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Odds of Sept rate hike fall sharply again

Short-term U.S. interest rates in the over-the-counter market fell on Friday, implying traders further scaled back bets the Federal Reserve would end its near zero interest rate policy in September.

Interest rates on overnight indexed swaps suggested traders see a 27 percent chance of a rate hike next month, down from 32 percent on Thursday and off from 48 percent a week earlier, according to data from Tullett Prebon.

Read MoreSpeculation is getting crazy

Expectations on a September rate increase have declined on perceived dovish minutes from the Fed's July policy meeting, which was released on Wednesday, and persistent jitters about the effect of slowing growth in China on the global economy.