Forex today: risk off, yet high beta's on the bid - go figure?

Forex today was again dominated by risk-off play and this took the dollar and US rates lower. 

N. Korea continues to concern the global arena while President Trump ramps up the ante and supplies weapons to Japan and South Korea. At the same time, storms in the US are destructive and there are now too many risks associated with the markets that the Fed might well use to excuse themselves from taking any further action in respect of not only their interest rates but indeed to the balance sheet which is also a weight on the greenback causing a spike in the commodity and higher beta currencies. Fed chat was also dovish, albeit to be expected when Kashkari crosses the worse, this time being far more direct and suggesting that rate hikes have done damage to the economy.  We also had another dove speaking and Fed’s Brainard, concerned over low inflation, urges caution on rates.

The DXY, as a result, was -0.40% to 92.26, up from the low of 92.18 earlier in the session. The US benchmark 10-year yields were down -4.42%, plummeting within a range of between 2.0630 - 2.1482%. Also, collapsing benchmark UST 2yr/10yr spread is signaling that there will be no taper.

AUD/USD (+0,62%) rallied through the 0.80 handle again, chasing the bid on the move in commodities, oil spiking on Hurricane Irma headed towards the Gulf of Mexico, gold testing YTD highs and China's latest data turning more positive. Copper underpinned the bullish tone today as well. CAD was +0.23%, NZD +1.06% (lifted by positive GDT price index GDT +0.3%). EUR was 0.18% and GBP +0.80%. Yen +0.82% on safe haven flows and funding currency buy-backs. All in all, a complex session and environment with investors mixed on the outlook and in appetite judging by the divergence of flows.

Key events to come from Asian session:

AUD: Gross Domestic Product (QoQ) / (Y/Y) (Q2)

Key notes from the US session:

• U.S. to continue deployment of defense assets to Korea - Yonhap
• Markets no longer view another hike in 2017 as likely - BBH
• US Factory Orders: Soft reading but steady improvement in business spending - Wells Fargo
• Florida and Puerto Rico declared state of emergency due to Hurricane Irma
• Fed's Kashkari: Fed's rate hikes may be causing ‘real harm’ to US economy