After earlier upside momentum, demand for risk receded throughout the US session with global growth concerns once again a key stumbling block. Comments from non-voting Fed Philadelphia President Charles Plosser provided a decidedly negative spin on the Fed's latest stimulus efforts noting "We are unlikely to see much benefit to growth or to employment from further asset purchases," while adding the risks associated "could prove quite costly to the economy." There were some bright spots throughout the session in terms of data releases with US consumer confidence outpacing expectation to rise to a 7-month high and a solid housing report with the Case-Shiller home-price index increasing for the third consecutive month, adding credence to the view the US housing market is in a recovery phase.
Clearly markets have well and truly baked in the chances of at least 10-Trillion Yen of additional monetary easing, however the BoJ has a history of playing with the minds of investors ahead of such decisions. This suggests the bank may decide to take advantage of the key inflection set in recent weeks and hit the market with a 20-Trillion Yen offensive
Meanwhile, the Euro continues to be dragged lower with a series of negative themes guiding the way. After trading to highs of 1.2972 earlier, the Euro retreated over the course of trade to current levels of $US1.29-figure. Disharmony between Germany and France over how soon a Banking Union could be implemented has provided Euro headwinds early this week, amid reluctance from Prime Minister Mariano Rajoy to formally request a bailout. It's clear Rajoy is facing an extremely difficult decision between easing the financial burden by requesting a bailout, and the effective loss of sovereignty given the strict conditions attached. For now it appears Mariano Rajoy is taking it all in his stride, but markets will be transfixed on possible outcomes, in-turn a key directive for the Euro. Greece also continues to bubble away in the background as investors wait in anticipation for a troika report which will ultimately decide if Greece will receive its next bailout installment. There's some speculation the report won't be released until after the U.S elections in early November to avoid placing Obama's re-election hopes in jeopardy in the event of a market meltdown.
The JPY led a safe-haven offensive overnight with the greenback close behind coinciding with a drop from key sentiment barometers such as U.S equities. A move to safe-haven units came at the expense of the Australian dollar after peaking at highs of 104.63. In the absence of local market moving data today, we anticipate regional equities will continue to provide direction for risk currency trends in the local session. At the time of writing the Australian dollar is buying 103.87 US cents. The DEWR Internet Skilled Vacancies is scheduled for release at 11am AEST.
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