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Forex News Timeline

Thursday, October 19, 2017

The greenback remains in the negative territory so far today, now helping EUR/USD to climb further to the 1.1840/50 band, or session tops. EUR/USD in

The greenback remains in the negative territory so far today, now helping EUR/USD to climb further to the 1.1840/50 band, or session tops.EUR/USD in 4-day peaksSpot is advancing for the second session in a row today despite the auspicious releases in the US docket. In fact, weekly initial claims rose 222K, bettering estimates, while the Philly Fed manufacturing gauge also surprised to the upside, coming in at 27.9 for the current month vs. 22.0 from prior surveys and September’s 23.8. EUR gained extra buying interests following news that the Spanish government is expected to trigger article 155 on Saturday. In addition, the now softer tone around US yields is also collaborating with the selling bias around the buck. In this regard, yields of the 10-year benchmark have retreated to the 2.30% neighbourhood, shedding around 5 bps since earlier weekly tops.EUR/USD levels to watchAt the moment, the pair is up 0.34% at 1.1827 and a breakout of 1.1840 (55-day sma) would target 1.1882 (high Oct.12) en route to 1.1911 (high Aug.2). On the other hand the initial support emerges at 1.1730 (low Oct.18) seconded by 1.1686 (low Oct.6) and finally 1.1662 (low Aug.17).

After closing the first three days of the week with gains and starting the day above the 0.98 mark, the USD/CHF pair came under a broad-based selling

After closing the first three days of the week with gains and starting the day above the 0.98 mark, the USD/CHF pair came under a broad-based selling pressure on Thursday and eased to mid-0.97s. As of writing, the pair was trading at 0.9753, losing 0.64% on the day. A weaker market sentiment reflected by the sharp fall witnessed in the major European equity indexes on Thursday seems to be helping the traditional safe havens such as the CHF find demand. At the moment, the German DAX and the UK's FTSE indexes are losing 0.8% and 0.55% respectively. On the other hand, the greenback is having a difficult time preserving its strength against its peers today with the US Dollar Index edging lower towards the 93 handle. Although the weekly jobless claims plummeted to its lowest level in more than 40 years at 222K and the Philly Fed Manufacturing Index advanced to 27.9 from 23.8, beating the market estimate of 22, the DXY is still down 0.25% on the day at 93.08. Later in the session, the economic calendar won't be offering any data that could impact the price action and the mood surrounding the US stocks could be the next catalyst for the pair.US: Weekly initial claims was 222,000, a decrease of 22,000 from previous weekPhilly Fed: Manufacturing firms reported continued growth in OctoberTechnical outlookWith today's retreat, the RSI indicator on the daily graph returned to the 50 region, suggesting that the buyers lost their dominance on the price action. On the upside, 0.9800 (psychological level) could be seen as the initial hurdle ahead of 0.9835 (Oct. 6 high) and 0.9900 (psychological level). On the downside, support could be seen at 0.9680 (20-DMA), 0.9640 (100-DMA) and 0.9600 (psychological level).

Jane Foley, Senior FX Strategist at Rabobank, notes that NZD/USD has plunged below its early October lows on the news that kingmaker Peters has decide

Jane Foley, Senior FX Strategist at Rabobank, notes that NZD/USD has plunged below its early October lows on the news that kingmaker Peters has decided to back the Labour party to form New Zealand’s next government. Key Quotes“His decision follows protracted talks since the final result of the September 23 election handed Labour and Greens collectively 54 seats compared with 56 for the National Party.  Peter’s New Zealand First party won 9 seats having campaigned on a platform that includes slashing immigration, reforming the Reserve Bank and stopping foreign ownership of New Zealand’s land and assets.  The 63 seats controlled by the new government is just 2 more than the 61 majority that it needed.  It has been reported that while the Green Party will continue to have a confidence and supply agreement with the Labour Party that NZ First will be a full coalition partner.  Peters has indicated that he has been offered the role of deputy PM as well as various portfolios which will be decided over the coming days in consultation with new PM Jacinda Ardern.”  “This morning Peter told the press that “we had a choice to make for a modified status quo or for change... that’s why in the end we chose a coalition government of New Zealand First with the New Zealand Labour Party.”  Both Labour and NZ First had campaigned heavily on a pledge to cut immigration.  Ms Ahern’s Labour have proposed cutting net arrivals by up to 30,000 annually.  This morning, the Stats NZ population clock was counting 4.83 mln and estimating that the number increases by one person every 4 minutes and 51 seconds.” “In the year to August 2017 statistics NZ reported that the net gain from immigration rose to 72.1 mln up from 3k y/y.  Since late 2012 there has been a strong uptrend in net immigration into New Zealand and this has created stress most specifically on housing.  Although house price inflation has recently cooled, partly on the back of election uncertainty, consumer’s debt to incomes ratios have already risen to heady levels as household’s chased rising house prices.  Ahern, aged only 37, tapped into the former government’s perceived failure to build enough homes and campaigned heavily “to make sure my generation can get into housing”.” “Ardern’s success has strong resonance with the populism that has been seen elsewhere in recent years.  Charisma and personality are widely considered to be strong elements behind her ability to knock former PM English out of his post as well as her ability to connect with voters.  Echoing Macron’s steep rise, she only took control of the Labour leadership in August and some commentators view her presence as single-handedly reigniting the party’s potential after nine years in opposition.”  “While Labour’s policies can be seen as a move to the left, the addition of the NZ First party as a coalition party will be seen as raising the risk of a hard lurch.  The policies championed by Peters raise uncertainties about inward investment and the openness of the NZ economy. There are also questions over the shape of reform at the RBNZ.”  “Both Labour and NZ First want changes at the central bank. Labour favours adding full unemployment to the RBNZ’s current inflation targeting mandate.  It would also like to see policy decisions made by a committee that would include external members.  This draws comparisons with the system used by the BoE and clearly has merit.  Former RBNZ Chief Wheeler, whose term ended on September 26, did reportedly use an internal committee to reach policy decisions, though there was no a formal arrangement.” “The RBNZ was one of the world’ first central banks to adopt an inflation target.  Specially, the RBNZ is mandated to target CPI inflation between 1% and 3% on average over the medium term.  That said in practice central banks that target inflation also have a strong regard for growth and employment levels.  Overall the change in the mandate as proposed by Labour are unlikely to have a significant market impact.  New Zealand First, however, campaigned to “replace Inflation Targeted Monetary Policy with monetary policy based on the Singaporean model.”  “Monetary policy in Singapore is centred on the management of the trade-weighted exchange rate.  The Monetary Authority carries out FX operations to ensure that the Singapore dollar remains within a policy band.  Any changes to the RBNZ that err towards those proposed by New Zealand First are likely to have a depressive impact on the NZD given speculation that the RBNZ would be mandated to targeted a weakened value for the currency.”  “The uncertainty about the RBNZ’s mandate and more widely about the treatment of overseas investors is likely to weigh on the NZD going forward.  We maintain our forecast of a move towards 0.68 on a 6 mth view.”

"Manufacturing firms reported continued growth in regional manufacturing in October," the Federal Reserve Bank of Philadelphia reported on Thursday.

"Manufacturing firms reported continued growth in regional manufacturing in October," the Federal Reserve Bank of Philadelphia reported on Thursday.Key highlights:The index for current manufacturing activity in the region increased 4 points to a reading of 27.9 and is now at its highest reading since May. More than 39 percent of the firms indicated increases in activity this month, while 11 percent reported decreases. Both the new orders and shipments indexes remained positive but fell this month, decreasing 10 points and 13 points, respectively. Both the unfilled orders and delivery times indexes were positive for the 12th consecutive month, suggesting longer delivery times and an increase in unfilled orders. The current employment index increased 24 points to a record high reading of 30.6. The average workweek index also increased 8 points, its highest reading in four months.

"In the week ending October 14, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 22,000 from the previous week's r

"In the week ending October 14, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 22,000 from the previous week's revised level," the US Department of Labor said anounced on Thursday.Key highlights:This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The previous week's level was revised up by 1,000 from 243,000 to 244,000. The 4-week moving average was 248,250, a decrease of 9,500 from the previous week's revised average.  Claims taking procedures continue to be severely disrupted in Puerto Rico and the Virgin Islands as a result of power outages and infrastructure damage caused by Hurricanes Irma and Maria. The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending October 7, a decrease of 0.1 percentage point from the previous week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 7 was 1,888,000, a decrease of 16,000 from the previous week's revised level.

United States Philadelphia Fed Manufacturing Survey above forecasts (22) in October: Actual (27.9)

United States Continuing Jobless Claims came in at 1.888M below forecasts (1.9M) in October 6

United States Initial Jobless Claims came in at 222K, below expectations (240K) in October 13

European Economist at HSBC Fabio Balboni gives his views on the potential triggering of article 155 by the Spanish government. Key Quotes “Article 1

European Economist at HSBC Fabio Balboni gives his views on the potential triggering of article 155 by the Spanish government.Key Quotes“Article 155 has never been invoked before, so we are in uncharted territory. Although it is ambiguous in its formulation, effectively it enables the central government to take over control of certain functions of the regional government. Mr Rajoy would be expected to lay out to the upper house which specific measures he intends to take”. “The Spanish press has suggested that Mr Puigdemont could be replaced by a delegate of the central government, and that the central government would "prioritise control of the regional armed forces and the budget”.

Indonesia Bank Indonesia Rate meets forecasts (5%) in October

Oliver Harvey, Macro Strategist at Deutsche Bank, explains that regime change has been a feature of FX markets this year, for example, the beta betwee

Oliver Harvey, Macro Strategist at Deutsche Bank, explains that regime change has been a feature of FX markets this year, for example, the beta between EUR/USD and interest rate differentials has collapsed.Key Quotes“One reason is that shifts in asset allocation have reduced the exchange rate sensitivity to monetary policy. And nowhere is there clearer evidence than the M&A market.” “M&A inflows into the Eurozone versus the US have soared to the highest level since the mid-2000s and are showing little sign of slowing down. Our latest report shows USD 32bn worth of outflows from the US in the last three months and USD 13bn of inflows to the Euro Area. M&A flows have clearly been an important factor behind EUR/USD strength this year.” “How long can the euro M&A party last? Growth and valuations will both be important factors here, but it's worth noting that M&A trends can be quite persistent. In the early 2000s, dollar negative outflows flows lasted for several years, while M&A outflows from the Euro Area persisted through most of the post-crisis period, before turning positive this year. Moreover, deal-making activity between the US and Euro Area diverged sharply since the financial crisis and the latter has only slowly begun to catch up, which doesn't suggest the European market is exhausted just yet.” “In other major currencies, Japan has experienced three consecutive years of M&A outflows but these are starting to slow notably. The UK has seen flat M&A flows this year, after modest ones in 2016 and huge inflows in 2015, suggesting Brexit has been weighing on foreign investment decisions. Australian M&A inflows, which were supportive in 2016 and 2015, are more disappointing this year. Canada continues to see large outflows.”

Japanese investors were net buyers (JPY0.3trn) of foreign bonds in the week to last Friday, notes the analysis team at RBC Capital Markets. Key Quote

Japanese investors were net buyers (JPY0.3trn) of foreign bonds in the week to last Friday, notes the analysis team at RBC Capital Markets.Key Quotes“After a sharp pickup in demand for foreign assets in mid-summer, the trend has been quite neutral recently, leaving overall demand for JPY more likely to be driven by speculative positioning (still materially long USD/JPY on our measures) and hedging flow.” “Japan’s September trade surplus came in at JPY0.2trn (consensus JPY0.3trn). Exports were up 14% y/y, though most of this growth continues to reflect prices rather than volumes. In volume terms, exports were up 4% y/y – in line with the recent trend.”

According to Lawrence Dyer, Strategist at HSBC, there is a risk that a new, hawkish Fed Chair could cause a shift to a higher yield range. However, th

According to Lawrence Dyer, Strategist at HSBC, there is a risk that a new, hawkish Fed Chair could cause a shift to a higher yield range. However, the front-runners seem to have views near the current Fed rate path consensus, he further adds.Key Quotes“Furthermore, White House Chief of Staff John Kelly said a decision on who will be the next Fed Chairman was “some time away” (Bloomberg, 12 October 2017). So, this should not be a factor in the near term.” “Our short-term themes are focused on the Fed outlook and its impact on the yield range and curve slope. For example, we expect mean reversion to continue for trading range patterns for periods from one day to three months. Our near-term range for the 10-year note remains 2.15-2.40%. This 25bp range is consistent with the typical monthly range since the end of QE.” “Our longer-term themes are structural. For example, one theme is JGBs swapped into US Dollars. Japan’s exporting corporations earn USD revenue, have JPY costs, and must protect their profits from potentially large, unfavourable currency swings. The cross currency basis was near zero before the financial crisis. Now, JGBs offer significant yield pickups to Treasuries (+64bp) and are as much as 40bp cheaper than comparable maturity high-quality bank debt. This reflects the increased cost of balance sheet usage, not increased risks. So, real money investors can profit by disintermediating the banks in the three-month to three-year sector.”

Micaella Feldstein, Research Analyst at Natixis, suggests that since the daily stochastic for Brent is close to the overbought territory, they cannot

Micaella Feldstein, Research Analyst at Natixis, suggests that since the daily stochastic for Brent is close to the overbought territory, they cannot rule out a decline to 56.95 (daily Bollinger moving average) even to 55.20-55.35 (daily parabolic). Key Quotes“These dips would enable the contract to gather momentum ahead of initiating a new leg higher to 58.50-58.70 (Fibonacci extensions) last obstacles ahead of 59.80-60 (monthly Bollinger upper band). Only a break of these last resistances would unleash strong upside potential, confirming a lasting rise to 62.60-62.80 (Fibonacci extensions) ahead of 65.70 (38.2% Fibonacci retracement of the 128.40-27.10 bearish wave / March 12 – Jan 16) and 66.90 (9 month moving average).”   “The supports are at 56.95, at 56, at 55.20-55.35 and at 53.70.” 

The upside momentum in the shared currency is now pushing EUR/USD to regain the 1.1800 handle and above, printing at the same time fresh daily tops.

The upside momentum in the shared currency is now pushing EUR/USD to regain the 1.1800 handle and above, printing at the same time fresh daily tops.EUR/USD attention to Catalonia, US dataSpot gathered fresh buying interest following news that the Spanish government intends to trigger article 155 on Saturday in response to the lack of clarity from Catalan leader C.Puigdemont regarding last week declaration of independence. In addition, the softer tone around the greenback is also collaborating with the strong rebound in spot, which gained around a cent since yesterday’s weekly lows in the 1.1730 area. Ahead in the session, and absent releases in the euro bloc, the Philly Fed manufacturing index will grab all the attention in the US docket ahead of the speech by KC Fed E.George (2019 voter, hawkish).EUR/USD levels to watchAt the moment, the pair is up 0.34% at 1.1827 and a breakout of 1.1840 (55-day sma) would target 1.1882 (high Oct.12) en route to 1.1911 (high Aug.2). On the other hand the initial support emerges at 1.1730 (low Oct.18) seconded by 1.1686 (low Oct.6) and finally 1.1662 (low Aug.17).

If the Catalan government doesn't backtrack on independence, implementation of Article 155 seems likely, according to Fabio Balboni, European Economis

If the Catalan government doesn't backtrack on independence, implementation of Article 155 seems likely, according to Fabio Balboni, European Economist at HSBC. This would allow the central government to take control of Catalonia and could eventually lead to regional polls and rather than being the beginning of the solution to the Catalan crisis, they see a risk of further escalation of political tensions, he further adds.Key QuotesHeading towards Article 155Today, 19 October, is decision day for Carles Puigdemont, the leader of the Catalan government. Either he backtracks on his push for independence, or Article 155, which allows the central government to take control of Catalonia, will be implemented. The deadline set by the Spanish PM Mariano Rajoy for the decision is 10am local time. Implementation of Article 155 seems likely. Mr Puigdemont did not provide a categorical answer to whether he had declared independence or not ahead of the previous deadline on 16 October, but has said that he remained committed to implementing the referendum result, and is under strong pressure particularly from the most radical elements in the Catalan government, to proceed unilaterally towards independence (El Mundo, 13 October).  The central government has said that another way to prevent Article 155 being triggered would be if the Catalan government called a snap regional election, but so far Mr Puigdemont has ruled out this option. Catalan Foreign Affairs Minister Raül Romeva has confirmed more recently that "we will not back-track in front of Article 155, and early elections are not in our agenda" (El Mundo, 18 October). Failure by Mr Puigdemont to backtrack on independence could lead to the immediate application of Article 155. Effectively the procedure was triggered last week, with Mr Rajoy giving an ultimatum to Mr Puigdemont. The next step would be the approval by an overall majority of the senate. The ruling party, Partido Popular (PP), has a majority (149 MPs in the 266-seat house) and the main opposition party, PSOE, with 62 MPs, has said that it will support the application of Article 155 (El País, 16 October). So this should be relatively straightforward.” “What happens if Article 155 is invoked?Article 155 has never been invoked before, so we are in uncharted territory. Although it is ambiguous in its formulation, effectively it enables the central government to take over control of certain functions of the regional government. Mr Rajoy would be expected to lay out to the upper house which specific measures he intends to take.  The Spanish press has suggested that Mr Puigdemont could be replaced by a delegate of the central government, and that the central government would "prioritise control of the regional armed forces and the budget" (El País, 16 October).”

