Forex - Asia Close Highlights


 08:44 (GMT) 12 Oct

  [Forex Highlights]

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Asia Close Highlights (0100-TCFZ-C01)

12 October 2017

Regional Backdrop:

Asian currencies gained on Wednesday, continuing a trend since the start of the week. Markets perceived Fed minutes as being dovish, and this helped to drag on the DXY. The outperformers were THB and MYR, up 0.23% and 0.21% respectively. Malaysia industrial production was strong, at 6.8% y/y from 6.1% a month ago. KRW was also seen gaining 0.18%. Chinese currencies were mixed, with CNY gaining 0.09% and CNH losing 0.05%. In contrast, PHP fell 0.14%. This comes as local news on oversubscription on term deposits, according to BSP Deputy Governor Guinigundo.

PBOC fixed USD/CNY mid-point at 6.5808 vs. previous close of 6.5882. This hinted at a preference for USD/CNY to move lower. The onshore pair took cues and fell to a low of 6.5860 before rebounding back up, and to 6.5839 at last look. 1Y NDFs meanwhile moved upwards on Thursday Asian morning hours but since faded and went back to 6.7312 at last check after opening at 6.7290.

After dipping to a new 2-week low of 1.3528 on Thursday morning, USD/SGD remained mostly stable thereafter, and traded on either side of 1.3540 for the day. Traders remain on the sidelines ahead of the country's Q3 GDP and MAS announcement on Friday. We expect it to retain its stance on the neutral appreciation of the Singapore dollar, with no change to the midpoint or the width of the slope.

USD/IDR onshore spot gapped lower to open at 13513 vs. last close of 13518 but was bid up above 13520 to a high of 13528 in early trading even as the USD index held onto its overnight losses from FOMC minutes. Downside pressures however returned and a momentary dip below 13500 was seen, and the pair could not get back above 13510 until last look.

USD/INR onshore spot gapped a shade lower to open at 65.1300 on Thursday vs. last close of 65.1400 and printed a fresh 1-week low of 65.0700 in early trading. A weak US dollar overnight from a dovish tint in FOMC minutes weighed, but the 65 handle failed to give in until last check.

Market Psychology

USD/CNY - In the light of dovish Fed minutes, momentum is on the upside for USD/CNY, with resistance level of 6.6000. Otherwise, we see some support at 6.5750.

USD/SGD - Eye on the support level at 1.3500 big figure.

USD/IDR - We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR - Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.


Forex - India Flows: USD/INR range bound ahead of CPI on Thursday


 04:31 (GMT) 11 Oct

 [Forex Flows]

USD/INR onshore spot gapped a shade lower to open at 65.2200 on Wednesday vs. last close of 65.2750 but returned to trade above 65.2500 in early trading and continued to trade in a sideways manner thereafter. Focus now on Fed minutes due later today and September CPI scheduled for Thursday. Even though lower revenues and increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle. 1M NDFs meanwhile continued to consolidate around 65.5000 on Thursday. SENSEX surged to a fresh 2-week highs, last seen in gains of nearly 0.5%.


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 10 Oct

 [Forex Highlights]

Asia Overnight Highlights - 11 October 2017

ASIA OUTLOOK

The USD had a softer tone as USTs saw a bull flattening. Catalan leader Puigdemont offered to postpone the referendum result, but this saw a limited response with Madrid clearly unimpressed.

Majors FX Highlights

The dollar index was seen with an offered tone on Tuesday night, and slid to a low of 93.137 amid gains in other currencies, especially EUR and GBP on the back of strong economic data releases and JPY from continued geopolitical concerns. EUR/USD rallied above 1.1750 as bullish trade data raised expectations of ECB tapering and a break above 1.1800 to an eventual high of 1.1825 was seen in the NY session as Catalonia's president Carles Puigdemont deferred the declaration of independence from Spain. USD/JPY slid lower to test the 112.00 big figure, but could only go as low as 111.99 as stocks remained in black. Pair later returned to 112.40-levels into the Asian open this morning, with focus on machinery orders print due this morning. Cable also extended gains in NY to break above 1.3200 and print a high of 1.3226 as manufacturing and industrial production data topped expectations. The commodity currencies also felt the benefit of a softer USD tone, the CAD still preferred to AUD and NZD with the aid of front-month WTI crude pushing over $50 to come within 10c of $51. The AUD is in a safe second place as AUD/NZD holds above 1.10 with NZD still battered by the delay in election outcome. Some upside seen in AUD this morning as Westpac consumer confidence came in above 100 for the first time in a year.

Majors Data Highlights

UK industrial production rose by 0.2%m/m in August, which has pushed the y/y rate higher to 1.6% from 1.1%y/y in July (revised from 0.4%y/y). Manufacturing output has at the same time risen by 0.4%m/m which has pushed the y/y rate up to 2.8% from 2.7% in July (revised from 1.9%y/y).

FOMC minutes from Sep 20 should not show any major shift in perceptions on inflation, with the majority still leaning towards a Dec rate hike even if concerns will persist. There is plenty of data to be seen before the Fed makes its decision. Dovish voter Evans and moderate-hawkish non-voter Williams are speaking as well. Keep an eye out for 4th round of NAFTA talks as well.

Emerging Asia FX Highlights

USD/Asians traded with a bearish bias overnight as the USD was weaker on gains in other currencies. USD/CNY 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. USD/SGD continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. USD/IDR 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. USD/INR 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Catalan leader Puigdemont proposed to suspend independence result, Spain said Catalonia declared deferred independence.

- Canada Sep housing starts -3.9% to 217.1k vs 212k exp, Aug building permits -5.5% vs -1.0% exp.

- VIX index: 10.08 (-2.42%)

- Gold Spot: $1,289.71/oz (+0.13%)

- ICE Brent front contract: $56.61 (+$0.82)

- Nymex WTI front contract: $50.89 ($-0.03)

- Reuters/Jefferies Commodities Index: 183.20 (+1.24%)

- 10y UST: 2.361% (+0bp) (Asia morning)

- DJI: 22,830.68 (+0.31%); S&P: 2,550.64 (+0.23%); Nasdaq: 6,587.25 (+0.11%)

ASIA NEWS

China: The International Monetary Fund raises its 2017 and 2018 GDP growth forecast for the U.S., China, euro area and Japan in its October World Economic Outlook published in Washington. - BBG

Indonesia: Central bank will stipulate the use of "closed-loop" payment, such as cash-equivalent cards by retailers including Starbucks and CGV Blitz. - BBG

CURRENCIES

The USD slipped a shade more over the day, EUR/USD breaking through 1.1788 resistance late in the European morning and eventually managing a high at 1.1825 as Catalan President Puigdemont offered to suspend the referendum result to talk with Spain, but a cool response from Madrid prevented any further gains.

