Yen Aims to Extend Gains as Risk Aversion Continues to Sweep Markets

Talking Points:

Euro Declines, Japanese Yen Gains Amid Risk Aversion in Overnight Trade
S&P 500 Futures Hint Risk-Off Trade to Continue in European, US Sessions
Final Eurozone CPI Data, Draghi Commentary to Inform ECB Policy Bets

The anti-risk Japanese Yen traded higher as risk aversion gripped financial markets at the start of the trading week, adding as much as 0.6 percent on average against its top counterparts. The MSCI Asia Pacific regional benchmark stock index fell percent. The Euro faced broad-based selling pressure, falling as much as 0.7 percent against the majors.

More of the same looks likely ahead. S&P 500 futures are pointing firmly lower in late Asian hours, hinting that sentiment will remain under pressure in on-coming trade. That bodes well for the Yen and may put risk-geared currencies like the Australian Dollar under pressure.

The final set of October’s Eurozone CPI figures headlines the economic data docket. The core year-on-year inflation rate is expected to register at 1 percent, confirming flash estimates. ECB President Mario Draghi is likewise scheduled to speak.

Traders will size up both outcomes to inform speculation about the likelihood of stimulus expansion at next month’s policy meeting and the strategy for its delivery. The ECB may opt to expand the scope of QE-eligible instruments, an outright increase in the size of monthly asset purchases, a cut in the deposit rate, or some combination thereof.

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