Analysts at HSBC note that Australian employment rose by 20k in September (market expected 15k) and over the past six months, jobs growth has averaged

Analysts at HSBC note that Australian employment rose by 20k in September (market expected 15k) and over the past six months, jobs growth has averaged 36k a month as annual employment growth stands at 3.1%, up from 2.7% the previous month.Key Quotes“Full-time employment rose by 6k in September and was up 3.9% y-o-y. Part-time employment was 14k higher in the month, and up 1.4% y-o-y.” “The unemployment rate was 5.5%, down from 5.6% the previous month.” “Total hours worked rose by 0.7% m-o-m. Looking through considerable month-to-month volatility, trend annual growth in hours worked was 2.9%, in line with the previous month.” “Implications Today we saw more evidence that the labour market is tightening up, with strong jobs growth continuing and the unemployment rate falling to a new cycle low of 5.5% in September. The details in the labour force survey have also been positive. Of the 372,000 jobs that have been created over the past year, 316,000 have been full-time jobs, while 56,000 have been part-time jobs. The lift in full-time employment is driving a pick-up in hours worked.   The pick-up in the official jobs numbers is in line with the other indicators of the labour market, including job advertisements, the hiring intentions components of the business surveys and the unemployment expectations component of the consumer sentiment surveys. Our summary indicator of labour market conditions, based on these other surveys, suggests continued strong jobs growth. In addition, the latest reading of the ABS job vacancies measure showed y-o-y growth of 15.4% in Q3, which is its fastest pace since 2002. Today we also received the Q3 print for the quarterly NAB business survey which showed that business conditions are around their highest level in a decade. Amongst the details, businesses are reporting a sharp jump in their concerns about being able to find 'suitable labour', which is another tell-tale sign that the labour market is tightening up.”

In opinion of Axel Rudolph, Senior Analyst at Commerzbank, the pair’s stance should stay constructive as long as it trades above 110.87. Key Quotes

In opinion of Axel Rudolph, Senior Analyst at Commerzbank, the pair’s stance should stay constructive as long as it trades above 110.87.Key QuotesUSD/JPY’s correction lower probably ended along the 200 day ma at 111.76, a fall through which would leave the 55 day ma at 110.87 exposed. While above here it will remain well placed for a recovery from a slightly longer term perspective. Above the 113.44 current October high will trigger further gains to the top of the range at 114.38/49. It is where the May and July highs were made”. “The 55 day ma guards the 109.55 midSeptember low and in turn this support guards the 108.81/13 April and June lows as well as the September low at 107.32”.

The President of the Catalan regional government (Carles Puigdemont) has not really clarified if his statement on Tuesday the 10th of October was or n

The President of the Catalan regional government (Carles Puigdemont) has not really clarified if his statement on Tuesday the 10th of October was or not a declaration of the independence and has maintained his call to dialog with the Mariano Rajoy, points out Jesus Castillo, Research Analyst at Natixis.Key Quotes“At this stage we believe that the Spanish government has no other option than to apply the article 155 of the Constitution with the aim to restore the normal functioning of the institutions. From now on Catalonia and Spain enter in an unchartered territory.” “Today at 10am finished the second deadline that the Spanish government gave to the President of the Catalan government Carles Puigdemont to clarify if yes or no he declared the independence on the 10th of October. In addition Puigdemont was supposed to indicate the measures taken to revert all the measures that didn’t comply with the legal obligations.” “After several days of internal debate within his own coalition, Puigdemont has finally declared that the independence decided, on the back of the outcome of the 1st of October referendum remains suspended. However he also write that if the Spanish government persists in the application of the article 155 of the Constitution, that allows it to take the control of the regional administrations, the Catalan Parliament will formally approve by a vote the declaration of the independence. Thus the situation remains not very clear. We still do not know if the independence has been declared or not since it is suspended but not approved by the regional chamber.” “The ball is clearly in the camp of Mariano Rajoy. He has call for an extraordinary meeting of his cabinet on Saturday and therefore inform of the next move of the Spanish government. At this stage he has not many options: 1/ The Spanish government decides to continue with the application of the article 155. Then it gives the detail of the measures it is going to send to the Senate for its approval. The measures may be more or less soft from a control from strategic areas to the full control of the Autonomous Community with the appointment of an interim delegate of the state that will assume the regional executive power.2/ The Spanish government considers that the independence has not been yet declared and that it has some leeway to avoid the use of the article 155. In this scenario the government tries to gain times to avoid a decision that may result in an elevated political cost. However, the final outcome of this potential strategy is not clear at all.” “Our view is that the Spanish government is going to use all the legal tools available. It cannot accept that the current crisis lasts more. Thus we believe that it will order to some strategic regional administrations to obey to its instructions with the aim to revert all the illegal decisions taken to the date. Before that, the Senate has to approve the measures proposed by the Spanish Government. This can take several days since a parliamentary session must be called previously. Thereafter, the President Puigdemont can also ask to be heard by the senators to defend his stance.”

Morten Helt, Senior Analyst at Danske Bank, expects the European cross to extend the consolidative theme for the time being. Key Quotes “A BoE rate

Morten Helt, Senior Analyst at Danske Bank, expects the European cross to extend the consolidative theme for the time being.Key Quotes“A BoE rate hike in November seems to be consensus in the market and priced with an 85% probability in the UK money market. Hence, while GBP could see some support going into the 2 November BoE meeting, we see little prospect of EUR/GBP breaking below 0.87 on the announcement due to the combination of already-stretched BoE pricing and long speculative GBP positioning. We still see EUR/GBP trading in the range of 0.87- 0.90 in coming months, targeting 0.88 in 1-3M (previously 0.87)”. “Longer term, we still see potential for a further decline in EUR/GBP driven by possible clarification on Brexit negotiations and valuations. However, with the ECB moving towards an exit as well and as relative growth is set to remain EUR/GBP positive, we see only modest downside potential in the year ahead. We target 0.87 in 6M (previously 0.86) and 0.86 in 12M”.

The Japanese economy has been on the recovery path on the back of Abenomics and Japanese Prime Minister Shinzo Abe has called a snap election to be he

The Japanese economy has been on the recovery path on the back of Abenomics and Japanese Prime Minister Shinzo Abe has called a snap election to be held on 22 October to take advantage of the recovery in his approval ratings due to a rising threat from North Korea as well as to exploit the current weakness of the opposition, points out the research team at OCBC Bank.Key Quotes“The latest election poll shows that Abe’s ruling coalition heading for a big win after Tokyo Governor Yuriko declined to run for a lower house seat. Should the ruling coaling maintain its two-third’s super majority in the Parliament, the impact on market is unlikely to be significant. Should the unexpected happen, the USDJPY may fall as a knee jerk reaction to rising political uncertainty.” “On monetary policy, we see the Kuroda’s reappointment as Bank of Japan Governor in April 2018 as dependent on the snap election outcome. Should the election result materialise in line with polls, the chance for Kuroda to be reappointed is high. This may reassure market expectation that BOJ will maintain its ultra-easing momentary policy.” “It is expected that there will be no drastic changes on the politics of Japan. Party of Hope is a newly established political party. Some of their new members are formerly the core members of other political parties (LDP and Democratic Party). The Constitutional Democratic Party of Japan is just another “form” of Democratic Party. Other than Abenomics and consumption tax reform, it is expected that no significant changes would be brought by the Opposition.” “The current situation is quite interesting. The Party of Hope cooperated with Democratic Party and Restoration Party respectively. However, they have quite different views on some political issues including Abenomics, tax reform and constitutional amendment. The (only) common purpose for their cooperation is to override Abe’s ruling. Therefore, it remains a big doubt whether they can form a Ruling Coalition (if they win over 2/3 seats in the House of Representatives).”

Next week's ECB meeting should finally provide the first details of the dovish tapering plans, ideally with as little noise as possible, according to

Next week's ECB meeting should finally provide the first details of the dovish tapering plans, ideally with as little noise as possible, according to Carsten Brzeski, Chief Economist at ING.Key QuotesStrong growth, little inflationThe state of the Eurozone economy has remained unchanged since the September meeting. Even though the results of the German elections have somewhat dampened the eu(ro)phoria of the summer months, survey indicators still point to a continuation of the recovery well into 2018. At the same time, inflation and inflation expectations remain low and clearly below the ECB’s target. Like all other central banks, the ECB is probably still wondering if factors like globalisation, ageing and digitalisation can be called transitory or have they become structural issues with a permanent disinflationary pressure. Even though inflation developments could easily argue in favour of not changing the monetary stance at all, the strong cyclical upswing together with the scarcity of bonds seems to be the primary driver for the ECB to announce first details of its tapering programme finally. Or, better describing the ECB’s hesitance and caution not to scare financial markets: the recalibration of its monetary stance.” “Full agreement for onceGiven official comments over the last weeks, there finally seems to be a consensus within the ECB to at least start tapering. No single voice has been opposing this idea.  However, diverging views still exist on how it should reduce its monthly QE purchases. In our view, the ECB will first identify a targeted, final, size of the balance sheet before it derives paths towards this balance sheet target. Latest newswire reports suggest the increase of the balance sheet could be between 200bn and 300bn euro. So, the big question is: how will the ECB spend it?” “We think there are three potential scenarios for tapering: Fed-style tapering, the staircase option or lower for longer.  i) Fed-style, the gradual tapering option. This option would see a linear scaling back of the asset purchases. Either every month or quarter, with the latter providing more flexibility. ii) The staircase option. Here, the ECB could reduce its monthly QE purchases in January by some 20bn euro, keep the purchases unchanged until June and then reduce the monthly purchases yet again by another 20bn euro until September. iii) Lower for longer. Here, the ECB could reduce its monthly purchases by more than markets currently expect to about 20bn or 25bn euro per month, while at the same time extending QE until the end of 2018.” “'Lower for longer' 2.0Ideally, the ECB would like to announce tapering with as little noise as possible, limiting any upward movement of the euro and interest rates to an absolute minimum. This is why we expect the ECB to announce a ‘lower for longer’ tapering, as in December 2016, reducing the monthly QE purchases to 25bn and extending them until the end of 2018. Also, we expect Draghi to emphasise ‘sequencing’, i.e. the fact that interest rates will remain low (far) beyond the end of QE which should help to anchor interest rate expectations. Such a strategy would also help to immunise the ECB’s monetary policy against further exchange rate fluctuations.” “The only question is how, not if, ECB starts taperingAll in all, next week’s ECB meeting should be a sea change, not a rough one but a very mild and cautious one. The ECB is still very much aware of any adverse effects from a premature tapering. Also, as strong as the Eurozone recovery currently looks, not only external risks but internal risks, think Catalonia and lack of further Eurozone reforms could easily dent the recovery. Therefore, the ECB will do everything it can to convince everyone that its next steps are a very dovish tapering.”

Crude oil prices are extending the downside today and are now dragging the barrel of West Texas Intermediate to the area of daily lows around $51.20.

Crude oil prices are extending the downside today and are now dragging the barrel of West Texas Intermediate to the area of daily lows around $51.20.WTI lower despite falling US supplies, OPEC rebalancingPrices for the WTI are trading on the defensive after Chinese GDP figures failed to surprise markets to the upside today. In fact, the Chinese economy is expected to expand at an annualized 6.8% during the July-September period, in line with prior surveys. Today’s price action around crude oil seems to ignore another weekly draw in US crude oil supplies, as per yesterday’s EIA report. Furthermore, WTI stayed apathetic after OPEC’s Secretary Barkindo said earlier in the session that the rebalance of the oil market remains on track. Looking ahead, US oil rig count by driller Baker Hughes is due tomorrow.WTI significant levelsAt the moment the barrel of WTI is retreating 1.13% at $51.44 and a break below $51.17 (low Oct.19) would aim for $51.09 (21-day sma) and then $50.08 (38.2% Fibo of $45.58-$52.86). On the upside, the next hurdle aligns at $52.37 (high Oct.16) seconded by $52.86 (high Sep.28) and finally $53.76 (high Apr.12).

Iris Pang, Economist at ING, notes that China isn’t a currency manipulator, according to the US Treasury’s bi-annual currency report. Key Quotes “Wh

Iris Pang, Economist at ING, notes that China isn’t a currency manipulator, according to the US Treasury’s bi-annual currency report.Key Quotes“When the US Treasury told the world that China has acted to avoid a “disorderly” depreciation and allowing the CNY to strengthen against the USD, it is odd because the result has been mainly linked to the weakening dollar.” “The US report does not mean whether China has reduced intervention or will intervene less. The report is just a description that CNY has appreciated against the dollar. During March to June the CNY appreciation speed stagnated vs the then fast weakening of the dollar. That deviation had been caught up by September.” “The CNY fixing mechanism follows the prior day close plus a basket of currencies (which we believe is the USD index basket), and the recently introduced counter-cyclical factor. Among these three factors, the counter cyclical factor looks like a black box to us, and doesn’t seem to be applied daily.” “Going forward, with a weakening USD the PBoC will be happy to ride the trend to strengthen the CNY and attract net capital inflow into the Mainland. In his speech yesterday President Xi mentioned allowing the market to play a greater role in pricing. Though he did not pinpoint a particular market, his tone echoed PBoC officials that the central bank would intervene less and allow the market to find the value of USD/CNY. That confirms our view that the CNY trend will be more likely to sync with the trend of other Asian currencies coming off the weak USD. We reiterate our 6.50 USD/CNY forecast for the end of 2017 and forecast further 4% appreciation in 2018.”  

The GBP/USD pair is seen making minor-recovery attempts, although faces stiff resistances near 1.3170 region on its way to 1.32 handle. GBP/USD: Brex

The GBP/USD pair is seen making minor-recovery attempts, although faces stiff resistances near 1.3170 region on its way to 1.32 handle.GBP/USD: Brexit Summit in focusThe spot held onto the major support located near 1.3125/40 area, and from there attempted a tepid-recovery, as the dust settled after the poor UK retail sales aftermath. The recovery seen in Cable is on the back of ongoing weakness seen in the US dollar across the board, fuelled by a rally in EUR/USD above 1.1800 levels, as the Spanish government seems to have regained their grip on Catalonia.Spanish Spokesman confirms implementation of Article 155Catalan Leader threatens Spanish PM to declare formal independence if no dialogueMeanwhile, with the EU/ Brexit Summit underway, the recovery may remain in check, as the pound could continue to feel the heat from the EU-UK deadlock on the Brexit negotiations, while increased nervousness ahead of the UK PM May’s speech at the Summit could also keep the bulls at bay. Also, of note for the major remains the US jobless claims and Philly Fed manufacturing index due later in the NA session for further momentum.GBP/USD Technical ViewAxel Rudolph, Senior Analyst at Commerzbank noted: “GBP/USD probably ended a minor Elliott wave abc correction at last week’s 1.3338 high, made close to the 50% retracement at 1.3343. While this level caps attention should remain on the 1.2996 2016-2017 uptrend line. This is the break down point to the 1.2830 38.2% retracement and the 1.2575 50% retracement. The currency pair has recently failed at the 1.3557 2014-2017 downtrend and is thus viewed negatively”.

Portugal Current Account Balance up to €0.34B in August from previous €-0.633B

Strategists at UOB Group have given their views on the ongoing Chinese National Congress. Key Quotes “The Communist Party of China’s General Secreta

Strategists at UOB Group have given their views on the ongoing Chinese National Congress.Key Quotes“The Communist Party of China’s General Secretary Xi Jinping delivered a report that charts out China’s plan to move into a new era of great modern socialist country by middle of the 21st century”. “In the economic policy space, no major surprises as China is set to continue its market reform measures in the next 5 years, highlighting policies that are still ongoing, including upgrading of manufacturing sector, SOE reform, rebalancing towards consumption, market reforms, market-based interest rate and exchange rate, and Belt & Road Initiative”. “Next sequence of events: the National Congress will run from 18 Oct to 24 Oct and on 25 Oct at the First Plenary Session of the Central Committee, a new leadership will be elected in place for the next 5 years”.

FX option expiries for Oct 19 NY cut at 11:00 Eastern Time, via DTCC, can be found below. - EURUSD: 1.1600 (EUR 320m) 1.1700 (665m) 1.1750 (725m) 1.1

FX option expiries for Oct 19 NY cut at 11:00 Eastern Time, via DTCC, can be found below. - EURUSD: 1.1600 (EUR 320m) 1.1700 (665m) 1.1750 (725m) 1.1765 (715m)
1.2000 (1.42bln) - GBPUSD: 1.3170 (GBP 470m) 1.3250 (265m) 1.3480 (400m) 1.3495-00 (500m) - USDJPY: 110.00-05 (USD 905m) 111.30 (350m) 111.50 (505m) 112.20 (370m) 112.30(320m) 112.50 (445m) 113.00-10 (855m) 113.95-00 (560m) - USDCHF:  0.9600 (USD 400m) - AUDUSD: 0.7500(AUD 670m) 0.7700 (325m) 0.7800 (360m) 0.7900 (405m) - USDCAD: 1.2400 (490m) 1.2500 (890m) - AUDNZD: 1.1015 (540m) - AUDJPY:   87.50 (230m)

The reply by the Catalan government on the question whether they had declared independence was not clear enough for the Spanish government and the cen

The reply by the Catalan government on the question whether they had declared independence was not clear enough for the Spanish government and the central government will now continue to enact Article 155, explains Steven Trypsteen, Economist at ING.Key Quotes“Catalan leader Puigdemont refused to retract his ambiguous declaration of independence and hinted at a possible vote at the Catalan parliament. The standoff between Catalonia and the central government is not good news for the economy in both Spain and the Catalan region. Many companies with their corporate address in Catalonia have already reacted by moving it out of Catalonia. Spain also downgraded its GDP growth forecast for 2018 from 2.6% to 2.3%.” “This Saturday there is likely to be a cabinet meeting that could ask the Senate to approve specific measures for Catalonia, Article 155, allowing take over of control in Catalonia.” “Many outcomes are still possible, such as the announcement of snap elections in Catalonia before Article 155 comes into force. In any case, we still seem to be far from a cooperative solution to the problem, which might put moderate upward pressure on Spanish spreads.”