The softer USD tone saw USD/JPY testing 112.00, a low noted at 111.98 but no one in a rush to chop a long, far less enter a new short at the level, especially with Wall Street holding in positive territory. With UST yields off the lows, USD/JPY recovered to 112.40.

GBP started under pressure, managed a small rally on better than expected production data, but overall was close to unchanged on the day as Cable followed EUR/USD and we left EUR/GBP close to where we found it.

The NOK took a hit early on as core CPI missed expectation but has spent the rest of the day making most of that back, 9.40+ proving rich for EUR/NOK. EUR/SEK has again held in a tight range to leave NOK/SEK little changed on the day too. EUR/CHF has again been happy to hold close to 1.1500.

BONDS

USTs started off slowly but a combination of some better futures covering interest after support continued to hold but more importantly fresh flattener trades helped the long end to progressively improve. Gains were trimmed when Catalonia opted to delay an independence declaration. 2s +0.0bps @ 1.50%, 5s -1.3bps @ 1.94%, 10s -1.6bps @ 2.34%, 30s -1.3bps @ 2.88%.

- Agency Spreads: Freddie/Fannie 5s +0.1/+0.5 bps, 10s +0.3/+0.3 bps.

- Swap Spreads: 2s -0.38bps, 5s +0.13bps, 10s -0.20bps.

EQUITIES

Equities slipped back from an early spike but the DJIA and S&P held marginally above neutral, consumer staples lifted by sales optimism from Wal-Mart. The lack of a Catalan independence declaration provided only modest support, and the earlier highs were not revisited.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. PBOC fixed USD/CNY mid-point at 6.6273 vs. previous close of 6.6248. The onshore pair however opened lower, at 6.5980 and slid to a low of 6.5742 in late trading. For USD/CNY, momentum is now on the downside, with the next support at 6.5500.

USD/CNH: Pair continue to see downside momentum sustain in the NY session, although 6.5600 supported until last look. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.5500 will increase downside momentum and risk 6.5000 big figure.

USD/SGD: Pair continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. Investors however remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level is only seen at 1.3500 big figure which should likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. Onshore spot saw another opening above 13500 at 13505 although lower than last close of 13518, but slid to a low of 13484 in early trading as the Chinese yuan strengthened. Gains above 13500 however returned in the afternoon. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open. Onshore spot slid below 65.3000 soon after the open as a weak USD possibly weighed, as did the upbeat comments from FinMin Jaitley on the rupee. Upside momentum however returned and gains above 65.3500 were seen in the afternoon before another sell-off into the close. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 08:00 GMT - TW: Exports (Sep) [Mkt: 13.4, Prev: 12.7]

- 08:00 GMT - TW: Imports (Sep) [Mkt: 8.2, Prev: 6.9]

- 08:00 GMT - TW: Trade Balance (Sep) [Mkt: 5.92, Prev: 5.71]

- 23:50 GMT - JP: Bank Lending Data (Ex trusts) (Sep) [Prev: 3.4]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.7, Prev: 8]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.8, Prev: -7.5]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 0.2, Prev: 0]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 3, Prev: 2.9]

EVENTS & AUCTIONS

- 11:15 GMT - US: Fed's Evans Speaks in Zurich

- 16:10 GMT - US: Fed's Potter Speaks in New York

- 17:50 GMT - EU: ECB's Praet Speaks in New York

- 18:00 GMT - US: FOMC Minutes Released

- 18:40 GMT - US: Fed's Williams Gives Community Leaders Speech


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 10 Oct

 [Forex Highlights]

Asia Overnight Highlights - 11 October 2017

ASIA OUTLOOK

The USD had a softer tone as USTs saw a bull flattening. Catalan leader Puigdemont offered to postpone the referendum result, but this saw a limited response with Madrid clearly unimpressed.

Majors FX Highlights

The dollar index was seen with an offered tone on Tuesday night, and slid to a low of 93.137 amid gains in other currencies, especially EUR and GBP on the back of strong economic data releases and JPY from continued geopolitical concerns. EUR/USD rallied above 1.1750 as bullish trade data raised expectations of ECB tapering and a break above 1.1800 to an eventual high of 1.1825 was seen in the NY session as Catalonia's president Carles Puigdemont deferred the declaration of independence from Spain. USD/JPY slid lower to test the 112.00 big figure, but could only go as low as 111.99 as stocks remained in black. Pair later returned to 112.40-levels into the Asian open this morning, with focus on machinery orders print due this morning. Cable also extended gains in NY to break above 1.3200 and print a high of 1.3226 as manufacturing and industrial production data topped expectations. The commodity currencies also felt the benefit of a softer USD tone, the CAD still preferred to AUD and NZD with the aid of front-month WTI crude pushing over $50 to come within 10c of $51. The AUD is in a safe second place as AUD/NZD holds above 1.10 with NZD still battered by the delay in election outcome. Some upside seen in AUD this morning as Westpac consumer confidence came in above 100 for the first time in a year.

Majors Data Highlights

UK industrial production rose by 0.2%m/m in August, which has pushed the y/y rate higher to 1.6% from 1.1%y/y in July (revised from 0.4%y/y). Manufacturing output has at the same time risen by 0.4%m/m which has pushed the y/y rate up to 2.8% from 2.7% in July (revised from 1.9%y/y).

FOMC minutes from Sep 20 should not show any major shift in perceptions on inflation, with the majority still leaning towards a Dec rate hike even if concerns will persist. There is plenty of data to be seen before the Fed makes its decision. Dovish voter Evans and moderate-hawkish non-voter Williams are speaking as well. Keep an eye out for 4th round of NAFTA talks as well.

Emerging Asia FX Highlights

USD/Asians traded with a bearish bias overnight as the USD was weaker on gains in other currencies. USD/CNY 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. USD/SGD continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. USD/IDR 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. USD/INR 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Catalan leader Puigdemont proposed to suspend independence result, Spain said Catalonia declared deferred independence.

