Talking Points:

• Yen drops after Kuroda says BOJ will not hesitate to expand stimulus
• Dovish comments from ECB’s Coeure may put Euro under pressure
• US Dollar may correct lower as PCE data cools Fed rate speculation

The Yen underperformed in otherwise quiet overnight trade as Japan’s benchmark Nikkei 225 stock index advanced, sapping demand for the anti-risk currency. The move may reflect optimism after BOJ Governor Haruhiko Kuroda said the central bank will not hesitate to expand stimulus if needed at the Jackson Hole Symposium over the weekend. Kuroda added that officials are “still far away” from the lower bound limiting scope for easing.

It remains to be seen if the Euro falls prey to a similar dynamic when regional markets come online. ECB Governing Council member Benoit Coeure said policymakers may need to “dive deeper” to fulfill their price stability mandate, implying that greater accommodation may be on the horizon. A meaningful response did not materialize in Asia.

Looking ahead, speculation about the direction of Federal Reserve monetary policy return to the spotlight as the US central bank’s favored PCE inflation figures cross the wires. The core year-in-year rate is expected to edge lower to 1.5 percent in July from 1.6 percent in the prior month. While the downtick was telegraphed in the analogous CPI report, a soft print may still pour a bit of cold water on rate hike bets stoked by Friday’s hawkish comments from Fed Chair Yellen and weigh on the US Dollar, if only in the near term.

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Asia Session

European Session

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