OVERNIGHT

Is it June or July, the next interest rate hike?

That's the message investors heard Thursday from New York Federal Reserve Bank President William Dudley pushing the DJIA and the S&P 500 to two month lows before rallying a bit. It was the third straight day the Dow finished lower.

The WSJ reported: The New York Fed's William Dudley, a permanent voting member of the central bank's rate-setting committee, said there was a strong sense among Fed officials that markets were underestimating the probability of policy tightening and that the bank was on track for a rate hike in June or July. Dudley said he was "quite pleased" investors had apparently increased bets that a rate hike would come soon.

Dudley's comments came a day after minutes of the Fed's April meeting revealed that most policymakers felt a rate increase might be appropriate as early as June.

Markets are pricing in a 32 percent chance of a rate hike in June, according to the CME FedWatch tool, up from 15 percent on Tuesday. A majority now expect a rate hike at the July meeting.

The Nikkei was up slightly ahead of the G7 meetings trading at 16,739.28, set to possibly gain 1.6% for the week. No doubt the G7 meeting will capture much focus and just what is in store for the yen as currencies are expected to be at the top of the discussion list Friday. The dollar was at 110.08 against the yen, down from its recent three-week high of 110.39.

Meanwhile, other Asian markets were up, the Korean Kospi 0.07%; ASX 200 0.57%; the Hang Send 1.20% and the Shanghai Composite 0.10%. Oil was up with Brent crude approaching the 450 a barrel mark, trading at $49.25. Gold overnight was trading at 1253.90.

There are those who believe that the Fed's sudden change in sentiment about rates is part of a currency deal cut last month a the G20 meeting to help rescue other flagging economies. By hiking rates the U.S. would be what many see as its role in the global slowdown, the consumers of last resort.