Axel Rudolph, Senior Analyst at Commerzbank, noted Cable could shift its attention to 1.2996 as long as 1.3338 caps. Key Quotes “GBP/USD probably en

Axel Rudolph, Senior Analyst at Commerzbank, noted Cable could shift its attention to 1.2996 as long as 1.3338 caps.Key QuotesGBP/USD probably ended a minor Elliott wave abc correction at last week’s 1.3338 high, made close to the 50% retracement at 1.3343. While this level caps attention should remain on the 1.2996 2016-2017 uptrend line. This is the break down point to the 1.2830 38.2% retracement and the 1.2575 50% retracement. The currency pair has recently failed at the 1.3557 2014-2017 downtrend and is thus viewed negatively”. “Above 1.3343 (50% retracement) would trigger a deeper recovery to potentially 1.3417/1.3523, the 61.8% and 78.6% Fibonacci retracement levels”. “A close above the 1.3658 September peak would open the way to the 1.3836 February 2016 low and the 50% retracement at 1.4341”.

The pair should come under further selling pressure in the next weeks, suggested Mathias Mogensen, Analyst at Danske Bank. Key Quotes “With little i

The pair should come under further selling pressure in the next weeks, suggested Mathias Mogensen, Analyst at Danske Bank.Key Quotes“With little in the data calendar for the rest of the week and little news from the series of ECB and Fed speeches yesterday, the market is turning the focus increasingly towards the ECB meeting next week”. “Yesterday, we changed our call on the ECB and we now expect it to announce a QE extension by nine months at a pace of EUR30bn. In terms of the FX market, we do not expect any significant reaction in EUR/USD on the ECB’s announcement, as we have already seen a substantial repricing of the ECB in the FX market over the summer and as a ‘lower for longer’ scenario is in line with recent ECB communication”. “Hence, we still see EUR/USD around current levels on a 1-3M horizon with the risks skewed slightly to the downside, as we expect the Fed to hike interest rates in December and as speculative accounts look stretched on EUR/USD longs according to IMM data. We target 1.17 in 1M and 1.18 in 3M”.

United Kingdom 10-y Bond Auction increased to 1.32% from previous 1.161%

After three consecutive daily pullbacks, the ounce troy of the safe haven metal seems to have found some respite today and is currently navigating the

After three consecutive daily pullbacks, the ounce troy of the safe haven metal seems to have found some respite today and is currently navigating the vicinity of the $1,290 area.Gold looks to Fed, USDDespite today’s so far tepid rebound, Bullion remains under pressure in light of the prospects of further tightening by the Federal Reserve via rate hikes, likely to be announced at the December 13 meeting. In this regard, the probability of a rate hike by year end is above 90%, according to CME Group’s FedWatch tool. In addition, the precious metal is closely following the headlines coming from the election of the successor of Janet Yellen at the helm of the Federal Reserve when she finishes her term, with J.Taylor (hawk) currently being the front-runner. It is worth mentioning that other suitable candidates are current FOMC’s member J.Powell (seen on the dovish side) and former governor K.Warsh (centrist/hawkish). On the USD-side, the US Dollar Index remains underpinned by the performance of yields in the US money markets, where yields of the 10-year benchmark stay sidelined in the upper end of the recent range.Gold key levelsAs of writing Gold is gaining 0.23% at $1,286.03 and a breakout of $1,290.21 (10-day sma) would aim for $1,300.84 (55-day sma) and finally $1,308.40 (high Oct.16). On the other hand, the immediate support emerges at $1,278.75 (100-day sma) followed by $1,262.80 (low Oct.6) and finally $1,259.67 (200-day sma).

The main FX mover overnight was the NZD, down as New Zealand First leader Winston Peters backed Labour to form a government, points out Kit Juckes, Re

The main FX mover overnight was the NZD, down as New Zealand First leader Winston Peters backed Labour to form a government, points out Kit Juckes, Research Analyst at Societe Generale.Key Quotes“There are details to iron out, but markets will remain nervous about what this means for monetary policy, with Mr Peters favouring a Singapore-style net effective exchange rate target. There’s nothing good for the NZD until clarity returns, and we still like longs in AUD/NZD, and CAD/NZD.”

The Office for National Statistics (ONS) said in a statement published on its website on Thursday, it will introduce a monthly measure of gross domest

The Office for National Statistics (ONS) said in a statement published on its website on Thursday, it will introduce a monthly measure of gross domestic product (GDP) in July next year.Key Quotes via Reuters:“ONS has today announced that, following a consultation, it will go ahead with plans to introduce a new publishing model for its short-term output indicators, including a monthly and rolling 3-monthly estimate for GDP.” 

OPEC Secretary General Barkindo crossed the wires last minutes, via Reuters, commenting on the global oil demand outlook. Key Points: No doubt oil m

OPEC Secretary General Barkindo crossed the wires last minutes, via Reuters, commenting on the global oil demand outlook.Key Points:No doubt oil market is rebalancing at accelerating pace Balanced oil market in sight Global oil demand growth has been robust Signs of stronger trend Expects oil demand to surpass 100mn bpd as early as 2020 OECD oil stocks fell further in Sept to stand at around 160m bpd above 5-year average

The EUR/USD pair stalled its retreat and rebounded nearly 40-pips on the Spanish government spokesman Mendez comments, with the bulls now trying hard

The EUR/USD pair stalled its retreat and rebounded nearly 40-pips on the Spanish government spokesman Mendez comments, with the bulls now trying hard to hold above 1.18 handle once again.EUR/USD: Volatile on Spanish political dramaThe spot witnessed good two-way businesses so far in Europe, as the latest developments on the Catalan independence campaign continue to drive the sentiment around the Euro. The latest upswing in the major can be attributed to the comments by Mendez, as he confirmed the implementation of Article 155 of the Constitution on Saturday, after Catalonia’s leader Puigdemont’s threatened the Spanish PM Rajoy to declare formal independence if he persisted in preventing any dialogue.  Meanwhile, it remains to be seen for how long the major can survive above 1.18 handle, as the US dollar recovers losses against its main peers, while EUR market continues to get affected by the headlines surrounding Spanish political environment. Also, markets may remain cautious, as the 2-day Brexit/ EU Summit gets underway, which could also keep further recovery in check. Ahead in the day, the pair will look forward to the US datasets for near-term trading opportunities.EUR/USD Technical ViewAccording to Valeria Bednarik, Chief Analyst at FXStreet: “Technical indicators in the mentioned (4-hour) chart are turning south around their mid-lines, reflecting the latest short-term slump rather than indicating further slides ahead. The main support continues being the 1.1720 level, as a break below it would expose 1.1660. To the upside, the main resistance is the 1.1820/30 region, with steady gains beyond the level required to see the pair shrugging off the current negative stance.”

China’s strong economic fundamentals, supported by financial deleveraging will continue to pressure the interbank interest rate higher and USD/CNY low

China’s strong economic fundamentals, supported by financial deleveraging will continue to pressure the interbank interest rate higher and USD/CNY lower, according to Iris Pang, Economist at ING.Key Quotes“GDP growth slowed in line with consensus to 6.8% YoY in 3Q17 from 6.9% in the previous quarter. We are still optimistic on China growth benefitting from ongoing structural reforms, especially the overcapacity reduction exercise.” “New growth areas including innovative technology platforms, new energy cars, and the manufacturing of robots have brought industrial production growth to 6.6% YoY in September, an acceleration from 6.0% YoY in August. A 69.4% YoY surge in production of industrial robots and a 30.8% surge in new energy cars were the most encouraging standouts, representing China’s move up the value chain in world production.” “Fixed asset investment growth slowed more than expected to 7.5% YoY YTD in September from 7.8% in August (consensus: 7.7%) but steady strong infrastructure investment growth of 19.8% YTD was a silver lining. However, deleveraging reform in overcapacity sectors, including mining, has dragged the overall investment growth slower. Real estate development grew slightly faster at 9.0% YoY YTD due to increasing activities in lower tier cities at the centre of the nation, which were up 13.3% YoY YTD. However, as tightening measures have been in place for more cities, we believe the real estate development trend will slow in coming months. By ownership of investment projects, local government investment has grown by 8% YoY YTD, while central government projects have fallen 6.0% YoY YTD. This reaffirms PBoC’s Zhou’s worry of rising local government debts.” “Middle class has continued to support retail sales, which grew 10.3% YoY in September (consensus: 10.2%, prior: 10.1%), especially on strong furniture and decoration spending as a result of still strong housing market. Data do not include the summer holiday spending abroad but a 29% YoY YTD surge in online shopping shows changing consumer behaviour.” “We remain optimistic that the Chinese economy is moving towards to a consumption driven economy. With twin growth engines – consumption and investment – firmly in place we believe the path of future economic development is to move to spending on services facilitated by high-tech products. Data show that real activities are indeed moving to high growth areas. Overall, the Chinese are not only producing high-tech products but also are consuming the products, possibly at more than the average high-tech consumption in the world.” “The continued financial deleveraging reform together with slower residential property development we expect will likely weigh on investment growth going forward. We are confident of strong consumption demand supporting GDP growth at 3Q’s 6.8% pace in the final quarter of the year.” “The financial deleveraging will continue to pressure interbank interest rates higher. The recent announcement by the PBoC to relax reserve requirements for banks’ inclusive finance business should not be interpreted as a more relaxed liquidity environment. This kind of targeted monetary policy is unlikely to benefit zombie companies that face overcapacity problems.” “At 6.8% 3Q GDP growth was short of the 7% pace for the second half of the year flagged by PBOC Governor Zhou recently. We do not see this eroding investor confidence in the CNY, which we believe remains on an appreciation path. The future growth picture in China is very positive as long as deleveraging reform is ongoing. Once the reform is completed, the economy will be driven mostly by high-growth, high-tech sectors. The economic fundamentals for the CNY remain strong. We reiterate our 6.50 USD/CNY forecast for the end of 2017 and our forecast of further 4% appreciation in 2018.”

The ECB appears to be working hard to prepare markets for an announcement about its QE plans for 2018, next Thursday, suggests Kit Juckes, Research An

The ECB appears to be working hard to prepare markets for an announcement about its QE plans for 2018, next Thursday, suggests Kit Juckes, Research Analyst at Societe Generale.Key Quotes“An extension of QE is widely anticipated, but with some Council members canvassing for the programme t to end in 2018 and for the absolute size of the balance sheet being limited, the choice is between a faster pace or a shorter period of time, and slower bond-buying for longer. Buying less for longer without an explicit commitment to stop the programme on a given date is a likely compromise, which is hoped by some to push expectations of the first rate increase well into 2019 and thereby avoid putting upward pressure on the euro. Anatoli thinks we end up with none month extension at EUR 25bn per month, possibly also buying debt with longer maturities.” “The FX implications are modest, though at the margin a slower pace of buying puts a floor under yields. The idea that pushng the first rate hike further away will hold the euro down doesn’t really make sense to me in the current environment. If markets conclude that QE IS going to end in 2018, they will also conclude that the ECB remains firmly on a path back to normal policies. I don’t see how a clear path to policy normalisation, combined with solid growth and a sizeable current account surplus, are consistent with a EUR/USD rate that is 7-10% below ‘PPP’ and 9% below the average of the last decade. EUR/USD is stuck in its 1.1660-1.1890 range and doesn’t look set to break out, but we still expect 1.27 by the end of 2018, and we expect EUR/JPY to go on rising steadily towards 140.”  

Spain 30-y Bond Auction rose from previous 2.804% to 2.874%

According to James Smith, Economist at ING, a drop in retail sales emphasises the fragile nature of UK consumer spending. Key Quotes “At -0.8%, the

According to James Smith, Economist at ING, a drop in retail sales emphasises the fragile nature of UK consumer spending.Key Quotes“At -0.8%, the latest month-on-month fall in retail sales suggests that things haven’t got a whole lot better for consumer spending, after what was a particularly woeful second quarter. As the real wage squeeze continues to persist, shoppers appear to be remaining cautious when it comes to non-essentials. Non-food retailers - which includes department stores - saw sales drop by 1.5% in September, whilst internet retailers continue to dominate the high street. Both of these developments back up what we've seen in other data from Visa and the British Retail Consortium.” “With inflation likely to stay up around 3% for the next few months (albeit set to peak in October) and wage growth set to hover just above 2% in the medium-term, the pressure on household budgets is unlikely to dissipate for at least a couple more quarters. It's also true that much of the spending we've seen throughout the last year has been fuelled by surging borrowing. Whilst much of that is confined to car financing, if consumers start to take a more cautious approach to unsecured lending more generally, that would keep a lid on any recovery in retail spending.” “Fragile consumer spending is a key reason why we think the Bank of England will take a cautious approach to raising rates. Whilst we expect the Bank to exit "emergency mode" with a November rate rise, we are yet to be fully convinced that the Bank will quickly follow up with a second hike over coming months.”

Spain 3-y Bond Auction up to 0.043% from previous 0.026%

Brent prices are down 1.17% in Europe following Wednesday's 'indecision candle' (Doji). At the time of writing, the front month contract was trading

Brent prices are down 1.17% in Europe following Wednesday's 'indecision candle' (Doji). At the time of writing, the front month contract was trading 70 cents lower at $57.45/barrel. Prices clocked a high of $58.30 earlier today. The drop in oil prices in the European session goes well with the risk-off action in the broader market (European equities are down, safe havens - Gold, Treasury prices and Yen are up). Oil specific factors favor upside in the prices. To start with, analysts and traders see OPEC, Russia and other major producers extend the global output deal beyond its expiry date at the end of March 2018. Meanwhile, in the US inventories continue to fall. The US Energy Information Administration (EIA) reported on Wednesday that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.Bearish doji reversal?Yesterday's Doji candle, if followed by an end of the day close below $57.28 (Oct 6 high) today, would signal bearish doji reversal.

Spain 10-y Obligaciones Auction up to 1.62% from previous 1.36%

Spanish spokesman Méndez de Vigo has confirmed the implementation of the article 155.  "In the absence of a response in the terms demanded, the Gover

Spanish spokesman Méndez de Vigo has confirmed the implementation of the article 155. Next Saturday, there will be an extraordinary council of ministers where it will be approved to go ahead with the procedures. "In the absence of a response in the terms demanded, the Government understands that the request has not been answered and will continue with the procedures established to implement Article 155", the Spokesman said .Read latest headlinesCatalan Leader threatens Spanish PM to declare formal independence if no dialogue Spanish government spokesman to make official statement on Catalonia at 8.30 GMT Spanish government ready to begin procedures to invoke article 155  

EUR/GBP jumped 30 pips to a fresh session high of 0.8970 after the UK Office for National Statistics (ONS) data showed UK consumers are feeling the pi

EUR/GBP jumped 30 pips to a fresh session high of 0.8970 after the UK Office for National Statistics (ONS) data showed UK consumers are feeling the pinch of creeping inflation. UK retail sales dropped 0.8% m/m in September, which is way bigger than the estimated drop of 0.1%. The sharp drop pushed the annualized figure lower to 1.2%. Core retail sales (excluding fuel) dropped 0.7% m/m. Year-on-year, core sales growth slowed to 1.6%. The dismal retail sales data could be an indication that the UK consumer is no longer resilient. The data only adds to the pressure on the Bank of England to act (hike rates). The markets have already priced-in a symbolic move in November. Most economists see little scope for further policy normalization given the Brexit uncertainty. Meanwhile, EUR remains well bid in the face of increasing tensions in Spain. As per latest reports, the Spanish government is ready to begin the procedures provided by the article 155 of the Constitution to restore legality in Catalonia.EUR/GBP Technical LevelsThe pair clocked a high of 0.8975 and was last seen trading around 0.8970. The immediate resistance is lined up at 0.8993 9Oct 6 high), which, if breached, would expose 0.9033 (previous week's high) and 0.9049 (late Oct 2016 high). On the downside, breach of support at 0.8929 (100-DMA) would expose support at 0.8897 (previous day's low) and 0.8891 (July 27 low).  

