Dollar and yen are mildly higher today on risk aversion following mild weakness in the global stock markets. Aussie is leading the decline with AUD/JPY and AUD/USD falling over 100 pips so far while NZD/JPY, CAD/JPY and EUR/JPY are all down. But after all, the movements are limited so far and with a light calendar ahead, trading would probably be quite. Focus will remain on development in US stocks and risk aversion. At 1330 GMT, Canada's new housing price index is expected to have dropped 0.3% in November after falling 0.4% a month ago. The Bank of Canada will also publish business outlook survey. In the previous survey (taken during late-August to mid-September), there was mild deterioration in Canada's economy. However, we believe things have turned substantially bad this time with all 3 major indicators: future sales growth expectation, the proportion of firms reporting difficulty meeting an unexpected increase in demand, and inflation expectation, have dropped significantly.

Technically speaking, as discussed before, dollar index's retreat from 84.01 is tentatively treated as completed at 81.19. Further rise is in favor towards 84.01 first. As discussed before, correction from 88.46 should have completed with three waves down to 77.69 already. Break of 84.01 will encourage a retest of this 88.46 high. On the downside, though, below 81.19 will flip intraday bias back to the downside and suggest that fall from 84.01 is resuming. Risk aversion trades is anticipated to be the driving force below dollar's rally. In particular, markets will focus on key near term support of 8367 in DOW and break will confirm that the corrective rebound from 7450 has completed. In such case, yen crosses should be dragged down, especially commodity yen crosses. AUD and CAD should then be dragged down against the greenback too and that should provide the fuel for another rise in the dollar index.