Forex today: firm data signals supporting the case for a Fed hike in December

Forex today had the dollar rally 0.5%, the US yields higher and firm data signals supporting the case for a Fed hike in December.

The US 10yr yields were extending the Friday's close positive session to 2.37%, although took a hit overnight in London before consolidating around 2.32% with ISM manufacturing data supporting US markets. Equities were firmer on the day as well with the S&P 500 scoring fresh new highs despite the Las Vegas disaster, following on from the European bourses that were also firm despite the events in Spain/Catalonia. 

Meanwhile, the Fed fund futures yields continued to price the chance of a December rate hike at 77%. Oil fell, with WTI sliding to  $50/bbl, while OPEC production was rising 120k bpd during September due to the output recovering in Nigeria and Libya. The safe-haven precious metal, Gold, fell 0.4%. Copper was lower -0.20%.

Despite the Spanish political climate, the euro was relatively firm leading into the US session and underpinned by ECB's Praet advocating for very cautious tapering of QE/APP. EUR/USD ended -0.69%, supported at 1.1730 with a 1.1760 breach in London and Early NY.  GBP/USD ended down -0.92% as the UK Conservative Party conference gets underway this week while UK/EU deadlock weighs over the pound. USD/JPY, +0.21%, still unable to hold rallies above the 113 handle. EUR/JPY was weak despite a strong performance on Wall Street, -0.44%. The Antipodeans were lead lower by Kiwi -0.46% and the Aussie -0.13%, although both were making a rebound intrasession from the lows of  AUD 0.7796 (a six-week low) to 0.7840 and 0.7168 to 0.7218 for the bird. AUD/NZD ranged sideways between 1.0855 and 1.0880.

Risk events for Asia today

Analysts at Westpac offered their outlook for the event risks in Asia:

"Australia: The RBA policy decision is widely expected to be on hold. Markets are pricing in the likelihood of hikes in 2018 but Westpac remains of the view that rates are on hold. Aug dwelling approvals are expected by Westpac to rise 2.0%. Approvals are still down 13.9% from their peak due to a high-rise drop but stronger construction related housing finance suggest a further lift in non-high rise activity.

NZ: NZIER business confidence survey may be affected by pre-election uncertainty. We will be interested in the relative industry performance, as well as capacity constraints and pricing intentions which may give clues about the inflation outlook. The GDT dairy auction is priced by futures to result in a 6% rise in WMP."

Key notes from US session 

From Catalonia to Las Vegas, violence dominates the headlines but little market impact - ANZ

US ISM: recovery continues but strong numbers partly due to hurricanes - Danske Bank

Fed's Kaplan: We are going to have to look hard if we should raise rates in December

Fitch: Catalonia's secession from Spain is very unlikely

ECB's Praet: When normalisation of monetary policy comes it has to be prudent