The British Pound is now losing the grip vs. the greenback and dragging GBP/USD to fresh session lows in the vicinity of the 1.3130 handle. GBP/USD o

The British Pound is now losing the grip vs. the greenback and dragging GBP/USD to fresh session lows in the vicinity of the 1.3130 handle.GBP/USD offered on data, BrexitCable remains depressed on Thursday following lower-than-expected retail sales in the UK economy for the month of September. In fact, headline sales contracted at a monthly 0.8% vs. a forecasted drop of 0.1%. On a yearly basis, sales expanded 1.2%, also below estimates. Further data saw sales excluding the Fuel component also missing estimates and contracting 0.7% inter-month and rose 1.6% over the last twelve months. In the meantime, renewed Brexit concerns keep weighing on the Sterling, while the now better tone around the greenback is also putting Cable under further downside pressure.GBP/USD levels to considerAs of writing the pair is retreating 0.51% at 1.3138 facing the next support at 1.3134 (low Oct.19) seconded by 1.3121 (low Oct.12) and then 1.3045 (100-day sma). On the flip side, a breakout of 1.3228 (high Oct.19) would open the door to 1.3289 (21-day sma) and finally 1.3338 (high Oct.16).

Spanish government spokesman Íñigo Méndez de Vigo will hold a press conference today at 8.30 GMT, answering Catalan President Carles Puigdemont.

Spanish government spokesman Íñigo Méndez de Vigo will hold a press conference today at 8.30 GMT, answering Catalan President Carles Puigdemont, who just sent a letter to the Spanish PM Mariano Rajoy. 
Puigdemont has told the Spanish government he will declare Independence if Spain applies the 155 article from the constitution, that would allow them to take over the Catalan government, effectingly suspending Catalonia’s autonomy.
Expect the announcement to have an effect in the EUR/USD and EUR pairs, already down significantly today.    

The office for National Statistics (ONS) published the UK’s retail trade report, which showed that the UK consumer spending stalled its rebound and

The office for National Statistics (ONS) published the UK’s retail trade report, which showed that the UK consumer spending stalled its rebound and showed a bigger-than expected drop in the month of September. The UK’s retail volumes came in at -0.8% in September m/m, while the annualized retail spending dipped sharply to 1.2%. Markets had estimated a -0.1% reading on a monthly basis; while a 2.1% print was expected on yearly basis. Retail sales excluding volatile items such as fuel also disappointed, arriving at -0.7% m/m and 1.6% y/y.

Hong Kong SAR Unemployment rate: 3.1% (September)

United Kingdom Retail Sales ex-Fuel (YoY) registered at 1.6%, below expectations (2.4%) in September

United Kingdom Retail Sales ex-Fuel (MoM) registered at -0.7%, below expectations (0.1%) in September

United Kingdom Retail Sales (MoM) came in at -0.8%, below expectations (-0.1%) in September

United Kingdom Retail Sales (YoY) came in at 1.2%, below expectations (2.1%) in September

The position by Spanish PM Rajoy to Puigdemont's letter, according to local sources, is that Spain will continue with the procedures provided by the a

The position by Spanish PM Rajoy to Puigdemont's letter, according to local sources, is that Spain will continue with the procedures provided by the article 155 of the Constitution to restore legality in Catalonia. El Pais reports that "If the Government that presides Mariano Rajoy considers that Carles Puigdemont has not responded to the request on clarifying the Independence status, the Spanish government will begin the procedures to implement Article 155 of the Constitution involving the suspension of self-government in Catalonia." As reported earlier, the Government's formal reaction to the letter of Carles Puigdemont is expected any minute. Sources note that the Spanish spokesman Méndez de Vigo is scheduled to appear at 8.30 GMT (10:30 am local time)

In view of CME Group’s advanced data for EUR futures markets, traders scaled back their open interest positions by more than 2.1K contracts on Wednesd

In view of CME Group’s advanced data for EUR futures markets, traders scaled back their open interest positions by more than 2.1K contracts on Wednesday vs. Tuesday’s final 447,557 contracts. On the opposite side, volume rose by nearly 9.9K contracts.EUR/USD rallies faces resistance near 1.1880EUR/USD’s closed near session tops on Wednesday. The move has been accompanied by a decrease in open interest while volume extending the recent up trend, all indicative that rallies should lack of traction ahead of the key recent tops in the 1.1880 area.

The GBP/JPY pair fell more than 100 pips to 148.18 in the last one hour, reportedly due to fears of UK-EU fallout and Yen strength. The British Pound

The GBP/JPY pair fell more than 100 pips to 148.18 in the last one hour, reportedly due to fears of UK-EU fallout and Yen strength. The British Pound is not the most loved currency this Thursday as UK PM Theresa May is under pressure to make 'deal or no deal' ultimatum at the Brexit summit. 'No deal' would be damaging for both sides, however, markets tend to punish British Pound first. Meanwhile, media reports in the UK say EU leaders expect no progress in negotiations from either side at  the two-day summit in Brussels. Longer the deadlock, more will be the political uncertainty. The drop in the GBP/JPY is accentuated by the decline in the USD/JPY pair. Looking ahead - The immediate focus is on the UK retail sales release. Pound could strengthen if the UK data betters estimates, although the sustainability of gains depends on the outcome of the Brexit summit.GBP/JPY Technical LevelsA break below 148.00 (zero figure) would expose 147.77 (Oct 17 low). A violation there could yield sell-off to 145.94 (50-DMA). On the higher side, a move above 148.50 (5-DMA) may see the pair re-test 149.00 (zero levels) and 149.12 (4-hour 100-MA).  

Following today's letter exchanged between the Catalan Leader, Carles Puigdemont, and the president of the Spanish government, Mariano Rajoy, Reuters

Following today's letter exchanged between the Catalan Leader, Carles Puigdemont, and the president of the Spanish government, Mariano Rajoy, Reuters reports that a Spanish government spokesman is due to make an official statement on Catalonia at 9.30 GMT. 

Analyst at Danske Bank Mathias Mogensen assessed the recent price action around the Norwegian Krone. Key Quotes “Yesterday saw EUR/NOK rise to the h

Analyst at Danske Bank Mathias Mogensen assessed the recent price action around the Norwegian Krone.Key Quotes“Yesterday saw EUR/NOK rise to the high end of the 9.25.9.40 range. While the rise benefits our bullish EUR/NOK position from Reading the Markets Norway, we think the move seems slightly overdone given the coinciding moves in not least the oil price”. “It could suggest some specific flows have gone through and as such we do not expect EUR/NOK to break above the range in today’s session”. “In terms of the SEK, today’s labour market report is notoriously volatile and one should probably fade any initial spot (over-) reaction. We still think EUR/SEK is a 9.50-9.65 range play”.

In another exchange of letters between the Catalan Leader, Carles Puigdemont, and the president of the Spanish government, Mariano Rajoy, the hard-lin

In another exchange of letters between the Catalan Leader, Carles Puigdemont, and the president of the Spanish government, Mariano Rajoy, the hard-line stance by the former has remained unshakable.  In the formal letter sent to Rajoy, the Catalan president admits that the declaration of independence was not voted in Parliament and remains suspended, however, he warns Rajoy that if he persists in preventing dialogue, the Parliament will declare independence.

Germany's DHK Chambers of Commerce out with latest forecasts on the German economy: Raises 2017 GDP forecast to 2.0% vs 1.8% prev 2018 GDP 2.2% Gro

Germany's DHK Chambers of Commerce out with latest forecasts on the German economy: Raises 2017 GDP forecast to 2.0% vs 1.8% prev 2018 GDP 2.2% Gross investments to rise 3.3% in 2017, 3.9% in 2018 Exports to rise 4.0% in 2017, 4.5% in 2018 Imports to rise 4.5% in 2017, 5.0% in 2018 German companies see shortage of skilled labour and rising labour unit costs as main risks

In view of Axel Rudolph, Senior Analyst at Commerzbank, the pair’s upside could now re-visit the 1.1840 region in the near term. Key Quotes “EUR/USD

In view of Axel Rudolph, Senior Analyst at Commerzbank, the pair’s upside could now re-visit the 1.1840 region in the near term.Key QuotesEUR/USD’s recent decline has taken it to yesterday’s low at 1.1730 before the cross began to rise again. Today it targets the 55 day ma at 1.1840 and over the coming days the 1.1880/1.1910 early August and current October highs. Around this area the currency pair should fail again. The 1.1910 level guards the 1.2092 September high”. “Support below the recent low at 1.1730 can be seen at key support at 1.1669/62. Failure at these August and current October lows would push the late July low at 1.1613 to the fore and also confirm a top formation. Such a move would trigger a sell-off to the mid-June high at 1.1296 and the more important 1.1110 end of May low”. “Above 1.2092 would target the 50% retracement from the move down from the 2014 high at 1.2168 and the 1.2383 200 month ma, but if seen, that is expected to hold”.

Rallies are on the cards for USD/CAD pair, as the daily indicators have recovered, towards a resistance at 1.2580-1.2591 (daily parabolic) strong barr

Rallies are on the cards for USD/CAD pair, as the daily indicators have recovered, towards a resistance at 1.2580-1.2591 (daily parabolic) strong barrier ahead of 1.2647 (weekly Bollinger moving average), suggests Micaella Feldstein, Research Analyst at Natixis.Key Quotes“The break of this last barrier would negate the weekly downside parallels, providing fresh bullish impetus and paving the way for a sustained rally to 1.2765-1.2781 (Fibonacci extensions) ahead of 1.2970 (9 month moving average). The supports are at 1.2461-1.2470, at 1.24-1.2420, at 1.2318-1.2334 and at 1.2120.”

USD/JPY is fast losing altitude, now trading at 112.76 after spending entire Asian session and early European session battling the bears above the psy

USD/JPY is fast losing altitude, now trading at 112.76 after spending entire Asian session and early European session battling the bears above the psychological level of 113.00.Treasury yields dropThe yield on the 10-Treasury note is down 1.2 basis points. More important, the curve (spread between the 10-yr yield and the 2-yr yield) continues to flatten. It currently stands at 77.6 basis points; the narrowest since August 2016. The Fed December rate hike has been priced-in as well. Furthermore, there is plenty of event risk today - Catalan President Puigdemont's decision and Brexit Summit. Consequently, the Yen and Treasury prices are likely to stay bid on haven demand. Only continuation of the record rally in the US stocks could ensure the USD/JPY cuts through offers above 113.00 handle. Looking ahead - the focus will be on the US stocks, treasury yields and US data releases - jobless claims and regional manufacturing indices.USD/JPY Technical LevelsThe immediate support is lined up at 112.72 (Sep 21 high), which, if breached, shall open up downside towards 112.43 (10-DMA) and 112.38 (5-DMA). On the higher side, a 4-hour close above 113.00 would open doors for a sustained rally to 114.18 (early July high) and 114.49 (July high).  

Prakash Sakpal, Economist at ING, suggests that they forecast range trading in USD/INR around 65.00 over the next 12 months. Key Quotes “The US Trea

Prakash Sakpal, Economist at ING, suggests that they forecast range trading in USD/INR around 65.00 over the next 12 months.Key Quotes“The US Treasury noted in its semi-annual currency manipulator report that, “Over the first half of 2017, there has been a notable increase in the scale and persistence of India’s net foreign exchange purchases, which have risen to around $42 billion (1.8 percent of GDP) over the four quarters through June 2017. India has a significant bilateral goods trade surplus with the United States, totalling $23 billion over the four quarters through June 2017. Treasury will be closely monitoring India’s foreign exchange and macroeconomic policies.” “The US Treasury’s report may bring some respite from recent INR depreciation pressure. USD/INR spiked above 65.50 in September in a sudden reversal of fortune caused by significant equity and bond market outflows associated with negative macro news of slowing GDP growth, rising CPI inflation, and an elevated risk of a budget deficit overshoot as fiscal policy gears to supporting growth. We also see the issue of twindeficit resurfacing as overhang on investor sentiment toward the INR going forward.” “Better activity data last week – lower CPI and WPI inflation in September and acceleration if industrial production in August – helped USD/INR drift below 65.00, though gains were short-lived (spot 65.04). We think it would take continued good economic news or a dramatic weakening in the USD for the pair to retest the August low of 63.58. We forecast range trading around 65.00 over the next 12 months.”

The EUR/USD pair caught a fresh bid-wave and jumped to fresh daily tops of 1.1822, after the Calatan leader Puigdemont’s comments, only to fade the re

The EUR/USD pair caught a fresh bid-wave and jumped to fresh daily tops of 1.1822, after the Calatan leader Puigdemont’s comments, only to fade the renewed uptick last minutes in a bid to retest 1.1800 levels.EUR/USD still above 5-DMA at 1.1796The spot is seen consolidating the renewed upside, although manages to hold the 1.18 handle, as markets assess the implications of Catalonia’s President Puigdemont’s independence declaration for Spain and EU as a whole. Markets are now speculating that Spain PM Rajoy may call cabinet meeting on Saturday, to discuss the triggering of the Article 50, which could keep a check on further gains. However, the downside remains limited amid fresh broad based USD selling, as the European traders react to the lack lustre US data released a day before. Meanwhile, negative sentiment on the European equities amid disappointing earnings, also offers some support to the funding currency Euro. Later today, the pair will get influenced by the sentiment around the European markets and Catalan political updates, as traders gear up for the US jobless claims and Philly Fed manufacturing index data.EUR/USD Technical ViewAccording to Jim Langlands at FX Charts: “The dailies are now pretty flat so some caution is warranted on the downside and the 4 hour charts do point a little higher but as long as we stay under 1.1880 I am happy to be short, with the need to keep a tight SL in place above 1.1900. The H/S objective is at around 1.1250.”4 Hour: Mildly Bullish – Prefer to sell rallies  Medium Term: Mildly Bearish  Resistance Support  1.1879/82 12 Oct high/(50% of 1.2092/1.1669)/Descending trend resistance 1.1750 Minor 1.1874/70 14 Oct high/Neckline resistance 1.1729 Session low 1.1840 Minor 1.1720 (76.4% of 1.1668/1.1880) 1.1819 16 Oct high 1.1700 Minor 1.1805 Session high 1.1661 17 Aug low

The pickup in daily volatility of German Bunds, the favourable orientation of the daily indicators and the turnaround of the weekly stochastic should

The pickup in daily volatility of German Bunds, the favourable orientation of the daily indicators and the turnaround of the weekly stochastic should support the contract over the next few trading sessions, according to Micaella Feldstein, Research Analyst at Natixis.  Key Quotes“Under these conditions, dips should be short lived and we’ll keep an eye on the resistances around 162.77-162.91 (weekly Bollinger moving average). A breakout above these levels would instil new upward momentum towards the resistance at 163.48 (monthly Bollinger moving average) ahead of 163.80-164 (Fibonacci extensions) and 164.80-165. The contract could even push higher to 165.50 (weekly parabolic).”  “Support levels are located at 162.27, at 161.74-161.91, at 161.30161.50, around 160.96-161.08 and at 160.68.”

The greenback, in terms of the US Dollar Index, stays on the defensive for the second session in a row on Thursday and is currently hovering over the

The greenback, in terms of the US Dollar Index, stays on the defensive for the second session in a row on Thursday and is currently hovering over the low-93.00s.US Dollar attention to US dataThe index lost upside momentum following yesterday’s tops, always reflecting the performance of yields in the US money markets, where the key 10-year reference is now navigating the area of session lows in sub-2.34% levels. The greenback keeps looking to US politics for direction, particularly headlines related to the tax reform proposed by the Trump administration and the potential implementation by year-end. In addition, investors stay vigilant on the probable successor of Janet Yellen, with FOMC’s J.Powell (dovish) and J.Taylor (hawkish) being the favourite candidates for the time being. Looking ahead, the Philly Fed manufacturing index next on tap seconded by the usual weekly report on US labour market and the speech by KC Fed E.George (2019 voter, hawkish).US Dollar relevant levelsAs of writing the index is losing 0.10% at 93.09 and a break below 93.01 (10-day sma) would expose 92.85 (low Oct.16) and then 92.57 (55-day sma). On the flip side, the next resistance lines up at 93.34 (100-day sma) followed by 93.55 (high Oct.18) and finally 94.03 (23.96% Fibo of the 2017 drop).

According to Prakash Sakpal, Economist at ING, Australia’s strong jobs growth will need to translate into consumption, which hasn’t been the case so f

According to Prakash Sakpal, Economist at ING, Australia’s strong jobs growth will need to translate into consumption, which hasn’t been the case so far in support for an early RBA rate hike.Key Quotes“Australia’s September labor report was another upside surprise, with 19.8k jobs growth and a further fall in the unemployment rate to 5.5% from 5.6% in August (consensus: 15k and 5.6%). Part-time jobs rose by 13.7k, almost same rise as in August, while there was a sharp slowdown in the full-time jobs to 6.1k from 39.5k. The participation rate was steady at 65.2%.” “Steady part-time jobs growth and participation rate indicate that that even new entrants to the labor force are finding it easy to obtain work. However, strong jobs growth needs to translate into private consumption, which hasn’t been the case so far. A dismal retail sales growth in August reduced the likelihood of an early RBA rate hike.”

According to Micaella Feldstein, Research Analyst at Natixis, the weak daily volatility of EUR/GBP cross is a major obstacle to a lasting rebound of t

According to Micaella Feldstein, Research Analyst at Natixis, the weak daily volatility of EUR/GBP cross is a major obstacle to a lasting rebound of the pair over the  coming sessions, all the more so since the daily stochastic has pulled back and the weekly stochastic is struggling to recover.Key Quotes“Under these conditions, a clean breakout above the resistance levels around 0.8988-0.90 (upper band of daily Bollinger) seems difficult. Watch out rather for pullbacks towards 0.8864 (daily Bollinger moving average), the last support before 0.8777-0.8794 and even 0.8740-0.8760 (lower band of daily Bollinger).”