- Canada Sep housing starts -3.9% to 217.1k vs 212k exp, Aug building permits -5.5% vs -1.0% exp.

- VIX index: 10.08 (-2.42%)

- Gold Spot: $1,289.71/oz (+0.13%)

- ICE Brent front contract: $56.61 (+$0.82)

- Nymex WTI front contract: $50.89 ($-0.03)

- Reuters/Jefferies Commodities Index: 183.20 (+1.24%)

- 10y UST: 2.361% (+0bp) (Asia morning)

- DJI: 22,830.68 (+0.31%); S&P: 2,550.64 (+0.23%); Nasdaq: 6,587.25 (+0.11%)

ASIA NEWS

China: The International Monetary Fund raises its 2017 and 2018 GDP growth forecast for the U.S., China, euro area and Japan in its October World Economic Outlook published in Washington. - BBG

Indonesia: Central bank will stipulate the use of "closed-loop" payment, such as cash-equivalent cards by retailers including Starbucks and CGV Blitz. - BBG

CURRENCIES

The USD slipped a shade more over the day, EUR/USD breaking through 1.1788 resistance late in the European morning and eventually managing a high at 1.1825 as Catalan President Puigdemont offered to suspend the referendum result to talk with Spain, but a cool response from Madrid prevented any further gains.

The softer USD tone saw USD/JPY testing 112.00, a low noted at 111.98 but no one in a rush to chop a long, far less enter a new short at the level, especially with Wall Street holding in positive territory. With UST yields off the lows, USD/JPY recovered to 112.40.

GBP started under pressure, managed a small rally on better than expected production data, but overall was close to unchanged on the day as Cable followed EUR/USD and we left EUR/GBP close to where we found it.

The NOK took a hit early on as core CPI missed expectation but has spent the rest of the day making most of that back, 9.40+ proving rich for EUR/NOK. EUR/SEK has again held in a tight range to leave NOK/SEK little changed on the day too. EUR/CHF has again been happy to hold close to 1.1500.

BONDS

USTs started off slowly but a combination of some better futures covering interest after support continued to hold but more importantly fresh flattener trades helped the long end to progressively improve. Gains were trimmed when Catalonia opted to delay an independence declaration. 2s +0.0bps @ 1.50%, 5s -1.3bps @ 1.94%, 10s -1.6bps @ 2.34%, 30s -1.3bps @ 2.88%.

- Agency Spreads: Freddie/Fannie 5s +0.1/+0.5 bps, 10s +0.3/+0.3 bps.

- Swap Spreads: 2s -0.38bps, 5s +0.13bps, 10s -0.20bps.

EQUITIES

Equities slipped back from an early spike but the DJIA and S&P held marginally above neutral, consumer staples lifted by sales optimism from Wal-Mart. The lack of a Catalan independence declaration provided only modest support, and the earlier highs were not revisited.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. PBOC fixed USD/CNY mid-point at 6.6273 vs. previous close of 6.6248. The onshore pair however opened lower, at 6.5980 and slid to a low of 6.5742 in late trading. For USD/CNY, momentum is now on the downside, with the next support at 6.5500.

USD/CNH: Pair continue to see downside momentum sustain in the NY session, although 6.5600 supported until last look. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.5500 will increase downside momentum and risk 6.5000 big figure.

USD/SGD: Pair continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. Investors however remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level is only seen at 1.3500 big figure which should likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. Onshore spot saw another opening above 13500 at 13505 although lower than last close of 13518, but slid to a low of 13484 in early trading as the Chinese yuan strengthened. Gains above 13500 however returned in the afternoon. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open. Onshore spot slid below 65.3000 soon after the open as a weak USD possibly weighed, as did the upbeat comments from FinMin Jaitley on the rupee. Upside momentum however returned and gains above 65.3500 were seen in the afternoon before another sell-off into the close. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 08:00 GMT - TW: Exports (Sep) [Mkt: 13.4, Prev: 12.7]

- 08:00 GMT - TW: Imports (Sep) [Mkt: 8.2, Prev: 6.9]

- 08:00 GMT - TW: Trade Balance (Sep) [Mkt: 5.92, Prev: 5.71]

- 23:50 GMT - JP: Bank Lending Data (Ex trusts) (Sep) [Prev: 3.4]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.7, Prev: 8]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.8, Prev: -7.5]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 0.2, Prev: 0]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 3, Prev: 2.9]

EVENTS & AUCTIONS

- 11:15 GMT - US: Fed's Evans Speaks in Zurich

- 16:10 GMT - US: Fed's Potter Speaks in New York

- 17:50 GMT - EU: ECB's Praet Speaks in New York

- 18:00 GMT - US: FOMC Minutes Released

- 18:40 GMT - US: Fed's Williams Gives Community Leaders Speech


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 10 Oct

 [Forex Highlights]

Asia Overnight Highlights - 11 October 2017

ASIA OUTLOOK

The USD had a softer tone as USTs saw a bull flattening. Catalan leader Puigdemont offered to postpone the referendum result, but this saw a limited response with Madrid clearly unimpressed.

Majors FX Highlights

The dollar index was seen with an offered tone on Tuesday night, and slid to a low of 93.137 amid gains in other currencies, especially EUR and GBP on the back of strong economic data releases and JPY from continued geopolitical concerns. EUR/USD rallied above 1.1750 as bullish trade data raised expectations of ECB tapering and a break above 1.1800 to an eventual high of 1.1825 was seen in the NY session as Catalonia's president Carles Puigdemont deferred the declaration of independence from Spain. USD/JPY slid lower to test the 112.00 big figure, but could only go as low as 111.99 as stocks remained in black. Pair later returned to 112.40-levels into the Asian open this morning, with focus on machinery orders print due this morning. Cable also extended gains in NY to break above 1.3200 and print a high of 1.3226 as manufacturing and industrial production data topped expectations. The commodity currencies also felt the benefit of a softer USD tone, the CAD still preferred to AUD and NZD with the aid of front-month WTI crude pushing over $50 to come within 10c of $51. The AUD is in a safe second place as AUD/NZD holds above 1.10 with NZD still battered by the delay in election outcome. Some upside seen in AUD this morning as Westpac consumer confidence came in above 100 for the first time in a year.

