The water sits in it, but only where gravity holds it. There would be a very pronounced meniscus at the top. That is, if you looked closely the water would dip down really far at the edges before it meets the bucket.

It's not that hydrophobic substances can't touch water, it's that the force of surface tension will oppose it. Unless you're an ant, surface tension isn't that impressive vs. most other forces.

Edit: If you have an ant-sized bucket, the water may sit on top of it as a droplet rather than going in.