Sweden Unemployment Rate above expectations (6%) in September: Actual (6.2%)

EUR/GBP clocked a 5-day high of 0.8958 in Europe, despite reports that Catalan leader Puigdemont is set to bid for independence today. The official d

EUR/GBP clocked a 5-day high of 0.8958 in Europe, despite reports that Catalan leader Puigdemont is set to bid for independence today. The official decision is due at 08:00 GMT. According to La Vanguardia, Puigdemont is all set to tell Spanish PM Rajoy that he is ready for independence. In such a case, the political crisis could worsen as PMI Rajoy has made it clear several times that he would trigger Article 155 of Spain's constitution - a measure that would allow it to start imposing direct rule over semi-autonomous Catalonia - if Puigdemont bids for independence. So far, the common currency has not shown any sign of weakness. But, things may change if the political tensions escalate. Meanwhile, the UK retail sales data due at 08:30 GMT could influence the demand for the British Pound.EUR/GBP Technical LevelsThe cross was last seen trading around 0.8950 levels. The immediate resistance is lined up at 0.8993, which, if breached, would expose 0.9033 (previous week's high) and 0.9049 (late Oct 2016 high). On the downside, breach of support at 0.8929 (100-DMA) would expose support at 0.8897 (previous day's low) and 0.8891 (July 27 low).
   

In response to the Catalan leader Puigdemont’s independence declaration, the Spanish PM Rajoy is expected to call a cabinet meeting on Saturday, La Va

In response to the Catalan leader Puigdemont’s independence declaration, the Spanish PM Rajoy is expected to call a cabinet meeting on Saturday, La Vanguardia reports.

UK retail sales Overview The UK retail sales data is expected to drop to -0.1% m/m in September, while on annualized basis, retail sales are also see

UK retail sales OverviewThe UK retail sales data is expected to drop to -0.1% m/m in September, while on annualized basis, retail sales are also seen ticking lower to 2.1%. In August, retail sales were seen at 1.0% over the month and 2.4% annually. Meanwhile, core retail sales data, excluding fuel, are expected to come in at 0.1% m/m and 2.4% y/y. The report will be published later this session at 0830 GMT.Deviation impact on GBP/USD Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 70 pips in deviations up to 3.5 to -1.5, although in some cases, if notable enough, a deviation can fuel movements of upto 100 pips.How could affect GBP/USD?A positive surprise in the retail sales report could offer fresh impetus to the GBP bulls, taking the rate back above 1.3220/30 barrier. While a bigger-than expected drop in the retail volumes would knock-off the pair back to 1.3155/50 – key support area. However, the reaction to the UK data is expected to be limited, as the main market moving event for the pound today remains the Brexit Summit, with the UK PM Theresa May’s speech eagerly awaited for some clarity on the Brexit talks.Key notesMarket movers today – Danske Bank UK: Brexit negotiations to take centre stage - TDSAbout UK retail salesThe retail Sales released by the National Statistics measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.  

James Smith, Developed Markets Economist at ING, suggests that ahead of this week's EU summit, there has been a lot of talk about when a transition de

James Smith, Developed Markets Economist at ING, suggests that ahead of this week's EU summit, there has been a lot of talk about when a transition deal can be agreed. But it's not just a question of when, the details matter just as much, he further adds.Key QuotesWith a transition deal, it is not just a question of when...When will a transition deal be agreed between the UK and EU? That's one of the big Brexit questions at the moment, and with the latest round of talks end in "deadlock", the consensus is, well, not soon. The European Council is widely expected to vote the end of this week that there has not been "sufficient progress" to justify moving talks forward. But a couple of weeks ago, there were reports that some countries were pushing to expand Barnier's mandate at this week's summit to allow a quick agreement on a transition deal, if not moving fully on to discuss trade. That's looking less likely now - Germany and France are reported to be reluctant to progress without further commitments on the UK's financial liabilities. Either way, the timing of the transition announcement matters because, with the clock ticking, firms are running out of time to enact contingency plans if they don't have certainty about the trading environment in the immediate Brexit aftermath - particularly given the renewed debate about a "no deal" scenario. Timing is also important because the agreement should in principle see some delayed investment and hiring plans get enacted. But it's not quite that binary - the details count just as much as the announcement. Here are four other factors that will affect how a transition period will affect the economy...” “What actually is the transition deal?This may sound like a fairly basic detail, but there has been some confusion in recent weeks over what the transition deal will actually entail. The UK government's official position is that a deal will be fully negotiated and agreed by March 2019, with a transition - or rather implementation period - simply there for businesses to adjust. But with the clock ticking on the article 50 process, there has been a lot of scepticism over whether it will be possible to agree everything by March 2019. After this week, the next opportunity for the European Council to vote in favour of "sufficient progress" vote be in December. That would leave less than a year to negotiate the final deal, allowing in 4-5 months for ratification. Remember that CETA, the EU-Canada deal, took seven years to negotiate (although as many point out, the starting point between the UK and EU is obviously very different). It is therefore possible that both sides agree to the framework of trade talks, perhaps with agreement on some "high level" principles, and leave the finer details to be thrashed out in the transition.” “How long with the transition be?If that latter scenario does materialise - if trade talks were to end up continuing in some form into the transition period - then the length will really start to matter. The UK is currently opting for a two-year transition, which could conceivably see the return of cliff-edge fears if there are important details about the post-Brexit trading environment left to be agreed. In the same way that businesses will need advance warning of the form the transition will take, they will also need to know what the UK's ultimate trading relationship will be well in advance of the transition coming to an end. But it's not just firms who are uncertain. As was discussed in an interesting FT article today, there are a number of logistical considerations too when it comes to customs checks, and whether two years would be enough to train the necessary staff and construct the required infrastructure to monitor the border.” “What are the terms?Following PM May's Florence speech, it looks increasingly likely that any transition phase would be "status quo". That means that the UK will remain part of the single market during this time, which means that businesses in theory only need to adjust once. But there are is still political disagreement on the role of the European Courts of Justice during the transition, given that the UK would be subject to any ECJ rulings, and also some UK politicians are against being a "rule taker" - where the UK must abide by the rules of the single market, but can no longer set them. There have also been some question raised by politicians on the European side as to what financial contributions the UK should make during the transition.” “Will a transition be effective without clarity on a final deal?This is a big question for the economy. The logic of a transition period is to avoid firms preparing for the worst case "cliff edge", but also to allow extra time to adjust to the post-Brexit environment. As we said earlier, that should see some shorter-term investment plans enacted. But given that in all likelihood, the transition will be agreed before the details of the final trading arrangement, firms are likely to maintain an air of caution about their approach to larger, longer-term investments in the UK.” “All of this matters for the Bank of EnglandThe Bank of England looks set to hike rates in November, but one of their key assumptions is that the Brexit process will be "smooth". But given the number of open questions, not just on the transition, but on various Brexit issues, the Bank is likely to proceed cautiously until the picture becomes clearer. So at this stage, we feel that it is more likely than not that the Bank decides to stay hold through next year.”

Hungary Gross Wages (YoY) up to 13.2% in August from previous 13.1%

The offered tone around the New Zealand dollar strengthened, pushing the NZD/USD to 4-1/2 month low of 0.7048 after NZ First said it will back the lab

The offered tone around the New Zealand dollar strengthened, pushing the NZD/USD to 4-1/2 month low of 0.7048 after NZ First said it will back the labor party to form a new government.Jacinda Ardern to be the next NZ PMLeader of the Labour Party, Jacinda Ardern will become the next New Zealand Prime Minister. Mr. Peteres may become the Deputy Prime Minister. The opinion polls in the run up to the vote had indicated that Kiwi bulls favor the incumbent government. Investors also fear that the new government may take measures to correct the NZD overvaluation. Mr. Peters has often questioned the need to persist with an inflated dollar. No wonder, the Labour-NZ First coalition announcement has not gone down well with the markets.NZD/USD Technical LevelsAt the time of writing, the currency pair is trading at 0.7040. The immediate support is lined up at 0.7032 (weekly 100-MA) ahead of 0.70 (psychological support), which, if breached shall open doors for test in July 2016 low of 0.6951. On the higher side, a move above 0.7050 (previous week's low) could yield 0.71 (zero levels) and 0.7114 (10-day MA).  

Analysts at TDS point out that the EU27 leaders meet today and tomorrow to decide whether or not to advance Brexit negotiations to the trade-focused s

Analysts at TDS point out that the EU27 leaders meet today and tomorrow to decide whether or not to advance Brexit negotiations to the trade-focused second phase.Key Quotes“A leaked draft of the summit statement suggests this will not happen; instead the leaders will wait until December’s meeting after more progress has be made on talks. The draft does show that they are willing to start their own internal preparations to discuss the transitional agreement between now and December, though, with Tusk confirming that story yesterday afternoon.” “We also have retail sales data for September today. After three consecutive months of growth (the first time this has occurred since early-2015), we expect UK retail sales to stagnate in September with no change, against market expectations of a 0.2% m/m decline.”  

Michael Gordon, Research Analyst at Westpac, explains that after several days of negotiations, NZ First party leader Winston Peters has announced that

Michael Gordon, Research Analyst at Westpac, explains that after several days of negotiations, NZ First party leader Winston Peters has announced that he will seek to form a coalition government with the Labour Party, which marks the end of nine years of government led by the National Party.Key Quotes“Labour and NZ First together have 55 of the required 61 seats in Parliament, so will require the support of the Green Party to reach a majority. The Greens were not directly involved in the negotiations, but are expected to provide a supply and confidence agreement.” “No policy positions have been formally announced yet. However, in the press conference Peters stated that his decision was based on which party would best protect the economy during what he sees as a looming downturn. Infrastructure, regional development and social housing are likely to feature.” “Other likely areas of policy change are around migration, foreign ownership of assets, and the Reserve Bank’s policy targets.” “The New Zealand dollar fell from 0.7100 to 0.7060 after the announcement, and has fallen by about a cent over the course of the day.”

Reuters published its latest poll on the ECB’s policy move, when it meets next week on Oct 26th. Key Findings: ECB to announce on Oct 26 a reduction

Reuters published its latest poll on the ECB’s policy move, when it meets next week on Oct 26th.Key Findings:ECB to announce on Oct 26 a reduction in monthly asset purchases from Jan ECB to cut monthly asset purchases by 20 bln euros from January to 40 bln per month, median shows; range 5-40 bln Euro Zone GDP growth seen at 0.5% Q3 2017, 0.5% Q4 2017, 0.4% Q2–Q4 2018

Analysts at Danske Bank point out that today, the two-day EU summit in Brussels kicks off and markets will again focus on any headlines regarding Brex

Analysts at Danske Bank point out that today, the two-day EU summit in Brussels kicks off and markets will again focus on any headlines regarding Brexit, as UK Prime Minister Theresa May will share her reflections on the current state of negotiations during EU leaders' working dinner later today.Key Quotes“In the UK, we get retail sales for September. The indicator usually moves markets but in reality it is a very weak indicator of actual consumption growth.” “The Philly Fed index is due to be released in the US and consensus is for a moderate decline to 22.0, as any meaningful progress with tax legislation and the potential for fiscal stimulus remains absent.” “In Scandinavia, the Swedish unemployment rate for September is due out, which we estimate to have decreased slightly to 6.5%.”

La Vanguardia, a Spanish daily newspaper, is out with the breaking news, citing that the Catalan leader Puigdemont told Spain PM Rajoy that he is read

La Vanguardia, a Spanish daily newspaper, is out with the breaking news, citing that the Catalan leader Puigdemont told Spain PM Rajoy that he is ready for independence.EUR/USD is seen heading back towards daily tops of 1.1816 on the above headlines.

Analysts at TDS explain that it was another Australian headline jobs beat vs consensus, with full-time employment and hours worked powering ahead as h

Analysts at TDS explain that it was another Australian headline jobs beat vs consensus, with full-time employment and hours worked powering ahead as headline employment rose by another +19.8k in September, with the outsized employment beat for August barely touched at +53k. In addition, the unemployment rate stepped down to 5.5% as the participation rate remained unchanged at 65.2%, they further add.Key Quotes“The acceleration in trend full-time jobs and hours worked at the expense of part-time has been a welcome theme all year. This is the mirror image of the weak composition that prevailed in 2016, where all net jobs created were part-time, skewed towards males. Those weak trends sparked the “spare capacity” concerns of the then newly minted RBA Governor Lowe. Surely he must be convinced by now that the labour market is more robust by the day!” “Annual employment growth jumped to 3.1%/yr, boosted by base effects of a negative September 2016 report. We see the NAB net employment balance as being more forward looking than the ANZ and the skilled vacancy series, and suggests that employment growth can be comfortably tracking between 2½-2¾% into mid-2018.” “Implications This employment report confirms that 2017 is the year of strong labour market dynamics. The next step in the Phillip’s curve cycle is higher wages growth, in turn spurring higher core inflation. RBA Governor Lowe’s speech in July first explained the policy dilemma of using monetary policy to mitigate the flat(ter) Phillips curve with high and rising household debt, as it sparks financial stability risks. Our (very) long-held view is that we expect wage inflation to pick up towards 2½%/yr (Q3 released 15 Nov) not only via minimum wages but also via further improvement in wages in the cyclical industries (manufacturing, construction, etc). Our base case remains for +25bp in May 2018 unless wages and CPI materially surprise to the upside (we look for core inflation to reach 2%/yr next week). OIS at present is only 33% priced for a rate hike in May 2018.”

The rise in the treasury yield and the resulting strength in the USD, coupled with fresh record highs on Wall Street pushed gold (XAU/USD) prices to a

The rise in the treasury yield and the resulting strength in the USD, coupled with fresh record highs on Wall Street pushed gold (XAU/USD) prices to a fresh 10-day low of $1276 levels.Trades above 100-day MAAt the time of writing, the yellow metal has been trading just above the 100-day MA level of $1278.    Prices have dropped $30 this week as the talk of a more hawkish Fed head in 2018 put a bid under the US dollar. The dollar index (DXY) has strengthened 0.76% from  the Oct. 10 low of 92.59. The treasury yields strengthened a well. The 10-year yield added more than 4 basis points on Wednesday and currently trades flat lined around 2.345%. Gold prices may regain bid tone as the December Fed rate hike has been priced-in. Hedge demand may rise with stocks at record highs across the globe.Gold Technical LevelsA breach of $1,278.60 (100-DMA) would expose support lined up at $1,262.80 (low Oct.6) and finally $1,259.24 (200-DMA). On the upside, the immediate resistance is seen at $1,300.66 (55-DMA) followed by $1,308.40 (high Oct.16) and finally $1,312.60 (50% Fibo of the September-October drop).  

What you need to know before markets open: Political risk factors dominate Thursday with Catalan ultimatum on clarifying independence due at 8:00 G

What you need to know before markets open:Political risk factors dominate Thursday with Catalan ultimatum on clarifying independence due at 8:00 GMT and British PM Theresa May trying to break the Brexit talks deadlock at the European summit. EUR is exposed to the political risk of Catalonia breaking free from Spain. GBP will be in the spotlight with the UK retail sales report due 8:30 GMT and European summit focusing on Brexit talks.
Thursday’ s market moving eventsChina’s GDP rose 6.8% y/y in Q3 2017 in line with expectations, but down from 6.9% in first half of the year. China’s industrial production rose 6.6% y/y in September, beating the market expectations of 6.2% rise. Australian employment rose 19,800 over the month while unemployment fell to 5.5% in September boosting AUD. The ultimatum of Madrid to Catalan Prime Minister Carles Puigdemont expires at 8:00 GMT on Thursday to clarify his claims for independence before central government triggers direct control of the regional administration under Article 155 of the Constitution. UK retail sales report is due at 8:30 GMT with sales expected to fall -0.1% m/m in September, down from 1.0% m/m increase in August. US weekly jobless claims are expected to reach 240K after 243K in the previous week.  Philadelphia Fed manufacturing index is expected to decelerate to 22.0 in October. Kansas City Fed President Esther George on "The US Economy: Rural and Urban Growth" in Altus, Oklahoma. British Prime Minister Theresa May will meet European leaders in European summit trying to break current Brexit talks deadlock with little success expected by Brussels insiders.Major forex market moversSee risk on/off hitting the market after Chinese set of data. GBP is likely to be under pressure vs US Dollar after retail sales fall more than expected. USD/JPY was a mover of the day with the US Dollar jumping up above 113.00 level gaining 0.72% vs yen on Wednesday.Wednesday’s macro summaryECB’s president Mario Draghi opened the ECB conference, in Frankfurt with a speech focusing on structural reforms rather than monetary policy. The UK labor market report revealed that the unemployment remained at 42-year low of 4.3% while wages rose 2.2% y/y including bonuses, slightly above market expectations of 2.1% y/y rise. The US housing starts rose 1.13 million in September, down from 1.18 million in August while building permits fell to 1.22 million vs 1.27 million prior month. Dallas Fed president Robert Kaplan said he is worried about a short-term tax cut that raises federal debt load, because it may harm long-term growth. In terms of the neutral policy rate, he thinks that it is at 2.5% due to a potential decline in long-term GDP growth. New York Fed President William Dudley said that the US Dollar is neutral for the US inflation outlook and the US economy has time to enjoy low unemployment and inflation environment. US commercial crude oil inventories decreased by 5.7 million barrels from the previous week.
 