Majors Data Highlights

UK industrial production rose by 0.2%m/m in August, which has pushed the y/y rate higher to 1.6% from 1.1%y/y in July (revised from 0.4%y/y). Manufacturing output has at the same time risen by 0.4%m/m which has pushed the y/y rate up to 2.8% from 2.7% in July (revised from 1.9%y/y).

FOMC minutes from Sep 20 should not show any major shift in perceptions on inflation, with the majority still leaning towards a Dec rate hike even if concerns will persist. There is plenty of data to be seen before the Fed makes its decision. Dovish voter Evans and moderate-hawkish non-voter Williams are speaking as well. Keep an eye out for 4th round of NAFTA talks as well.

Emerging Asia FX Highlights

USD/Asians traded with a bearish bias overnight as the USD was weaker on gains in other currencies. USD/CNY 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. USD/SGD continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. USD/IDR 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. USD/INR 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Catalan leader Puigdemont proposed to suspend independence result, Spain said Catalonia declared deferred independence.

- Canada Sep housing starts -3.9% to 217.1k vs 212k exp, Aug building permits -5.5% vs -1.0% exp.

- VIX index: 10.08 (-2.42%)

- Gold Spot: $1,289.71/oz (+0.13%)

- ICE Brent front contract: $56.61 (+$0.82)

- Nymex WTI front contract: $50.89 ($-0.03)

- Reuters/Jefferies Commodities Index: 183.20 (+1.24%)

- 10y UST: 2.361% (+0bp) (Asia morning)

- DJI: 22,830.68 (+0.31%); S&P: 2,550.64 (+0.23%); Nasdaq: 6,587.25 (+0.11%)

ASIA NEWS

China: The International Monetary Fund raises its 2017 and 2018 GDP growth forecast for the U.S., China, euro area and Japan in its October World Economic Outlook published in Washington. - BBG

Indonesia: Central bank will stipulate the use of "closed-loop" payment, such as cash-equivalent cards by retailers including Starbucks and CGV Blitz. - BBG

CURRENCIES

The USD slipped a shade more over the day, EUR/USD breaking through 1.1788 resistance late in the European morning and eventually managing a high at 1.1825 as Catalan President Puigdemont offered to suspend the referendum result to talk with Spain, but a cool response from Madrid prevented any further gains.

The softer USD tone saw USD/JPY testing 112.00, a low noted at 111.98 but no one in a rush to chop a long, far less enter a new short at the level, especially with Wall Street holding in positive territory. With UST yields off the lows, USD/JPY recovered to 112.40.

GBP started under pressure, managed a small rally on better than expected production data, but overall was close to unchanged on the day as Cable followed EUR/USD and we left EUR/GBP close to where we found it.

The NOK took a hit early on as core CPI missed expectation but has spent the rest of the day making most of that back, 9.40+ proving rich for EUR/NOK. EUR/SEK has again held in a tight range to leave NOK/SEK little changed on the day too. EUR/CHF has again been happy to hold close to 1.1500.

BONDS

USTs started off slowly but a combination of some better futures covering interest after support continued to hold but more importantly fresh flattener trades helped the long end to progressively improve. Gains were trimmed when Catalonia opted to delay an independence declaration. 2s +0.0bps @ 1.50%, 5s -1.3bps @ 1.94%, 10s -1.6bps @ 2.34%, 30s -1.3bps @ 2.88%.

- Agency Spreads: Freddie/Fannie 5s +0.1/+0.5 bps, 10s +0.3/+0.3 bps.

- Swap Spreads: 2s -0.38bps, 5s +0.13bps, 10s -0.20bps.

EQUITIES

Equities slipped back from an early spike but the DJIA and S&P held marginally above neutral, consumer staples lifted by sales optimism from Wal-Mart. The lack of a Catalan independence declaration provided only modest support, and the earlier highs were not revisited.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. PBOC fixed USD/CNY mid-point at 6.6273 vs. previous close of 6.6248. The onshore pair however opened lower, at 6.5980 and slid to a low of 6.5742 in late trading. For USD/CNY, momentum is now on the downside, with the next support at 6.5500.

USD/CNH: Pair continue to see downside momentum sustain in the NY session, although 6.5600 supported until last look. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.5500 will increase downside momentum and risk 6.5000 big figure.

USD/SGD: Pair continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. Investors however remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level is only seen at 1.3500 big figure which should likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. Onshore spot saw another opening above 13500 at 13505 although lower than last close of 13518, but slid to a low of 13484 in early trading as the Chinese yuan strengthened. Gains above 13500 however returned in the afternoon. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open. Onshore spot slid below 65.3000 soon after the open as a weak USD possibly weighed, as did the upbeat comments from FinMin Jaitley on the rupee. Upside momentum however returned and gains above 65.3500 were seen in the afternoon before another sell-off into the close. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 08:00 GMT - TW: Exports (Sep) [Mkt: 13.4, Prev: 12.7]

- 08:00 GMT - TW: Imports (Sep) [Mkt: 8.2, Prev: 6.9]

- 08:00 GMT - TW: Trade Balance (Sep) [Mkt: 5.92, Prev: 5.71]

- 23:50 GMT - JP: Bank Lending Data (Ex trusts) (Sep) [Prev: 3.4]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.7, Prev: 8]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.8, Prev: -7.5]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 0.2, Prev: 0]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 3, Prev: 2.9]

EVENTS & AUCTIONS

- 11:15 GMT - US: Fed's Evans Speaks in Zurich

- 16:10 GMT - US: Fed's Potter Speaks in New York

- 17:50 GMT - EU: ECB's Praet Speaks in New York

- 18:00 GMT - US: FOMC Minutes Released

- 18:40 GMT - US: Fed's Williams Gives Community Leaders Speech


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 10 Oct

 [Forex Highlights]

Asia Overnight Highlights - 11 October 2017

ASIA OUTLOOK

The USD had a softer tone as USTs saw a bull flattening. Catalan leader Puigdemont offered to postpone the referendum result, but this saw a limited response with Madrid clearly unimpressed.

