From Marc Chandler at Bannockburn Global Forex:
Overview: The increasingly likely partial US federal government shutdown has spurred a bout of liquidation of long dollar positions. The psychologically important JPY150 level was approached, and the euro was sold through $1.05 yesterday, and the greenback has come back better offered today. It is lower against all the G10 currencies. It is mixed against the emerging market currency complex, with central European currencies and South African rand leading the advancers. The Chinese yuan has also stabilized ahead of next week's holidays. A US government shutdown is estimated to reduce GDP by 0.2% a week and will impact the data release schedule, including next week's jobs report. Moody's, the last of the big three rating agencies that gives the US a AAA rating, acknowledged that a government shutdown would be credit negative.
At the same time, the low US oil stocks, and especially at Cushing, has seen oil prices jump, with the November WTI hitting $95 a barrel before pulling back. In the Asia Pacific, where many smaller bourses are on holiday, the large market were mixed to mostly lower. Taiwan and South Korea were notable exceptions. Note, too, that the Ministry of Finance data showed foreigners sold a record amount of Japanese equities last week and a large amount of Japanese bonds. Europe's Stoxx 600 is lower for the sixth consecutive session. US index futures are narrowly mixed. Bonds continue to sell off. European benchmark 10-year yields are 6-8 bp higher, while the Gilt yield is up 10 bp. The 10-year US Treasury yield is up two basis points to 4.63%. A softer US dollar and higher rates leaves gold pinned near yesterday's low (~$1872).
Asia Pacific
In the eight weeks since the Bank of Japan adjusted Yield Curve Control at the end of July, Japanese investors have been net buyers of about JPY6 trillion or around $41 bln of foreign bonds....
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