After hitting fresh tops near 1.1820 in early trade, EUR/USD has now receded to the 1.1800 neighbourhood ahead of the opening bell in Euroland. EUR/U

After hitting fresh tops near 1.1820 in early trade, EUR/USD has now receded to the 1.1800 neighbourhood ahead of the opening bell in Euroland.EUR/USD looks to yields, US dataThe pair is looking to extend yesterday’s advance following another test of the support area around 1.1730, although the bullish attempt appears to have run out of legs in the 1.1810.20 band for the time being. On the USD-side, the greenback’s positive streak came to a halt on Wednesday, with the US Dollar Index failing to extend the up move to levels closer to the critical 94.00 handle. Yield spread differentials between US and Germany continue to drive the pair’s price action for the time being, while expectations of some kind of QE-related announcement by the ECB at its meeting next week are also playing their role in the sentiment around EUR. In the data space, nothing noteworthy in the euro area, whereas the Philly Fed manufacturing index will be the salient event later in the NA session along with the speech by KC Fed E.George (2019 voter, hawkish).EUR/USD levels to watchAt the moment, the pair is up 0.14% at 1.1803 and a breakout of 1.1840 (55-day sma) would target 1.1882 (high Oct.12) en route to 1.1911 (high Aug.2). On the other hand the initial support emerges at 1.1730 (low Oct.18) seconded by 1.1686 (low Oct.6) and finally 1.1662 (low Aug.17).

Speaking at the Oil & Money conference in London late-Wednesday, Ian Taylor, Chief Executive Officer at Vitol Group, the world’s largest oil trader, n

Speaking at the Oil & Money conference in London late-Wednesday, Ian Taylor, Chief Executive Officer at Vitol Group, the world’s largest oil trader, noted that he sees Brent oil prices tumbling more-than 20% in 2018.Key Quotes:There’s currently a consensus in the industry that prices will go higher, but that such an unanimity “can be dangerous.” “We are all expecting a little bit of tightening to come through because we all see demand growing next year at a pretty good rate, we all expect OPEC to hold together and we expect probably the capital discipline to [remain in place].” “So it’s guaranteed we are all going to be wrong. And I think there’s a chance oil could fall closer to $40 than $50, because I think there’s still one more big surge coming from U.S., which will knock prices down.”

The GBP/USD pair failed to sustain at higher levels again and trimmed gains over the last hour, as markets await the UK retail sales release for the n

The GBP/USD pair failed to sustain at higher levels again and trimmed gains over the last hour, as markets await the UK retail sales release for the next direction.GBP/USD sold-off near 1.3225 levelsThe spot is seen defending minor bids in early Europe, as investors remain wary over the outcome of the UK retail sales release. Retail sales expected to drop to 0.1% m/m in September, while on yearly basis, the growth is seen slowing to 2.1% from 2.4%.   Moreover, increased cautiousness ahead of the UK PM Theresa May’s speech on the first day of the Brexit/ EU Summit starting later today, also adds to the weight on the pound. Meanwhile, stalled selling the US dollar across the board further collaborates to the renewed weakness seen in Cable. All eyes now remain on the UK retail sales report for fresh trading impetus amid a data-light EUR calendar today.GBP/USD Technical ViewJim Langlands at FX Charts noted: “Technically, the momentum indicators are generally mixed/flat so a neutral stance is required today and I prefer to stand aside, although the hourlies do point to the chance of another topside squeeze, where a break of 1.3210 is needed to allow the chance of a move towards 1.3250, possibly to 1.3280.”24 Hour: Neutral  Medium Term: Neutral  Resistance Support  1.3337 14 Oct high/100 WMA 1.3170 Minor 1.3311 16 Oct high 1.3150 Minor 1.3286 17 Oct high 1.3139 Session low 1.3245 100 HMA 1.3120 12 Oct low 1.3211 Session high /200 HMA 1.3100 Minor  

Switzerland Imports (MoM) increased to 15326M in September from previous 14494M

Switzerland Exports (MoM) climbed from previous 16667M to 18243M in September

News is crossing the wires via LiveSquawk that Labour will form the new government with NZ First. Kiwi is being offered on the news. The bird has hit

News is crossing the wires via LiveSquawk that Labour will form the new government with NZ First. Kiwi is being offered on the news. The bird has hit a new intraday low of 0.7059.   

Switzerland Trade Balance above expectations (2470M) in September: Actual (2918M)

ECB Governing Council member Ewald Nowotny crossed the wires last minutes, via Reuters, commenting on the bloc’s inflation outlook in an interview wit

ECB Governing Council member Ewald Nowotny crossed the wires last minutes, via Reuters, commenting on the bloc’s inflation outlook in an interview with Der Standard.Key Points:ECB cannot stop asset purchases abruptly Decision how to proceed must be made in Oct Sees arguments for slowing purchases Won't reach inflation target this year Expect even lower inflation next year but policy can be normalized before target reached Sees risks of bubbles in Europe with investors seeking alternatives in times of low rates

GBP/JPY rose to a two-week high of 149.40 ahead of the UK data, which could show consumer spending as represented by retail sales dropped in September

GBP/JPY rose to a two-week high of 149.40 ahead of the UK data, which could show consumer spending as represented by retail sales dropped in September.Trades above 4-hour 50-MAAt the time of writing, the cross is trading at 149.35 levels. The 4-hour 50-MA is located at 149.13. UK retail sales are seen falling 0.1% m/m in September. Year-on-year growth is seen slowing to 2.1% from 2.4%. Core retail sales (ex-fuel) are expected to print at 2.4% y/y and 0.1% m/m. Lead indicators suggest the decline in the retail sales could be much less than what economists are calling for. A better-than-expected retail sales figure could strengthen the Pound, although sustainability of the gains depends on the outcome of the Brexit summit to be held later today.GBP/JPY Technical LevelsThe immediate resistance is lined up at 149.75 (Sep. 29 low) ahead of 150.00 (zero levels) and 150.20 (Sep. 29 low). On the downside, breach of support at 149.01 (session low) could yield 148.70 (5-DMA) and 148.47 (10-DMA).  

Analysts at TDS explain that Bank Indonesia surprised the markets by cutting the policy rate by 25bps at each of the last two rate meetings, but today

Analysts at TDS explain that Bank Indonesia surprised the markets by cutting the policy rate by 25bps at each of the last two rate meetings, but today TDS thinks they are unlikely to surprise markets yet again.Key Quotes“We and the unanimous consensus expect the benchmark 7-day reverse repo rate to remain unchanged at 4.25%. While the economy is recovering, GDP has so far failed to accelerate from 5% Y/Y and inflation remains below target for now. CPI stood at 3.7% Y/Y in September, below the recent peak of 4.4% in May, but close enough to the target to allow only ever so slightly policy adjustments that wouldn’t result into uncontrolled acceleration in prices. Moreover, the rupiah is about 1.3% weaker vs USD since the last meeting on 22 Sept, when BI surprised for a second time. We think BI will want to avoid adding more depreciatory pressures to IDR at a time that support for the rupiah has already weakened on a combination of domestic and external factors, supporting our expectation for rates to remain on hold today.”

NZD/USD dropped to a five-day low of 0.7081 as  investors awaited the outcome of talks to form a new government. New Zealand political uncertainty to

NZD/USD dropped to a five-day low of 0.7081 as  investors awaited the outcome of talks to form a new government.New Zealand political uncertainty to end today?New Zealand First, the party which holds the balance of power after last month's inconclusive elections, was set to make an announcement earlier today. However, there is still no announcement, which made investors nervous, leading to a sharp drop in the Kiwi. NZ Hearld says, "the delay could be to NZ First pushing for at least five ministerial posts". At the time of writing, the NZD/USD pair appears to have settled around 0.7110 levels. However, the volatility may rise again for a brief period following the government formation announcement.NZD/USD Technical LevelsA break below the session low of 0.7081 would open doors for 0.7056 (Oct. 10 low), under which a major support is seen at 0.70 (psychological level). On the higher side, a move above 10-DMA of 0.7119 could yield 0.7161 (200-DMA) and 0.7172 (session high).  

Le Figaro, a French daily, reports comments from the UK’s Brexit Minister Davis, via Livesquawk. Key Headlines: A Hard Brexit  is “remote possibil

Le Figaro, a French daily, reports comments from the UK’s Brexit Minister Davis, via Livesquawk.Key Headlines:A Hard Brexit  is “remote possibility”

The latest national accounts data showed that China’s economy expanded by 6.8% yoy in the third quarter, compared with 6.9% in Q2, notes Gerard Burg,

The latest national accounts data showed that China’s economy expanded by 6.8% yoy in the third quarter, compared with 6.9% in Q2, notes Gerard Burg, Senior Economist at NAB.Key Quotes“The 19th National Congress of the Communist Party of China commenced in Beijing this week, a meeting that will shape the country’s leadership for the next five years. As many as five of the seven member Politburo Standing Committee are set to retire, and their replacements may signal whether President Xi is likely to serve an additional five year term (beyond the current one ending in 2022) and whether the stalled reform agenda can be brought back on track.” “As was the case with Q2, economic growth in Q3 was supported with a large scale increase in credit. Reflecting the strength of economic growth across the first three quarters, we have revised our forecast for 2017 to 6.8% (from 6.7% previously). Our forecasts for 2018 and 2019 are unchanged – at 6.5% and 6.25% respectively.” “China’s industrial production grew by 6.6% yoy in September – accelerating from the comparatively weak 6.0% recorded in August. Crude steel production rose in year-on-year terms in September (up by 5.3%) but has declined from recent peaks – down to 71.8 million tonnes (from an all time high of 74.6 million tonnes in August).” “Fixed asset investment grew at a faster rate in September – up by 5.7% yoy (compared with 4.9% in August) – albeit this was still the second lowest rate of growth in 2017. Given the acceleration in producer prices during September, this implies the second straight month of negative real investment – at around -1.4% yoy (compared with -1.6% previously). New construction starts have slowed in recent months – well off the peaks recorded in June. On a three month moving average basis, new residential starts rose by 4.7% yoy in September – the slowest rate of growth this year, and well off the double digit levels of the first half. Similarly, house sales have softened.” “China’s trade surplus narrowed further in September – down to US$28.5 billion (compared with US$41.0 billion previously). Compared with the levels from August, there was a sharp increase in imports, while exports were marginally lower. Import volumes of key industrial commodities rose strongly – with iron ore import volumes rising to record levels, a surprise given the planned shutdown of steel capacity in a range of northern cities across November to March.” “Retail sales growth was marginally stronger in September. In line with a slight softening in inflation trends, real retail sales growth was stronger – back up to 9.3% yoy (compared with 8.9% in August). Consumer confidence has continued to improve – albeit only modestly in August – up to 114.7 points (from 114.6 points in July) – the highest level in over two decades.” “China’s monetary policy remained relatively stable across Q2 and Q3 – following modest tightening in Q1. Over this period, the 7 day Shibor traded in a range of just 184 basis points – broadly around 2.8%. The Shibor trended closer to 3.0% immediately ahead of the Golden Week holidays (at the start of October) but has subsequently trended lower.”

The major is seen consolidating the upside around 113 handle, with the bulls trying hard to extend gains beyond the last, tracking the positive tone s

The major is seen consolidating the upside around 113 handle, with the bulls trying hard to extend gains beyond the last, tracking the positive tone seen in the Japanese stocks and Treasury yields. More so, mixed Japanese trade figures combined increased nervousness ahead of Sunday’s Japanese election, keep the Yen on the back foot against its American counterpart. However, further upside looks dicey, as the US dollar lacks recovery momentum against its major peers, in the wake of dismal US housing data. Moreover, markets have already priced-in a Dec Fed rate hike, as already reflected in the recent USD rebound. At the time of writing, the spot is seen trading at 113.03, heading for a test of 103.09 highs and up +0.09% on the day. Next of note for the major remains the US datasets due later in the NA session for fresh momentum on the prices.USD/JPY Technical ViewJim Langlands at FX Charts offers key technical levels: “113.20 will be decent resistance, but above there 113.43 (6 Oct high), 114.00 and 114.49 (11 July high) would eventually beckon. The dailies currently look less certain of the upside, and on the downside, support today should arrive at around 112.60 and then at the 200 HMA at 112.30.”        

Asia today cheered some positive news from the Aus docket, lifting the AUD/USD pair to 0.7870 levels, before reversing sharply on mixed Chinese data d

Asia today cheered some positive news from the Aus docket, lifting the AUD/USD pair to 0.7870 levels, before reversing sharply on mixed Chinese data dump, with the Q3 GDP figures falling a tad short on expectations. The Kiwi too followed suit and tested 0.71 handle, eagerly awaiting the announcement on the new government. Meanwhile, both the EUR and GBP regained poise amid stalled USD recovery, as sentiment soured towards Asia close amid mixed equities and weaker oil prices.Main topics in AsiaJapan Merchandise Trade Balance Total registered at ¥670.2B above expectations (¥559.8B) in September North Korea could stage an unimaginable strike on the US A report from Yonhap (South Korean Press) says North Korea could stage an unimaginable strike on the US. UK PM Theresa May urged to walk out if the EU wont talk trade - Telegraph The UK’s newspaper, Telegraph, published a story earlier on the day, citing that the UK PM Theresa May urged to walk out if the EU agree on trade talks. Australia full-time job growth slows, unemployment rate drops in September The seasonally adjusted data released this Thursday showed the Australian economy added 19.8K jobs in September, beating the estimated rise of 15.0K.  China Q3 GDP y/y a tad weaker, but meets estimates China's YoY GDP figures for the third quarter of 2017 came at +6.8% vs +6.8% exp and 6.9% previous, with the QoQ reading for Q3 coming in at +1.7% vs +1.7% exp and +1.8%  (revised up from 1.7%) last. Key Focus aheadLooking ahead, the EUR, GBP traders brace for the critical UK retail sales data, which will have a major impact on Cable and EUR/GBP, as it is the only macro news up for release from the EUR calendar data. From the US docket, the weekly jobless claims and Philly Fed manufacturing index will remain in focus. However, the main event to watch out today is the Brexit/EU Summit for fresh developments on the Brexit negotiations. GBP/USD - Will UK retail sales help defend 50-day MA ahead of Brexit summit?GBP/USD rebounded from the 50-day moving average on Wednesday, although the uptick ran out of steam in Asia at a high of 1.3228. EUR/USD headed back towards 1.1735/30 support? Having failed to sustain at higher levels, the EUR/USD pair trimmed gains to test the 1.18 handle amid broad based US dollar recovery in sync with Treasury yields. Brexit/ EU Summit: What to expect? - HSBC HSBC analysts offer their thoughts on what to expect from the 2-day EU Summit starting today, with the agenda mainly centered on the Brexit negotiations. NZ First to make announcements today? - ANZ Analysts at ANZ noted that today is supposedly the day that NZ First will make an announcement on the formation of the next government.   

In Q3, China’s annual GDP growth edged lower to 6.8%yr as expected following three consecutive upside surprises over the nine months to June 2017, not

In Q3, China’s annual GDP growth edged lower to 6.8%yr as expected following three consecutive upside surprises over the nine months to June 2017, notes Elliot Clarke, Research Analyst at Westpac.Key Quotes “At least to September, 2017 has proven to be a very successful year for the authorities. Not only has growth remained above their target of “around 6.5%yr” without intervention, but housing markets across the nation have also been brought into line, as has foreign investment. Following October’s National Congress, authorities will be able to continue focusing on incremental reform of the economy and markets without any concerns over growth.” “In nominal terms, annual GDP growth ticked higher to 11.2%yr in Q3 as the deflator firmed modestly to 4.4%yr. Higher commodity prices continue to work their way through the economy, but have little relevance for consumer prices. CPI inflation is currently running at just 1.6%yr, weighed down by food prices.” “Other than Q1’s 11.8%yr, the Q3 nominal GDP result is still the strongest outcome since Q1 2012 (12.4%) – although back then, real GDP growth was 1.3ppts stronger at 8.1%yr.” “Having reached a low of just 0.9%yr in late-2015, nominal growth in the secondary sector (manufacturing and construction) accelerated rapidly over the 15 months to March to a very strong 14.2%yr. This momentum has largely been sustained since, with growth of 12.7%yr reported for the past six months.” “The Chinese manufacturing sector has been a key contributor to the rebound in activity, benefitting from an upturn in global trade and improved domestic conditions. Manufacturers have consequently added to capacity.” “From the fixed asset investment data, it looks as though this upturn in investment is well past its peak, annual growth having slowed over the past six months. This is not only true of manufacturing, but also residential, transport and utility investment. In part, this is because the private sector are holding back on investment. And, given resilient GDP growth, there is no cause for another wave of public projects to stoke demand.” “Finally, growth has remained strong over the past year in the services sector, averaging 11.5%yr nominal. This momentum should be sustained through 2017 and 2018. However, the below-average employment growth reported by the PMIs points to some downside risk on this front.”

