is that the return of market participants should help revive volatility, which, but for Friday's dramatic (and important) price developments, was flagging at multi-year lows (pre-January 2015 SNB!).

Yet developments on Friday cleared have played into the US Dollar's favor, with the odds of a December 2016 rate hike having jumped from 44% on Thursday to 65% by the time the closing bells rang on Friday. With a significant economic calendar in store for the next few days for the US economy, there is a window of opportunity for markets to shift their expectations from a hawkish hold to perhaps an outright rate hike.