Asian Markets Lower On Fed Talks, BoE Inflation Report Watched

Asian equities are broadly lower today following the -93 pts fall in DOW overnight. There were more official comments regarding Fed's tapering. Chicago Fed Evans noted "good improvement in the labor market" and he would not rule out September tapering. However, he sounded a bit uncertain as he'd still want to "see greater evidence that it's a sustainable improvement" in the labor market. Atlanta Fed Lockhart also said Fed could start dialing back the asset purchase as soon as in September but he's "quite prepared to delay or even reconsider" the timing if there is deterioration from this point. In the currency markets, dollar is mixed at the time of writing.

Yen is generally firm against other major currencies as BoJ starts its two day policy meeting. it's widely expected the central bank would maintain policy unchanged, including keeping the pledge to increase the monetary base at an annual pace of JPY 60T to JPY 70T. Prime minister Abe's advisor Hamada said that BOJ should be prepared to expand the easing program if the economy falters after the sales-tax hike in April. Some economists expressed concern that the tax hike would slow the economy and inflation momentum.

Sterling lost some momentum against dollar and euro ahead of the BoE inflation report today. An important focus is the the use of thresholds forward guidance, as requested by the government. There are talks that in addition to inflation targeting, BoE could link policies to nominal GDP. Employment is also something that might be considered by it should be noted unlike Fed, BoE doesn't have the mandate to maintain full employment.

On the data front, New Zealand unemployment rate rose more than expected to 6.4% in Q2 but employment rose slightly more than expected by 0.4% qoq. Australian home loans rose more than expected by 2.7% in June. Swiss will release CPI and foreign currency reserves in European session while Germany will release industrial production. Canadian building permits and Ivey PMI will be released in US session.