The yen fell toward its lowest level since April 2011 before the Bank of Japan begins a two-day meeting tomorrow with incoming Prime Minister Shinzo Abe pressing it to engage in further policy easing.  The yen declined versus all of its 16 major counterparts as BOJ Governor Masaaki Shirakawa met Abe today and gains in stocks worldwide sapped demand for safer assets. Shirakawa said today he spoke with Abe and there was no discussion of monetary policy. The BOJ governor may visit LDP headquarters later today and discuss monetary policy with Abe, Jiji reported earlier, without citing anyone.

In the U.S., President Barack Obama put forward a new budget offer that would raise taxes by $1.2 trillion and increase tax rates for households earning more than $400,000 a year, said a person familiar with the talks. Obama’s plan would cut $1.22 trillion in federal spending, including interest savings, said the person, who spoke on condition of anonymity. House Speaker John Boehner said in his Dec. 14 offer that he would accept $1 trillion in revenue, up from $800 billion, according to a person familiar with the talks.

Australia’s currency held a drop from yesterday after the Reserve Bank released minutes from its meeting this month when policy makers cut interest rates. Demand for the U.S. dollar was limited amid signs of progress in budget negotiations.

EUR/USD: during the Asian session, the pair rose to $1.3175.

GBP/USD: during the Asian session, the pair rose to yesterday's high of $1.6215.

USD/JPY: during the Asian session, the pair rose to Y84.10.

UK data is expected at 0930GMT, with the release of the November consumer and producer inflation numbers. CPI has of course misbehaved for policymakers in recent months, persistently defying the downward path set for it by Bank of England forecasters. The narrative here continues to be one of energy and commodity prices propped up by strong demand from the BRICs despite economic weakness in the industrialised OECD countries. UK CPI is seen at +2.7% y/y.