Majors FX Highlights

The dollar index was seen with an offered tone on Tuesday night, and slid to a low of 93.137 amid gains in other currencies, especially EUR and GBP on the back of strong economic data releases and JPY from continued geopolitical concerns. EUR/USD rallied above 1.1750 as bullish trade data raised expectations of ECB tapering and a break above 1.1800 to an eventual high of 1.1825 was seen in the NY session as Catalonia's president Carles Puigdemont deferred the declaration of independence from Spain. USD/JPY slid lower to test the 112.00 big figure, but could only go as low as 111.99 as stocks remained in black. Pair later returned to 112.40-levels into the Asian open this morning, with focus on machinery orders print due this morning. Cable also extended gains in NY to break above 1.3200 and print a high of 1.3226 as manufacturing and industrial production data topped expectations. The commodity currencies also felt the benefit of a softer USD tone, the CAD still preferred to AUD and NZD with the aid of front-month WTI crude pushing over $50 to come within 10c of $51. The AUD is in a safe second place as AUD/NZD holds above 1.10 with NZD still battered by the delay in election outcome. Some upside seen in AUD this morning as Westpac consumer confidence came in above 100 for the first time in a year.

Majors Data Highlights

UK industrial production rose by 0.2%m/m in August, which has pushed the y/y rate higher to 1.6% from 1.1%y/y in July (revised from 0.4%y/y). Manufacturing output has at the same time risen by 0.4%m/m which has pushed the y/y rate up to 2.8% from 2.7% in July (revised from 1.9%y/y).

FOMC minutes from Sep 20 should not show any major shift in perceptions on inflation, with the majority still leaning towards a Dec rate hike even if concerns will persist. There is plenty of data to be seen before the Fed makes its decision. Dovish voter Evans and moderate-hawkish non-voter Williams are speaking as well. Keep an eye out for 4th round of NAFTA talks as well.

Emerging Asia FX Highlights

USD/Asians traded with a bearish bias overnight as the USD was weaker on gains in other currencies. USD/CNY 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. USD/SGD continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. USD/IDR 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. USD/INR 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Catalan leader Puigdemont proposed to suspend independence result, Spain said Catalonia declared deferred independence.

- Canada Sep housing starts -3.9% to 217.1k vs 212k exp, Aug building permits -5.5% vs -1.0% exp.

- VIX index: 10.08 (-2.42%)

- Gold Spot: $1,289.71/oz (+0.13%)

- ICE Brent front contract: $56.61 (+$0.82)

- Nymex WTI front contract: $50.89 ($-0.03)

- Reuters/Jefferies Commodities Index: 183.20 (+1.24%)

- 10y UST: 2.361% (+0bp) (Asia morning)

- DJI: 22,830.68 (+0.31%); S&P: 2,550.64 (+0.23%); Nasdaq: 6,587.25 (+0.11%)

ASIA NEWS

China: The International Monetary Fund raises its 2017 and 2018 GDP growth forecast for the U.S., China, euro area and Japan in its October World Economic Outlook published in Washington. - BBG

Indonesia: Central bank will stipulate the use of "closed-loop" payment, such as cash-equivalent cards by retailers including Starbucks and CGV Blitz. - BBG

CURRENCIES

The USD slipped a shade more over the day, EUR/USD breaking through 1.1788 resistance late in the European morning and eventually managing a high at 1.1825 as Catalan President Puigdemont offered to suspend the referendum result to talk with Spain, but a cool response from Madrid prevented any further gains.

The softer USD tone saw USD/JPY testing 112.00, a low noted at 111.98 but no one in a rush to chop a long, far less enter a new short at the level, especially with Wall Street holding in positive territory. With UST yields off the lows, USD/JPY recovered to 112.40.

GBP started under pressure, managed a small rally on better than expected production data, but overall was close to unchanged on the day as Cable followed EUR/USD and we left EUR/GBP close to where we found it.

The NOK took a hit early on as core CPI missed expectation but has spent the rest of the day making most of that back, 9.40+ proving rich for EUR/NOK. EUR/SEK has again held in a tight range to leave NOK/SEK little changed on the day too. EUR/CHF has again been happy to hold close to 1.1500.

BONDS

USTs started off slowly but a combination of some better futures covering interest after support continued to hold but more importantly fresh flattener trades helped the long end to progressively improve. Gains were trimmed when Catalonia opted to delay an independence declaration. 2s +0.0bps @ 1.50%, 5s -1.3bps @ 1.94%, 10s -1.6bps @ 2.34%, 30s -1.3bps @ 2.88%.

- Agency Spreads: Freddie/Fannie 5s +0.1/+0.5 bps, 10s +0.3/+0.3 bps.

- Swap Spreads: 2s -0.38bps, 5s +0.13bps, 10s -0.20bps.

EQUITIES

Equities slipped back from an early spike but the DJIA and S&P held marginally above neutral, consumer staples lifted by sales optimism from Wal-Mart. The lack of a Catalan independence declaration provided only modest support, and the earlier highs were not revisited.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a sharp slide in the Asian session on Tuesday, coming off by over 5 big figures, and continued to trade lower in NY with 6.7200 providing some support. PBOC fixed USD/CNY mid-point at 6.6273 vs. previous close of 6.6248. The onshore pair however opened lower, at 6.5980 and slid to a low of 6.5742 in late trading. For USD/CNY, momentum is now on the downside, with the next support at 6.5500.

USD/CNH: Pair continue to see downside momentum sustain in the NY session, although 6.5600 supported until last look. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.5500 will increase downside momentum and risk 6.5000 big figure.

USD/SGD: Pair continued to slide in the NY hours, and printed an eventual low of 1.3545, breaking below the key 1.3550. Investors however remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level is only seen at 1.3500 big figure which should likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw some gains return to 13560 in London hours but retreated again in NY to trade around 13530. Onshore spot saw another opening above 13500 at 13505 although lower than last close of 13518, but slid to a low of 13484 in early trading as the Chinese yuan strengthened. Gains above 13500 however returned in the afternoon. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs were sold off to a low of 65.4200 in the NY session but recovered some losses to inch up above 65.5000 into the Asia open. Onshore spot slid below 65.3000 soon after the open as a weak USD possibly weighed, as did the upbeat comments from FinMin Jaitley on the rupee. Upside momentum however returned and gains above 65.3500 were seen in the afternoon before another sell-off into the close. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 08:00 GMT - TW: Exports (Sep) [Mkt: 13.4, Prev: 12.7]

- 08:00 GMT - TW: Imports (Sep) [Mkt: 8.2, Prev: 6.9]

- 08:00 GMT - TW: Trade Balance (Sep) [Mkt: 5.92, Prev: 5.71]