Japan All Industry Activity Index (MoM) below forecasts (0.2%) in August: Actual (0.1%)

Netherlands, The Unemployment Rate s.a (3M) unchanged at 4.7% in September

More comments hitting the wires, via Reuters, from the PBOC Governor Zhou: Will fend off risks from drastic adjustments of asset bubbles Should prev

More comments hitting the wires, via Reuters, from the PBOC Governor Zhou: Will fend off risks from drastic adjustments of asset bubbles Should prevent accumulation of risks stemming from excessive optimism China to seriously treat disguised debt of local government financing vehicles Corporate sector debt levels are relatively high Household debt level currently rising too quickly

HSBC analysts offer their thoughts on what to expect from the 2-day EU Summit starting today, with the agenda mainly centered on the Brexit negotiatio

HSBC analysts offer their thoughts on what to expect from the 2-day EU Summit starting today, with the agenda mainly centered on the Brexit negotiations.Key Quotes:“The European Council will discuss the progress of the Brexit talks at its October summit. To move on to next phase of talks - over the future relationship and a possible transition deal - the EU needs to assess the progress of the first phase, which covers the terms of the divorce, including, most notably, the rights of citizens, the status of the Northern Irish border with Ireland and a financial settlement. Things are not looking good for the UK. Chief Negotiator Michel Barnier said at the conclusion of the latest round of talks that he was not in a position to make any recommendations, while the European Parliament on 3 October overwhelmingly passed a motion decreeing that progress had been insufficient. At this stage, a positive decision from the Council would be a major upside surprise. It is possible the Council could agree to discuss a potential transition deal before the second phase, which might be a boost for the UK. However, if, as we expect, the Council says the talks have not progressed enough, the UK will have to pin its hopes on the next summit, currently scheduled for 14-15 December.”

The NAB Quarterly Business Survey showed a continuation of the very upbeat conditions for firms into the September quarter, points out the research te

The NAB Quarterly Business Survey showed a continuation of the very upbeat conditions for firms into the September quarter, points out the research team at NAB.Key Quotes“Confidence has not been quite as exuberant, with many firms still worried about margin pressures and the demand outlook. Despite that though, we are still seeing solid expectations in terms of the near-term outlook, while business expectations for the longer-term (1 year ahead) outlook have generally strengthened. Investment expectations for the next year lifted further, with most industries pointing to above-average capex.” “Employment intentions continue to trend higher and firms are now indicating much greater difficulty finding suitable labour. While most industries are performing well in the Survey, conditions in the retail sector deteriorated further, which is a concern given the importance of consumption to economic growth. A tighter labour market and tentative signs of a lift in wage pressures in the Survey could help to bolster demand conditions for retailers, but other challenges will likely remain.”

Simon Murray, Research Analyst at Westpac, notes that the Australian unemployment rate falls as employment momentum carries on, led by a lift in part-

Simon Murray, Research Analyst at Westpac, notes that the Australian unemployment rate falls as employment momentum carries on, led by a lift in part-time employment in NSW and VIC, and a notable broad-based gain in WA.Key Quotes“Employment increased by 19.8k, broadly in line with the market median forecast of +15.0k and Westpac’s forecast of +25.0k. Part-time employment grew 13.7k, while full-time rose 6.1k, though importantly hours worked posted a solid 0.7% gain. This brings annual employment growth to 3.1% with total hours worked at 3.4%.” “The unemployment rate fell to 5.5% with the participation rate holding at 65.2% though August’s number was revised lower from 65.3%. Note that at two decimal places, participation fell slightly to 65.21% from 65.25%, with male participation falling to 70.7% from 70.8% and female participation falling to 59.8% from 59.9%.” “By state, the most notable was the broad-based gain in WA with employment up 8.3k (+4.5k full-time, +3.8k part-time). This saw hours worked increase by the largest of the states, +1.1%. Other standouts were NSW and Vic, up 21.1k and 8.9k respectively. While this was mainly driven by part-time employment growth (NSW +21.1k, Vic +14.2k), again note robust gains in hours worked of 0.7% and 0.6% respectively.” “Overall, the result is another solid employment release, in line with what forward indicators have been suggesting. While the lower unemployment rate is a good outcome, declining to a four-year low, note that labour market slack still lingers, evident in other measures such as the underemployment rate (8.6% in August – released quarterly) and ongoing sluggish wage growth.”  

Brent oil is on the back foot in Asia despite the talk of OPEC output cut extension and growing evidence of tighter US market. At the time of writing

Brent oil is on the back foot in Asia despite the talk of OPEC output cut extension and growing evidence of tighter US market. At the time of writing, Brent is down 0.17% or 10 cents lower at $58.10/barrel. Prices clocked a high of $58.83 yesterday. Analysts and investors expect OPEC, Russia and other major producers extend the global output cut deal beyond its expiry date at the end of March 2018. Elsewhere, the US Energy Information Administration (EIA) reported that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels. Still, prices retreated from the high of $58.83 to end the day on a flat note at $58.15. The upbeat Chian industrial production and retail sales data also failed to strengthen the oil prices.Technical outlook - Bearish reversal?Yesterday's Doji candle if followed by a negative price action and an end of the day close below $57.28 (Oct 6 high) could spell trouble for oil bulls. Such a move would confirm bearish doji reversal.  

In its latest report on the Australian dollar, analysts at ANZ highlighted 5 key reasons to the Aussie on every dip. Key Points: USD is due for a

In its latest report on the Australian dollar, analysts at ANZ highlighted 5 key reasons to the Aussie on every dip.Key Points:USD is due for a correction Risk sentiment remains supportive RBA still on track to hike in 2018 Outlook for iron ore remains positive Technicals bode well: While the AUD lacks a clear bullish bias against the USD, the price action suggests the AUD is well supported above0.78. “Given these five indicators, we think that any downside surprise in domestic data should be used as an opportunity to buy the AUD on dip.”  

Following are the comments from Pan Gongsheng, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreig

Following are the comments from Pan Gongsheng, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange (SAFE): Foreign exchange market is stable now Supply and demand in foreign exchange market basically balanced Foreign exchange rate will be more flexible Will enhance ability to manage foreign exchange reserves

Having failed to sustain at higher levels, the EUR/USD pair trimmed gains to test the 1.18 handle amid broad based US dollar recovery in sync with Tre

Having failed to sustain at higher levels, the EUR/USD pair trimmed gains to test the 1.18 handle amid broad based US dollar recovery in sync with Treasury yields.EUR/USD clings to 5-DMA support at 1.1794The spot rallied hard in the overnight trades and reached three-day tops at 1.1816 in early Asia, as the US dollar was dumped across the board on lackluster US housing data. However, the spike above 1.18 handle was short-lived, as the US bulls staged a solid comeback after the 10-year Treasury yield spiked 4 basis points on global equity-surge led better investor risk appetite, which reduced the demand for the safe-haven Treasuries. Meanwhile, markets continue to digest the latest updates surrounding the next Fed Chair appointment as well as on the US tax overhaul plans, which also affects the sentiment around the buck, eventually impacting the EUR/USD pair. Trump: Want tax reform "by Christmas" The EUR markets also assess the Reuters headlines reported overnight, citing a government source, as saying that, "Catalonia’s regional president told a meeting of his party he would formally declare independence if Spain starts the process of suspending the region’s autonomy on Thursday." Calendar-wise, there is nothing relevant due out from the Euroland and hence, attention turns towards the US docket, with the jobless claims and Philly Fed manufacturing index slated for release.EUR/USD Technical ViewAnalysts from Brown Brother Harriman (BBH) noted: “In essence, the first head and shoulders pattern was part of the head of a larger head and shoulders pattern. Even if one does not subscribe to technical analysis, the takeaway may be important.  First, the bearish technical view would be weakened by a euro move back above the larger shoulders ($1.1880-$1.1910).  Second, a break of the $1.1660 area could spur further liquidation of long euro speculative positions. A break of $1.1600 area would signal a move toward $1.1250, not far from the 50% retracement of this year's euro advance.”    

Comments from People's Bank of China (PBOC) Governor Zhou crossing the wires via LiveSquawk- Yuan trading band is not too important Yuan trading ban

Comments from People's Bank of China (PBOC) Governor Zhou crossing the wires via LiveSquawk- Yuan trading band is not too important Yuan trading band expansion is not a current focus

AUD/USD options data shows falling demand for Put options and a sharp drop in the implied volatility. Risk reversals & volatility The one-month

AUD/USD options data shows falling demand for Put options and a sharp drop in the implied volatility.Risk reversals & volatilityThe one-month 25-delta risk reversal (green line) has jumped to -0.60; the highest level since Sept. 14. The one-month at the money option volatility dropped to 7.32; its lowest level since mid July.AUD/USD - Bid tone to strengthenThe uptick in the risk reversal suggests falling demand for Put options (bearish bets). Meanwhile, the drop in the volatility is usually accompanied by a rise in the underlying. Thus, Aussie dollar may continue its slow rise to 50-day moving average level of 0.7903.

Comments out from China’s National Bureau of Statistics (NBS) spokesman Xing Zhihong, delivered during news conference after the release of downbeat C

Comments out from China’s National Bureau of Statistics (NBS) spokesman Xing Zhihong, delivered during news conference after the release of downbeat Chinese growth numbers for the third quarter.Key Points:China's property risks have been effectively resolved Destocking efforts in third- and fourth-tier cities achieving results Thus, China's economy will maintain steady and improving momentum, with economic growth still within a reasonable range

Livesquawk reports headlines from the PBOC, citing that the Chinese central bank CNY positions (m/m) rose for the first time since Oct 2015. Separa

Livesquawk reports headlines from the PBOC, citing that the Chinese central bank CNY positions (m/m) rose for the first time since Oct 2015. Separately, PBOC Deputy Central Bank Governor Yi Gang noted that price stability is not equal to financial stability.

GBP/USD rebounded from the 50-day moving average on Wednesday, although the uptick ran out of steam in Asia at a high of 1.3228. Currently, the spot

GBP/USD rebounded from the 50-day moving average on Wednesday, although the uptick ran out of steam in Asia at a high of 1.3228. Currently, the spot is trading at 1.32 levels and the 50-day moving average is located at 1.3156.UK retail sales are due at 08:30 GMTRetail sales are seen falling 0.1% m/m in September. The annualized growth is seen slowing to 2.1 percent from 2.4 percent. Core retail sales (ex fuel) growth is likely to have slowed to 0.1 percent m/m and 2.4 percent y/y.Retail sales could beat estimates, lead indicators sayFigures from the British Retail Consortium (BRC) and KPMG showed that showed that like-for-like retail sales rose 1.9 percent last month, compared to a 0.4 percent rise a year earlier. Total sales rose 2.3%, while online sales surged 10.7% in September. Thus, odds are high that the official retail sales data due today could print higher than expected (slowdown could be much less than estimates). A better-than-expected UK retail sales figure could lift the GBP/USD to 1.3268 (38.2% Fib R of Sep. 20 high - Oct. 6 low). However, the sustainability of the gains depends on the outcome of the Brexit summit.May under pressure to make 'deal or no deal' ultimatumAs per The Telegraph report, four former Cabinet ministers, as well as MPs, business leaders and academics have urged PM Theresa May to walk away from the EU and stop negotiations if European leaders do not agree to trade talks at a crucial summit on Thursday evening. While a 'no deal' scenario could be disastrous for both sides, the first to take a hit could be the British Pound. On the other hand, a positive outcome of the summit could push the Pound higher even if the retail sales fall more than expected.GBP/USD Technical OutlookOn the downside, support is lined up at 1.3170 (trend line sloping upwards from Mar. 14 low and Jun. 21 low) and 1.3156 (50-day MA). A violation there would open up downside towards 1.3043 (100-day MA). On the higher side, a break above 1.3222 (Oct. 3 low) could yield 1.33 (zero levels) and 1.3338 (Oct. 13 high).    

The NZD/USD pair came under sharp selling pressure, after a slew of mixed Chinese macro releases failed to impress the bulls, knocking-off the rate

The NZD/USD pair came under sharp selling pressure, after a slew of mixed Chinese macro releases failed to impress the bulls, knocking-off the rate back towards 10-DMA resistance-turned support at 0.7132 levels.NZD/USD: Eyes on NZ government announcement. The Kiwi staged a solid comeback in the overnight trades and went onto hit daily tops at 0.7170 levels amid expectations that a New Zealand Government will be announced today, putting an end to the uncertainty around the country’s political climate. NZ PM English: Unclear if NZ First will back Nationals to form government However, the recovery mode soon lost strength and the spot was aggressively sold into a slightly downbeat Chinese GDP numbers, which overshadowed better-than expected retail sales and industrial production figures. China Q3 GDP y/y a tad weaker, but meets estimates Meanwhile, subdued trading activity seen around the US dollar across its main competitors, helps keep the downside in check, as focus shifts towards the US jobless claims and Philly Fed manufacturing index due later on the day.NZD/USD Levels to consider                                                                               The NZD reversed to test 10-DMA support at 0.7132, below which 0.7100 (round number) and 0.7050 (psychological levels) are key near-term downside areas. To the topside, a test of 0.7150/52 (20 & 200-DMA) due on the cards, which could open doors towards 0.7170 (daily top).

A better-than-expected China industrial production and retail sales number has failed to boost the appetite for the Aussie dollar. AUD/USD retreated

A better-than-expected China industrial production and retail sales number has failed to boost the appetite for the Aussie dollar. AUD/USD retreated from the session high of 0.7872 to 0.7850 after China reported third quarter growth rate of 6.8% y/y as expected. The growth rate in the previous quarter was 6.9%. Meanwhile, industrial production came-in at 6.6% y/y, beating the forecast of 6.2% and printing well above the previous figure of 6.0%. Retail sales printed at 10.3%, beating the estimate of 10.2%. Still, the Aussie is trimming gains. A slight drop in the growth rate could be hurting the Aussie, although markets usually tend to focus on the relatively more forward looking indicators like the retail sales. Investors may have taken the note of the sharp slowdown in the Aussie full-time jobs report, thus leading to a drop in the AUD from 0.7872 to 0.7850.AUD/USD Technical LevelsJim Langlands from FXCharts says, "the dailies still look positive". He adds, " the Aud has had a similar session to yesterday, falling to 0.7818 before recovering; to finish just below the base of the daily cloud, with today’s direction to be provided by the local Unemployment data and the host of China data. The 4 hour charts still suggest that selling into strength seems to be the plan, looking for an eventual move toward 0.7800. The dailies still look positive though, so I suspect that we could well be confined to a choppy range today, again confined to 0.7800/0.7900."    

China's YoY GDP figures for the third quarter of 2017 came at +6.8% vs +6.8% exp and 6.9% previous, with the QoQ reading for Q3 coming in at +1.7% vs

China's YoY GDP figures for the third quarter of 2017 came at +6.8% vs +6.8% exp and 6.9% previous, with the QoQ reading for Q3 coming in at +1.7% vs +1.7% exp and +1.8%  (revised up from 1.7%) last.  With regard to retail sales YoY, the number was in +10.3 vs 10.2% exp and 10.1% last, with industrial output YoY at 6.6% and 6.2% exp and 6.0% last. Meanwhile, urban investment YoY stood at +7.5% vs 7.7% expected and 7.8% last.  The mixed data had a negative impact on the Australian Dollar, knocking-off the AUD/USD pair back to test 0.7850, while AUD/JPY retraced to 88.71 levels.

China Gross Domestic Product (YoY) meets forecasts (6.8%) in 3Q

China Industrial Production (YoY) above expectations (6.2%) in September: Actual (6.6%)

China Retail Sales (YoY) came in at 10.3%, above expectations (10.2%) in September

China Gross Domestic Product (QoQ) meets forecasts (1.7%) in 3Q

The UK’s newspaper, Telegraph, published a story earlier on the day, citing that the UK PM Theresa May urged to walk out if the EU agree on trade talk

The UK’s newspaper, Telegraph, published a story earlier on the day, citing that the UK PM Theresa May urged to walk out if the EU agree on trade talks.Key Quotes:“In an open letter to the Prime Minister, four former Cabinet ministers, as well as MPs, business leaders and academics demanded she "formally declare" that Britain will leave the EU and conduct trade deals via the World Trade Organisation. The warning from the Leave campaign comes after the EU talks became deadlocked and amid fears the beleaguered Prime Minister will be humiliated at a key summit of EU leaders in Brussels.  Sources in Brussels have told The Telegraph that EU leaders will tell Mrs May Britain must agree to pay some money into the EU budget until 2023, rather than 2021 under the current offer, before there can be any movement on trade talks.“

Guo Shuqing, chairman of the China Banking Regulatory Commission (CBRC) is out on the wires now, via Livesquawk, noting that China is likely to deep

Guo Shuqing, chairman of the China Banking Regulatory Commission (CBRC) is out on the wires now, via Livesquawk, noting that China is likely to deepen reform and open up in banks.    

New Zealand PM Bill English crossed the wires earlier today, via Reuters, expressing his take on the announcement on the new government due today. Ke

New Zealand PM Bill English crossed the wires earlier today, via Reuters, expressing his take on the announcement on the new government due today.Key Headlines:Satisfied on agreements reached with NZ First Unclear if NZ First will back Nationals to form government Awaiting the announcement like everyone else is. NZ First party leader Winston Peters is expected to announce his decision on New Zealand government later today.

