Sterling Finds Poise On Potential For Shift Towards More Fiscal Prudence

The moderation in fiscal rhetoric out of the UK has supported the GBP as Asia-Pac traders went online, after PM Truss sacked Chancellor Kwarteng and appointed Jeremy Hunt as his successor. BoE Gov Bailey had a "meeting of minds" with the new Chancellor as the two agreed on the importance of fiscal sustainability. Hunt also held talks with the Prime Minister and refused to rule out more U-turns on Truss' original fiscal plans.

• Cable returned above the $1.12 mark in early trade and last deals +60 pips at $1.1233. Its one-month implied volatility has crept higher and last sits at 18.9%, still comfortably off post-mini budget highs.
• There is little demand for safe-haven assets, as USD, JPY and CHF underperform all their G10 peers save for the kiwi. The BBDXY has slipped as richening impetus has pushed U.S. Tsy yields lower in cash Tokyo trade.
• USD/JPY operates just shy of neutral levels as Japanese officials stuck with familiar rhetoric re: FX matters. BoJ Gov Kuroda reaffirmed the intention to keep powerful monetary easing in place, while chief FX diplomat Kanda and FinMin Suzuki pledged readiness to take "bold action" if they see excessive speculative moves.
• The NZD is the worst G10 performer after New Zealand's PSI deteriorated to 55.8 in September from 58.6 prior. AUD/NZD snapped its five-day losing streak and trades ~30 pips better off, even as Australia/New Zealand 2-year swap spread remains heavy.
• U.S. Empire State Manufacturing Survey headlines the global data docket today. ECB members dominate the central bank speaker slate, with Lane, de Guindos, de Cos and Nagel set to take the floor.