Asian session: The yen and dollar held gains

01:30 Australia RBA Financial Stability Review September

05:00 Japan Small Business Confidence September 49.7 49.8

The yen and dollar held gains versus most major peers as stocks in Asia and the U.S. dropped amid concern over budget talks that risk a federal government shutdown, sparking demand for haven currencies. The U.S. Senate is set to hold a test vote today on legislation passed by the House of Representatives to cover federal spending through Dec. 15, and choke off funds for President Barack Obama’s health-care law. Senate Majority Leader Harry Reid has said the Senate will pass a spending measure without defunding the health law, raising the prospect of the debate extending past a Sept. 30 deadline. The next fiscal year begins Oct. 1.

The greenback remained stronger before data forecast to show new home sales rebounded in August, a sign the housing market is beginning to adjust to a jump in financing costs. Purchases of new houses in the U.S. climbed 6.6 percent to a 420,000 annual rate in August after plunging in July by the most in three years, according to economists in a Bloomberg News survey before the Commerce Department data today. Even with the gain, the purchase pace would fall short of the average 448,000 rate in the first six months of the year.

Excluding the volatile transportation category, orders for durable goods in the U.S. rose 1 percent in August after falling 0.8 percent the prior month, according to a separate survey before today’s report.

The New Zealand dollar fell versus its 16 major peers after official data showed the nation’s trade deficit widened to NZ$1.2 billion ($989 million) in August, the biggest shortfall in five years.

EUR / USD: during the Asian session the pair traded in the range of $ 1.3460-80

GBP / USD: during the Asian session, the pair fell to $ 1.5975

USD / JPY: during the Asian session the pair traded in the range of Y98.55-80

Wednesday is another busy day on both sides of the calendar, with a full session of calendar releases. The European calendar gets underway at 0600GMT, with the release oF the German October GfK consumer confidence data. There is a raft of French data at 0645GMT, including the release of the September business climate index, along with the September services and manufacturing sentiment indices. Spanish August PPI numbers are set for release at 0700GMT, to be followed by the Italian September ISTAT consumer confidence data at 0800GMT. At 1200GMT, ECB Executive Board member Joerg Asmussen will give a speech on "Finance crisis - no end?" in Frankfurt. At 1300GMT, ECB Governing Council member Patrick Honohan appears before the Irish parliament, in Dublin. There are further European speakers from 1500GMT, when ECB Governing Council member Jens Weidmann speaks at a Bundesbank regional office, in Duesseldorf. At 1645GMT, European Commission Vice President Joaquin Almunia will deliver a speech on EU bank resolution in Washington.