- 23:50 GMT - JP: Bank Lending Data (Ex trusts) (Sep) [Prev: 3.4]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.7, Prev: 8]

- 23:50 GMT - JP: Key Machinery Orders (Aug) [Mkt: 0.8, Prev: -7.5]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 0.2, Prev: 0]

- 23:50 GMT - JP: PPI (Sep) [Mkt: 3, Prev: 2.9]

EVENTS & AUCTIONS

- 11:15 GMT - US: Fed's Evans Speaks in Zurich

- 16:10 GMT - US: Fed's Potter Speaks in New York

- 17:50 GMT - EU: ECB's Praet Speaks in New York

- 18:00 GMT - US: FOMC Minutes Released

- 18:40 GMT - US: Fed's Williams Gives Community Leaders Speech


Forex - Asia Open - Overnight Highlights


 23:47 (GMT) 09 Oct

 [Forex Highlights]

Asia Overnight Highlights - 10 October 2017

ASIA OUTLOOK

With markets thin due to Columbus Day in the US, markets were subdued. GBP saw some relief that PM May seemed to have avoided a leadership challenge.

Majors FX Highlights

The dollar index remained rangy overnight on Monday, trading quietly around 93.7000 as US and Canada markets were away on holiday. Some weakness was seen as geopolitical tension resurfaced following President trump's tweet threats against North Korea over the weekend, while gains in the sterling also weighed. Cable was bid up to 1.3184 with PM May appearing to have deflected a leadership challenge, but settled near 1.3140 subsequently. EUR/USD also saw a rally to 1.1756 but gains above 1.1750 continue to remain limited and pair returned to trade around 1.1740 into the Asian open. USD/JPY remains stuck between 112 and 113, after last Friday's failed attempt to break 113. The Japanese election is starting to come into focus, with a debate starting on the policy consequences of the LDP not securing a large majority. AUD/USD continued to slide despite some momentary gains to 0.7765+, but inched to a low of 0.7750 in early Asian trading morning. NZD/USD remains weak on coalition talks jitters and may be heading again for 0.7050.

Majors Data Highlights

US markets remained closed on Monday for Columbus day, while Japan was closed as well for Health Sports Day.

Only data from the US today will be NFIB small business optimism for Sep. Canada's data focuses on the housing sector with Sep housing starts and Aug building permits today. UK will release August industrial production, alongside trade numbers, where we expect to see a 0.3%m/m fall (prev: 0.2%m/m), which will keep the y/y rate unchanged at 0.4%. Manufacturing output is expected to fall by a similar 0.3%m/m which will take the y/y rate down to 1.3% (prev: 1.9%y/y).

Emerging Asia FX Highlights

USD/Asians were slightly weaker in the NY session, although range trading was seen with many US traders away on holiday. USD/CNY 1Y NDFs saw downside momentum continue steadily into the overnight session, and slipped to a low of 6.7695. USD/SGD returned after testing the 1.3700 big figure on Friday and traded with an offered tone on Monday slipping to an eventual low of 1.3620. USD/IDR 1M NDFs saw gains to 13580 in early NY trading but reversed to 13570 subsequently. USD/INR 1M NDFs saw quiet trading around 65.7000 in Monday's NY session.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Fed's Rosengren said over the weekend that it is prudent to continue gradual tightening.

- ECB's Lautenschlaeger said should begin to scale back bond purchases at the beginning of next year.

- VIX index: 10.33 (+7.05%)

- Gold Spot: $1,283.93/oz (+0.01%)

- ICE Brent front contract: $55.79 (+$0.17)

- Nymex WTI front contract: $49.56 ($-0.02)

- Reuters/Jefferies Commodities Index: 180.96 (+0.00%)

- 10y UST: 2.359% (0bp) (Asia morning)

- DJI: 22,761.07 (-0.06%); S&P: 2,544.73 (-0.18%); Nasdaq: 6,579.73 (-0.16%)

ASIA NEWS

China: PBOC's Zhou Tells Caijing He Wants More Financial Openness. - BBG

Singapore: MAS Takes Serious View on Money Laundering, Terrorism Financing. - BBG

Indonesia: Tax Revenue Increases 12.6% Y/Y as of Sept.

India: Asked whether he's concerned with rupee decline against the dollar, India's Finance Minister Arun Jaitley says "I don't think it's a continuous decline -- that's an overstatement." - BBG

CURRENCIES

EUR/USD churned in quiet holiday trading, with Powell gaining versus Warsh in the betting odds for the next Fed chair and thus tempering Fed tightening fears for 2018. While comments from ECB's Lautenschlaeger nudged the pair to highs above 1.1750 the mood remains positive for the USD. Catalonia remains in focus, though this is not really a driving force on the EUR at this point.

USD/JPY remains stuck between 112 and 113, after last Friday's failed attempt to break 113. The Japanese election is starting to come into focus, with a debate starting on the policy consequences of the LDP not securing a large majority.

GBP gained ground across the board with PM May appearing to have deflected a leadership challenge. However, the GBP gain ran out of steam with some traders are noting that the IMM position has swung to long GBP positions, though a report May had assured business leaders of a 2 year transition period gave the GBP some late support.

BONDS

USTs were pretty sidelined in holiday trade, with futures left treading water above their big figure support levels after Friday's payrolls driven breaks below were not sustained. Some note of Fed's Powell moving ahead with the bookies for the Fed chair as hawkish Warsh slips back. Curve wise however, data and Fed talk is arguably still conductive to curve flattening big picture. Low productivity and trend growth and low expectations for the terminal Fed funds suggest that future tightening into next year ought to be coming with a curve flattening and even inverting medium-term thrust.

EQUITIES

Futures had advanced ahead of the open with the weekend having delivered no major developments from North Korea, but the indices dipped quickly to near flat, and later marginally negative.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw downside momentum continue steadily into the overnight session, and slipped to a low of 6.7695. PBOC fixed USD/CNY mid-point at 6.6493 vs. previous close of 6.6528, after China onshore markets were closed for a week. This was higher than the previous fixing of 6.6369. USD/CNY opened with an offered tone, heading to a low of 6.6213 from 6.6566. We do not see clear momentum either way at the moment. If the downside movements continue, expect some resistance at 6.6100, otherwise we see support at 6.6500.

