Taper Talk No Concern

The market continued to shrug off taper talk from Fed members. The pound was the top performer while the yen lagged. The calendar for Asia-Pacific trading is light. 

Yen weakness was the main theme on Monday, as it has been for most of the past month. The recent correction in yen crosses has been washed away and GBP/JPY, EUR/JPY and USD/JPY all hit fresh cycle highs.

At the moment, the taper trade simply isn't a factor, as difficult as that is to believe. There was no US economic data on the day but plenty of Fedspeak.

Bullard came the closest to directly addressing QE, saying a small taper might recognize job gains and allow the Fed to monitor inflation. Fisher and Lacker argued to reduce QE, as they have for months.

The secondary battle about revealing a taper roadmap along with the first reduction in asset purchases is heating up as Bullard became the first Fed member to speak out against it. The theory is that it could limit the Fed's flexibility. Lacker, meanwhile, joined four other Fed members in endorsing a loose schedule to wind the program down.

One nod toward a taper may have come from gold as it gained $12 to $1240 but until the $1260-$1210 range breaks, it's tough to draw conclusions.

Up later, the calendar in Asia is light but there are some noteworthy events. At 2350 GMT, Japan's tertiary index is expected to rise 0.1% after a 0.2% rise in Sept. At 0030 GMT the focus shifts to Australian home loans which are forecast to rise 1.0% m/m in October. The main focus will be the Nikkei, after the 2.3% rise Monday sparked broad yen weakness.