The People's Bank of China (PBOC) set the Yuan reference rate at 6.6093 vs. Wednesday's fix of 6.5991

The People's Bank of China (PBOC) set the Yuan reference rate at 6.6093 vs. Wednesday's fix of 6.5991

A big beat on the Aussie September headline jobs figure and a drop in the unemployment rate is boding well for the AUD this Thusday. AUD/JPY jumped 2

A big beat on the Aussie September headline jobs figure and a drop in the unemployment rate is boding well for the AUD this Thusday. AUD/JPY jumped 27 pips to a three-week high of 88.88 as the Australian economy added 19.8K jobs in September, beating the estimated rise of 15.0K. Meanwhile, the unemployment rate dropped to 5.5 percent from the August figure of 5.6 percent. The details reveal a sharp slowdown in the full-time job growth number. Elsewhere, National Bank of Australia (NAB reported slight deterioration in the business confidence in the third quarter (7 in Q3 versus 8 in Q2). Currently, the markets are cheering the better-than-expected headline jobs data. The Aussie 10-year yield has added two basis points, which adds credence to the uptick in the AUD.AUD/JPY Technical LevelsA break above 90.00 (psychological level) would open doors for 89.14 (61.8% Fib R of Sep. 21 high - Oct. 10 low). A violation there would expose resistance lined up at 89.68 (Sep. 25 high). On the other hand, failure to hold above 88.78 (50% Fib R of Sep. 21 high - Oct. 10 low) could yield a pull back to 88.33 (5-DMA) and 88.00 (zero levels).  

South Korea BoK Interest Rate Decision remains unchanged at 1.25% in October

Analysts at Nomura offered their model projection for today's USD/CNY fix. Key quotes: "Our model1 projects the fix to be 223 pips higher than the p

Analysts at Nomura offered their model projection for today's USD/CNY fix.Key quotes:"Our model1 projects the fix to be 223 pips higher than the previous fix (6.6214 from 6.5991) and 9 pips higher than the previous official spot USD/CNY close of 6.6205. The basket implied change is 10 pips higher than the previous official spot USD/CNY close (6.6215 from 6.6205)."

The key quotes from BOJ Deputy Governor Hiroshi Nakaso's speech on Wednesday are crossing the wires via Bloomberg- The central bank will adjust the s

The key quotes from BOJ Deputy Governor Hiroshi Nakaso's speech on Wednesday are crossing the wires via Bloomberg- The central bank will adjust the shape of the yield curve as necessary to achieve the price target of 2% The BOJ can impact rates even with smaller amounts of JGB purchases

Currently, AUD/USD is trading at 0.7868, up 0.28% on the day, having posted a daily high at 0.7873 and low at 0.7841. AUD/USD has rallied 30 pips on

Currently, AUD/USD is trading at 0.7868, up 0.28% on the day, having posted a daily high at 0.7873 and low at 0.7841. AUD/USD has rallied 30 pips on the back of a promising Aussie jobs report.Australia full-time job growth slows, unemployment rate drops in SeptemberThe monthly trend unemployment rate has decreased by 0.2 per cent over the past year to 5.5 per cent in September 2017, according to figures released by the Australian Bureau of Statistics (ABS) today. This is the lowest rate seen since March 2013 and reflects the strength in employment growth over the past 12 months.  "The trend unemployment rate had been hovering in the range of 5.6 to 5.8 per cent for almost two years, but has now dropped to a four year low of 5.5 per cent," the Chief Economist for the ABS, Bruce Hockman, said. Jobs data as follows:Employment Change: 19.8K beat expected 15.0K, prior 54.2K  Unemployment Rate:  5.5% beat expected 5.6%, prior 5.6% Full Time Employment Change: 6.1K prior was +40.1K Part Time Employment Change: 13.7K prior was +14.1K Participation Rate: 65.2%AUD/USD levelsAbove last week’s high at 0.7896 sits the 61.8% Fibonacci retracement at 0.7975 which should cap, if reached according to analysts at Commerzbank. However, Jim Langlands, at FX Charts offered his preferred strategy for a fade: "The 4 hour charts still suggest that selling into strength seems to be the plan, looking for an eventual move toward 0.7800. The dailies still look positive though, so I suspect that we could well be confined to a choppy range today, again confined to 0.7800/0.7900. Sell AudUsd at 0.7880. SL at 0.7915, TP at 0.7700."AUDUSD: The dailies still look positive

The seasonally adjusted data released this Thursday showed the Australian economy added 19.8K jobs in September, beating the estimated rise of 15.0K.

The seasonally adjusted data released this Thursday showed the Australian economy added 19.8K jobs in September, beating the estimated rise of 15.0K. The details show the full-time job growth slowed, while the unemployment rate dropped.Key pointsJobless rate 5.5% in September versus 5.6% expected and 5.6% in August Full-time employment change +6.1k in September versus downwardly revised +39.5K in August Part-time employment change +13.7K in September versus +14.1K in August Participation rate ticked dropped slightly to 65.2% as expected from the previous month's figure of 65.3%.

Australia National Australia Bank's Business Confidence (QoQ) remains at 7 in 3Q

Australia Part-time employment: 13.7K (September) vs previous 14.1K

Australia Fulltime employment down to 6.1K in September from previous 40.1K

Australia Participation Rate meets forecasts (65.2%) in September

Australia Unemployment Rate s.a. below forecasts (5.6%) in September: Actual (5.5%)

Australia Employment Change s.a. came in at 19.8K, above expectations (15K) in September

A report from Yonhap (South Korean Press) says North Korea could stage an unimaginable strike on the US. The warning comes ahead of the US-South Korea

A report from Yonhap (South Korean Press) says North Korea could stage an unimaginable strike on the US. The warning comes ahead of the US-South Korea joint naval drills in the Korean Peninsula.   

Currently, USD/JPY is trading at 112.96, up 0.03% on the day, having posted a daily high at 113.11 and low at 112.91. Forex today: bullish theme arou

Currently, USD/JPY is trading at 112.96, up 0.03% on the day, having posted a daily high at 113.11 and low at 112.91.Forex today: bullish theme around the US economy, dollar unchangedBears are keen to protect territory on the 113 handle in the open of Tokyo, with a dip in the price below the figure after a strong performance on Wall Street again and a bid on USD/JPY to 113.09 the o/n high. However, the greenback finished flat in NY while 2yr yields rose from 2.55% to 2.57% while the US 10yr treasury yield rose from 2.30% to 2.35%. Fed fund futures yields are pricing the chance of a December rate hike at 92%. The DXY was unchanged on the day.  However, US Treasury yields with the 2Y U.S.-Japan yield spread was extending its rally to a fresh post-crisis high around 170bpts and the highest since 2008. The 10Y spread is also reversing its recent drop and pushing back toward last week’s multi-month high around 230bpts. A Fed hike for December and the chances of a more hawkish Fed Chair are driving forces at the moment. The Fed fund futures yields firming and the chance of a December rate hike now at 92%. Data-wise, the Fed’s Beige Book was positive on the US economy and came across hawkish. Fed's Dudley said the biggest uncertainty is Washington's policy-making ahead of tomorrow's key vote on the budget in the Senate.USD/JPY levelsUSDJPY: The 4 hour charts suggesting prospect of more gains aheadJim Langlands at FX Charts explained that the dailies currently look less certain of the upside, and on the downside, support today should arrive at around 112.60 and then at the 200 HMA at 112.30. "The session low was at 112.12 which looks fairly safe, but back below 112.00, good support would be at 111.60/70.  Buying dips is preferred today although further out, with the dailies looking less positive, further range trade near current levels may be in store."

Japan Adjusted Merchandise Trade Balance came in at ¥240.3B, below expectations (¥317.9B) in September

Japan Foreign investment in Japan stocks down to ¥840.7B in October 13 from previous ¥1235.3B

Japan Foreign bond investment increased to ¥269.7B in October 13 from previous ¥89.2B

Japan Merchandise Trade Balance Total registered at ¥670.2B above expectations (¥559.8B) in September

Japan Imports (YoY) below forecasts (15%) in September: Actual (12%)

Japan Exports (YoY) below forecasts (14.9%) in September: Actual (14.1%)

Analysts at ANZ explained that speculation in betting markets that NZ First would side with Labour weighed on kiwi overnight, but really just highligh

Analysts at ANZ explained that speculation in betting markets that NZ First would side with Labour weighed on kiwi overnight, but really just highlights market nerves around a possible announcement today.Key Quotes:"Whether any initial reaction to an announcement is sustained will depend critically on policy concessions and perceived stability. But looking beyond politics and near-term noise, we still prefer to fade any NZD strength. Support 0.7110 Resistance 0.720."

Australian jobs report (Sep) Australia's monthly jobs report is back on the cards for Asian markets today. The report will be released at 1230 GMT. 

Australian jobs report (Sep) Australia's monthly jobs report is back on the cards for Asian markets today. The report will be released at 1230 GMT.  Sep employment is expected to rise 15k, holding the unemployment rate at 5.6%. Westpac’s forecasts are +25k, 5.6%, with leading indicators pointing to ongoing robust demand for labour. How could the data affect AUD/USD?AUD/USD fell to 0.7818 before recovering just below the bas of the daily cloud. The 4 hour chart is a sell on rallies, and on a miss of expectations, 0.7800 could come under threat. On tge flip side, the 0.79 handle could be attractive on another strong report, giving the hawks at the RBA something to chew on. Key notesChina Hints, Aussie Jobs NextAbout the Employment ChangeThe Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).

Analysts at ANZ noted that today is supposedly the day that NZ First will make an announcement on the formation of the next government.  Key Quotes:

Analysts at ANZ noted that today is supposedly the day that NZ First will make an announcement on the formation of the next government. Key Quotes:"Exactly when and in what format that announcement will be is unclear at this stage. But no doubt markets will be on tenterhooks until then. We will look to put out some more detailed thoughts on the result, the policy concessions required to achieve it and the stability of any arrangement once more detail is known. We will also outline the implications, if any, for our broader economic forecasts." 

Analysts at Westpac offered their outlook for the antipodean cross and rates. Key Quotes: "AUD/NZD 1 day: Direction today will be largely dependent

Analysts at Westpac offered their outlook for the antipodean cross and rates.Key Quotes:"AUD/NZD 1 day: Direction today will be largely dependent on the AU jobs data outcome, plus the composition of the NZ government announced today. AUD/NZD 1-3 month: September’s downward correction should give way to a resumption of the trend rise which started in June, and test 1.12, contingent on AU commodity prices recovering and risk sentiment remaining elevated. (4 Oct) AU swap yields 1 day: The 3yr should open around 2.14%, the 10yr around 2.91%. AU swap yields 1-3 month: Our RBA outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.80% to 2.30% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (4 Oct). NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.21%, the 10yr up 3bp at 3.21%, in response to AU and US interest rates movement overnight. NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.10% to 2.50% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (4 Oct)"

Analysts at ANZ noted the bold claims from US Treasury Secretary Mnuchin . Key Quotes: "In an interview overnight, not only did US Treasury Secretar

Analysts at ANZ noted the bold claims from US Treasury Secretary Mnuchin .Key Quotes:"In an interview overnight, not only did US Treasury Secretary Mnuchin give his “absolute guarantee” that the tax bill will be ready for Trump’s signature by early December, he also stated that “to the extent we get the tax deal done, the stock market will go up higher”, while also adding that “... if we don’t get it done you are going to see a reversal of a significant amount of these gains.” That is quite a bold prediction, especially when a number of other markets appear to have largely priced out any prospects for reform.  Certainly, right now, some of the market’s fundamentals look okay. Bloomberg report that of the 52 members of the S&P 500 that have reported earnings, more than 80% have beat expectations. It’s early days, but the ‘E’ in ‘P/E’ appears to be keeping up its end of the bargain. Rather than tax reform, arguably one of the biggest issues on the horizon for all asset markets is how they will handle QT (quantitative tightening) which is just around the corner."

Analysts at Nomura noted that the Beige Book prepared for the 31 Oct-1 Nov FOMC meeting reported growth pace that is “split between modest and moderat

Analysts at Nomura noted that the Beige Book prepared for the 31 Oct-1 Nov FOMC meeting reported growth pace that is “split between modest and moderate,” but no indication of a pick-up in price pressure. Key Quotes:"As expected, Richmond, Atlanta and Dallas Feds reported major hurricane disruptions in economic activity. The labor market remained tight, with labor scarcity reported in some industries (e.g., construction and manufacturing). However, the majority of the Fed Districts reported only modest to moderate wage pressures. On prices, the upward pressure appears to have been modest with limited pass-through. Many business surveys indicated increases in input costs, which in part were driven by supply chain disruptions from hurricanes, but prices of finished goods at factory gates did not pick up. Considering recent remarks by regional Fed presidents and Chair Yellen, while acknowledging downside risks to inflation, the FOMC participants still expect tighter labor markets to drive up wages and eventually, inflation."

Forex today was chasing the higher rates and a Fed hike scenario for December.  Despite the increasing bullish theme around the US economy and its ou

Forex today was chasing the higher rates and a Fed hike scenario for December.  Despite the increasing bullish theme around the US economy and its outlook that is driving rates higher, Wall Street continues to rally with US stocks making fresh highs, with the S&P500 +0.2%.  2yr yields rose from 2.55% to 2.57% while the US 10yr treasury yield rose from 2.30% to 2.35%. Fed fund futures yields are pricing the chance of a December rate hike at 92%. The DXY was unchanged on the day. Data-wise, the Fed’s Beige Book was positive on the US economy and came across hawkish. Fed's Dudley said the biggest uncertainty is Washington's policy-making ahead of tomorrow's key vote on the budget in the Senate.  EUR/USD was higher despite the US / STIR curve widening in the steeper Fed path. The correlation is diminishing yield EUR initially fell to 1.1730 before rebounding to 1.1795.  GBP was heavy but managed a score to the 1.32 level. However, the pound was initially lower on the 1.31 handle despite the positive UK wages that were strong enough to persuade markets that the BoE is a little more likely to raise rates in the near future, with Nov still favoured. EUR/GBP was up around 50 pips from Asian lows to 0.8946. USD/JPY rose from 112.20 to 113.05, with the safe-haven yen the worst performer out there. This was a new closing high, but the pair still needs to clear 113.00 and close above there for a convincing correction.   As for the antipodeans, the Aussie continued to range between 0.7820 and 0.7860 while high-beta FX remained on the defence while the Kiwi, as the second-worst performer, fell from 0.7160 to 0.7120 after news the NZ government will be announced on Thursday. Key risks aheadAnalysts at Westpac note dthe key events risks for Asia as follow . . ."NZ: Monarch-maker NZ First said yesterday that it will be in a position to announce this afternoon which major party it will form a government with.Australia: Sep employment is expected to rise 15k, holding the unemployment rate at 5.6%. Westpac’s forecasts are +25k, 5.6%, with leading indicators pointing to ongoing robust demand for labour. The Q3 NAB business survey provides a more detailed report than the monthly survey which remained above average at +14 over the quarter. RBA Assistant Governor Financial System Bullock speaks at the Shareholders Association, Sydney 12:10 PM.China: Q3 GDP is expected to show annual growth of 6.8%, which remains above authorities’ 2017 target of “around 6.5%”, having surprised to the upside in the preceding three quarters."Key notes from US sessionWH spokeswoman: Announcement on Fed chair due in coming daysUS Dollar edges lower below 93.30 on Fed's Beige BookFed's Beige Book: Price pressures remained modestMarkets have almost fully priced in a third hike for 2017 in December - BBHWTI drops below $52.00 post-EIAEIA: US commercial crude oil inventories decreased by 5.7 mln barrelsAtlanta Fed: GDPNow model forecast for real GDP growth in Q3 steady at 2.7%The mystery behind low inflation - NatixisWall Street surges to record highs led by tech and financialsOPEC leaning toward extension of oil supply cut for 9 more months - Reuters

Boosted by robust gains seen in technology and financial shares major equity indexes in the U.S. jumped to fresh all-time peaks on Wednesday. On the

Boosted by robust gains seen in technology and financial shares major equity indexes in the U.S. jumped to fresh all-time peaks on Wednesday. On the back of a stronger-than-expected third-quarter earnings report, IBM shares surged sharply to close the day 8.86% higher, lifting the S&P 500 Information Technology Sector (SPLRCT) to 1,053.83, up 3 points, or 0.3%."Today the catalyst is clearly IBM ... which appears to have turned the corner. It gave the Dow the boost to stay over 23,000," Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey, told Reuters. The Beige Book released by the Federal Reserve today showed that the economic activity in the U.S. expanded at a modest to moderate pace in September through early October. In the meantime, the 10-year US Treasury-bond yield rose nearly 2% on the day, allowing bank stocks to extend their recovery from last week's sharp retreat. The S&P 500 Financials Sector ( SPSY) added 0.5% on the day. The Dow Jones Industrial Average gained 159.71 points, or 0.69%, to close the day for the first time above the 23K mark at  23,157.6. The S&P 500 added 2.01 points, or 0.08%, to 2,561.37 and the Nasdaq Composite rose 0.86 points, or 0.02%, to 6,624.53.Headlines from the NA session:Market wrap: dollar unchanged, pick up in rates and sticks rally - WestpacWH spokeswoman: Announcement on Fed chair due in coming daysUS Dollar edges lower below 93.30 on Fed's Beige BookFed's Beige Book: Price pressures remained modestMarkets have almost fully priced in a third hike for 2017 in December - BBHWTI drops below $52.00 post-EIAEIA: US commercial crude oil inventories decreased by 5.7 mln barrelsAtlanta Fed: GDPNow model forecast for real GDP growth in Q3 steady at 2.7%The mystery behind low inflation - NatixisOPEC leaning toward extension of oil supply cut for 9 more months - Reuters