USD/CNH: Pair continued to be offered, but support at 6.6100 continued to hold despite several tests. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.6100 will increase downside momentum and risk 6.6000 big figure.

USD/SGD: Pair returned after testing the 1.3700 big figure on Friday and traded with an offered tone on Monday slipping to an eventual low of 1.3620. Investors remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level at 1.3613 is likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw gains to 13580 in early NY trading but reversed to 13570 subsequently. Onshore spot continued to remain bid above the 13500 mark at the start of the new week in Asia, and despite some trading below the level, pair returned to 13520 into the close. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs saw quiet trading around 65.7000 in Monday's NY session. Onshore spot saw a firm opening at 65.3700 at the start of the new week, and consolidated around 65.3000 subsequently as focus turned to the September CPI release this week. Some traction however came in the afternoon and pair jumped up to 65.4000. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 23:50 GMT - JP: Current Account (Aug) [Mkt: 2279.9, Prev: 2320]

- n/a GMT - CN: Aggregate Financing (10th-18th) (Sep) 4cast:1450 RMB bn [Mkt: 1586.4, Prev: 1480]

- n/a GMT - CN: Money Supply M2 (10th-18th) (Sep) 4cast:8.8 % y/y [Mkt: 9, Prev: 8.9]

- n/a GMT - CN: New Yuan Loans (10th-18th) (Sep) 4cast:1050 CNY bn [Mkt: 1215, Prev: 1090]

- 00:30 GMT - AU: NAB Business Confidence (Sep) [Prev: 5]

- 01:00 GMT - PH: Exports (Aug) [Prev: 10.4]

- 01:00 GMT - PH: Imports (Aug) [Prev: -3.2]

- 01:00 GMT - PH: Trade Balance (Aug) [Prev: -1646]

- 05:00 GMT - JP: Economy Watchers Survey (Sep) [Mkt: 49.5, Prev: 49.7]

- 08:30 GMT - UK: Construction Output (sa) (Aug) [Mkt: -0.2, Prev: -0.9]

- 08:30 GMT - UK: Construction Output (sa) (Aug) [Mkt: 0, Prev: -0.4]

- 08:30 GMT - UK: Industrial Production (Aug) 4cast:0.4 % y/y [Mkt: 0.9, Prev: 0.4]

- 08:30 GMT - UK: Manufacturing Production (Aug) 4cast:1.3 % y/y [Mkt: 1.9, Prev: 1.9]

- 08:30 GMT - UK: Visible Trade Balance (Aug) [Mkt: -11.2, Prev: -11.576]

- 10:00 GMT - US: NFIB Small Business Optimism Index (Sep) [Mkt: 104.8, Prev: 105.3]

- 12:15 GMT - CA: Housing starts (Sep) [Prev: 223.2]

- 12:30 GMT - CA: Building permits (Aug) [Prev: -3.5]

- 23:30 GMT - AU: Westpac Consumer Confidence (Oct) [Prev: 97.9]

EVENTS & AUCTIONS

- TW: Market Holiday - National Day

- 09:30 GMT - UK: 1.75% 2037 Bond Auction (GBP 2.5bn)

- 14:00 GMT - US: Fed's Kashkari Speaks in Minnesota

- 15:30 GMT - US: 3mth Bills Auction

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 52wk Bills Auction

- 15:30 GMT - US: 6mth Bills Auction

- 18:00 GMT - CA: BoC's Wilkins Speaks in Washington

- 23:00 GMT - US: Fed's Kaplan Speaks in Stanford, California


Forex - Asia Open - Overnight Highlights


 23:47 (GMT) 09 Oct

 [Forex Highlights]

Asia Overnight Highlights - 10 October 2017

ASIA OUTLOOK

With markets thin due to Columbus Day in the US, markets were subdued. GBP saw some relief that PM May seemed to have avoided a leadership challenge.

Majors FX Highlights

The dollar index remained rangy overnight on Monday, trading quietly around 93.7000 as US and Canada markets were away on holiday. Some weakness was seen as geopolitical tension resurfaced following President trump's tweet threats against North Korea over the weekend, while gains in the sterling also weighed. Cable was bid up to 1.3184 with PM May appearing to have deflected a leadership challenge, but settled near 1.3140 subsequently. EUR/USD also saw a rally to 1.1756 but gains above 1.1750 continue to remain limited and pair returned to trade around 1.1740 into the Asian open. USD/JPY remains stuck between 112 and 113, after last Friday's failed attempt to break 113. The Japanese election is starting to come into focus, with a debate starting on the policy consequences of the LDP not securing a large majority. AUD/USD continued to slide despite some momentary gains to 0.7765+, but inched to a low of 0.7750 in early Asian trading morning. NZD/USD remains weak on coalition talks jitters and may be heading again for 0.7050.

Majors Data Highlights

US markets remained closed on Monday for Columbus day, while Japan was closed as well for Health Sports Day.

Only data from the US today will be NFIB small business optimism for Sep. Canada's data focuses on the housing sector with Sep housing starts and Aug building permits today. UK will release August industrial production, alongside trade numbers, where we expect to see a 0.3%m/m fall (prev: 0.2%m/m), which will keep the y/y rate unchanged at 0.4%. Manufacturing output is expected to fall by a similar 0.3%m/m which will take the y/y rate down to 1.3% (prev: 1.9%y/y).

Emerging Asia FX Highlights

USD/Asians were slightly weaker in the NY session, although range trading was seen with many US traders away on holiday. USD/CNY 1Y NDFs saw downside momentum continue steadily into the overnight session, and slipped to a low of 6.7695. USD/SGD returned after testing the 1.3700 big figure on Friday and traded with an offered tone on Monday slipping to an eventual low of 1.3620. USD/IDR 1M NDFs saw gains to 13580 in early NY trading but reversed to 13570 subsequently. USD/INR 1M NDFs saw quiet trading around 65.7000 in Monday's NY session.

Emerging Asia Data Highlights

A quiet start to the week is seen, although China may report September monetary statistics anytime this week.

OVERNIGHT NEWS HIGHLIGHTS

- Fed's Rosengren said over the weekend that it is prudent to continue gradual tightening.

- ECB's Lautenschlaeger said should begin to scale back bond purchases at the beginning of next year.

