Forex today: eyes on Catalan President's speech to signal secession (it didn’t), euro supported

Forex today had all eyes on political developments yet again with the Spanish government considering Puigdemont's speech as nothing more than a declaration of independence.

EUR/USD was, initially, steady over Catalonia's Puigdemont speech while markets were awaiting details of a plan for independence. This was the first time he had spoken publically since the referendum that provoked a standoff with the Spanish government. 

He started by expressing his appreciation to the separatists and was giving a long history lesson on the province and the Catalan independence campaign.

He had been speaking for around 20 minutes until he finally explained that he intends to negotiate plans for a separation with the government but would be suspending the referendum result for the time being.

Subsequently, the euro popped higher, but not by much as the markets have not really been factoring in any negative ramifications of this and the euro was better bid more around the recent sentiment for a call to action from the ECB yet again in regards to their QE programme and the possibility of a reduction. EUR/USD was ranging between 1.1796/25 as the market digested the speech.

Elsewhere, risk sentiment remained elevated, with gold dropping back from the London highs of $1,294 spot to a NY low of $1,288.14. US equities jumped to fresh record highs while bond yields and the US dollar fell. The US dollar index is down 0.4% at the close of NY.  USD/JPY fell from 112.70 to 111.99. Interest rates: US 10yr treasury yields fell from 2.37% to 2.32% before steadying at 2.34%. Fed fund futures yields continued to price the chance of a December rate hike at 87%. 

Cable inched higher onto the 1.32 handle, trading between 1.3172 in London to 1.3225 the high in NY on a less volatile climate surrounding the Tories and PM's questionable leadership skills - The cross, on the other hand, was better bid above 0.8925, trading between 0.8925/8947. AUD preserved yesterday’s gains in a 0.7774-0.7797 range. NZD ranged sideways between 0.7057 and 0.7088. 

Key events ahead:

Analysts at Westpac offered a snapshot of the key risk events ahead:

Australia: Westpac-MI Consumer Sentiment was last at 97.9. Pessimists have continued to outweigh optimists with pressures on family finances offsetting a recent run of jobs growth.

Japan: Aug core machine orders are expected to rise 1.0%, consolidating on July’s 8.0% bounce.

US: FOMC meeting minutes are likely to maintain communication surrounding expectations of a December hike, with the post September meeting Fed speakers generally supportive of a further removal of stimulus this year. Other Fedspeak includes Kaplan in a Q&A on the economy, Evans in a moderated discussion on policy and Williams gives a Community Leaders Speech.

Key events from US session:

• Wall Street eases off record peaks, closes day modestly higher
• Markets whippy as the context of speech by the Catalonian regional president was digested - ANZ
• Gold still below its inflexion point and bearish, despite ongoing macrofunda' political risks
• Spanish govt considers Puigdemont's speech to be a declaration of independence - El Pais