Forex

The Bank of Japan's Deputy governor Iwata, considered a dove, said that risks of a sharp U.S. economic slowdown are heightening, adding that the current U.S. housing slump may drag on U.S. growth until early 2008. Iwata said that asset and land prices are important for the central bank's policy. "We need to be aware that stock price falls and the yens rise, if sustained, could have a negative effect on Japan's economic outlook," Iwata said. The JPY showed no reaction to his comments. Between 17:00 ET and 23:05 ET: USD/JPY -0.07%, EUR/JPY +0.04%, GBP/JPY -0.04%, AUD/JPY +0.02%, NZD/JPY -0.11%

- Aussie building approvals dive after RBA rate hike: (AU AUG BUILDING APPROVALS MOM: -1.7% V -0.5% expected, prior revised to 0.2% from 0.4%; YOY: -0.1% V -7.6% prior revised from -7.5%) This was the first drop in 3 months for the index, and analysts blamed the RBA rate hike for weighing on new home building.

- The Gulf News cited a UAE official saying that the Gulf Common Currency monetary union may be behind schedule by five years. Sultan Nasser Al Suwaidi is the first of GCC central bank governors to admit that the bloc's monetary union could be behind schedule by more than five years, following an announcement of the governors meeting in early September that the 2010 target is not realistic. The UAE ministers will meet in Riyadh at the end of October, and the consensus seems to be that the meeting will probably end in deadlock, highlighting a lack of political will within the group to create a common currency.

- Foreign investors turned net buyers of Japanese stocks for first time in 4 weeks as risk appetite returned to Asia: (JP Foreign Net Stocks Investment for week ending Sept28: ??223.4B v -??157B prior; Net Bonds Investment: -??90.1B v -??1160B prior)

- Equities: The lower close on Wall Street dragged on Tokyo's Nikkei, sending the index down -0.59% by 22:51 ET. The Nikkei found support at 17070, with energy-related stocks being sold aggressively. Investors snapped up Japanese financials after bullish commentary from Deutsche Bank, and real estate firms continued to move higher. Australia's ASX (-1.06%) tracked regional bourses lower, but resource and U.S.-exposed stocks limited the downside. South Korea's Kospi is lower by more than -0.5%. Chip makers dropped sharply after U.S. rival Micron Technology's quarterly loss highlighted concerns over upcoming earnings.

- Commodities: Nymex crude oil lost -0.33% between 18:00 ET and 22:59 ET, drifing between $79.60/bbl and $79.80/bbl for most of the session. Spot gold is down -0.33% (last quote at $733.30/oz), tracking losses on crude amid the U.S. dollar's technical rebound.