Yen Higher On Weak Asian Equities, Sterling And Aussie Soft

Sentiments towards US and Asian markets remains diverged. While S&P 500 made another record close at 1762.11 overnight, Nikkei suffers from selloff in initial trading. The Japanese index is down over -120 pts at the time of writing and risk aversion triggered some buying in the yen. Notable weakness is seen in Sterling with the GBP/USD dipping through 1.6115 minor support and the GBP/JPY breaching 156.86 minor support. And that suggests the pound would stay weak for a while today. Australian dollar was also weighed down mildly by comments from RBA governor Stevens. The dollar is mixed as Fed will start a two-day meeting today.

RBA governor Stevens said the levels of Australian dollar's exchange rate are "not supported by Australia's relative levels of costs and productivity". And he noted that the "terms of trade are likely to fall" from here. He expected it's "quite likely" the Aussie will be "materially lower" than it is today at some point in the future.

In UK, BoE chief economist Dale said that the central bank's forward guidance provided more stimulus to the economy. He noted, "if absent forward guidance, people thought the MPC would react as it did during the Great Moderation, and raise Bank Rate after three or four quarters of growth, then yes, it has provided more stimulus." But he's unsure what BoE should continue with forward guidance as the economy normalizes.

Canada Finance Minister Flaherty said the country will move decisively into surplus in the 2015/16 fiscal year, and "not a tiny surplus". He said there will be "not doubt" Canada will be in balance in 2015. The Parliamentary Budget Forecast yesterday that the 2015/16 surplus would be CAD 200m but Flaherty predicted much as CAD 800m surplus.

On the data front, Japan household spending rose 3.7% yoy in September, unemployment rate dropped to 4.0%, retail sales rose 3.1%. German Gfk consumer sentiment, UK mortgage approvals and M4 will be released in European session. US will release the PPI, retail sales, house price, business inventories and consumer confidence. Canada will release IPPI and RMPI.