- VIX index: 10.33 (+7.05%)

- Gold Spot: $1,283.93/oz (+0.01%)

- ICE Brent front contract: $55.79 (+$0.17)

- Nymex WTI front contract: $49.56 ($-0.02)

- Reuters/Jefferies Commodities Index: 180.96 (+0.00%)

- 10y UST: 2.359% (0bp) (Asia morning)

- DJI: 22,761.07 (-0.06%); S&P: 2,544.73 (-0.18%); Nasdaq: 6,579.73 (-0.16%)

ASIA NEWS

China: PBOC's Zhou Tells Caijing He Wants More Financial Openness. - BBG

Singapore: MAS Takes Serious View on Money Laundering, Terrorism Financing. - BBG

Indonesia: Tax Revenue Increases 12.6% Y/Y as of Sept.

India: Asked whether he's concerned with rupee decline against the dollar, India's Finance Minister Arun Jaitley says "I don't think it's a continuous decline -- that's an overstatement." - BBG

CURRENCIES

EUR/USD churned in quiet holiday trading, with Powell gaining versus Warsh in the betting odds for the next Fed chair and thus tempering Fed tightening fears for 2018. While comments from ECB's Lautenschlaeger nudged the pair to highs above 1.1750 the mood remains positive for the USD. Catalonia remains in focus, though this is not really a driving force on the EUR at this point.

USD/JPY remains stuck between 112 and 113, after last Friday's failed attempt to break 113. The Japanese election is starting to come into focus, with a debate starting on the policy consequences of the LDP not securing a large majority.

GBP gained ground across the board with PM May appearing to have deflected a leadership challenge. However, the GBP gain ran out of steam with some traders are noting that the IMM position has swung to long GBP positions, though a report May had assured business leaders of a 2 year transition period gave the GBP some late support.

BONDS

USTs were pretty sidelined in holiday trade, with futures left treading water above their big figure support levels after Friday's payrolls driven breaks below were not sustained. Some note of Fed's Powell moving ahead with the bookies for the Fed chair as hawkish Warsh slips back. Curve wise however, data and Fed talk is arguably still conductive to curve flattening big picture. Low productivity and trend growth and low expectations for the terminal Fed funds suggest that future tightening into next year ought to be coming with a curve flattening and even inverting medium-term thrust.

EQUITIES

Futures had advanced ahead of the open with the weekend having delivered no major developments from North Korea, but the indices dipped quickly to near flat, and later marginally negative.

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw downside momentum continue steadily into the overnight session, and slipped to a low of 6.7695. PBOC fixed USD/CNY mid-point at 6.6493 vs. previous close of 6.6528, after China onshore markets were closed for a week. This was higher than the previous fixing of 6.6369. USD/CNY opened with an offered tone, heading to a low of 6.6213 from 6.6566. We do not see clear momentum either way at the moment. If the downside movements continue, expect some resistance at 6.6100, otherwise we see support at 6.6500.

USD/CNH: Pair continued to be offered, but support at 6.6100 continued to hold despite several tests. With onshore spot back in action, the pair is likely to follow the trend in USD/CNY, and gains are likely seeming restricted. Break of 6.6100 will increase downside momentum and risk 6.6000 big figure.

USD/SGD: Pair returned after testing the 1.3700 big figure on Friday and traded with an offered tone on Monday slipping to an eventual low of 1.3620. Investors remain cautious ahead of the country's Q3 GDP data and MAS decision this Friday. The next support level at 1.3613 is likely to hold as the focus turns to domestic issues.

USD/IDR: 1M NDFs saw gains to 13580 in early NY trading but reversed to 13570 subsequently. Onshore spot continued to remain bid above the 13500 mark at the start of the new week in Asia, and despite some trading below the level, pair returned to 13520 into the close. We continue to see gains above 13550 to attract offers and intervention fears, but resistance turned support at 13300 should continue to hold.

USD/INR: 1M NDFs saw quiet trading around 65.7000 in Monday's NY session. Onshore spot saw a firm opening at 65.3700 at the start of the new week, and consolidated around 65.3000 subsequently as focus turned to the September CPI release this week. Some traction however came in the afternoon and pair jumped up to 65.4000. Even though increased spending continues to risk fiscal deficit target breach, we see no risk to the 66 handle.

DATA RELEASES DUE TODAY

- 23:50 GMT - JP: Current Account (Aug) [Mkt: 2279.9, Prev: 2320]

- n/a GMT - CN: Aggregate Financing (10th-18th) (Sep) 4cast:1450 RMB bn [Mkt: 1586.4, Prev: 1480]

- n/a GMT - CN: Money Supply M2 (10th-18th) (Sep) 4cast:8.8 % y/y [Mkt: 9, Prev: 8.9]

- n/a GMT - CN: New Yuan Loans (10th-18th) (Sep) 4cast:1050 CNY bn [Mkt: 1215, Prev: 1090]

- 00:30 GMT - AU: NAB Business Confidence (Sep) [Prev: 5]

- 01:00 GMT - PH: Exports (Aug) [Prev: 10.4]

- 01:00 GMT - PH: Imports (Aug) [Prev: -3.2]

- 01:00 GMT - PH: Trade Balance (Aug) [Prev: -1646]

- 05:00 GMT - JP: Economy Watchers Survey (Sep) [Mkt: 49.5, Prev: 49.7]

- 08:30 GMT - UK: Construction Output (sa) (Aug) [Mkt: -0.2, Prev: -0.9]

- 08:30 GMT - UK: Construction Output (sa) (Aug) [Mkt: 0, Prev: -0.4]

- 08:30 GMT - UK: Industrial Production (Aug) 4cast:0.4 % y/y [Mkt: 0.9, Prev: 0.4]

- 08:30 GMT - UK: Manufacturing Production (Aug) 4cast:1.3 % y/y [Mkt: 1.9, Prev: 1.9]

- 08:30 GMT - UK: Visible Trade Balance (Aug) [Mkt: -11.2, Prev: -11.576]

- 10:00 GMT - US: NFIB Small Business Optimism Index (Sep) [Mkt: 104.8, Prev: 105.3]

- 12:15 GMT - CA: Housing starts (Sep) [Prev: 223.2]

- 12:30 GMT - CA: Building permits (Aug) [Prev: -3.5]

- 23:30 GMT - AU: Westpac Consumer Confidence (Oct) [Prev: 97.9]

EVENTS & AUCTIONS

- TW: Market Holiday - National Day

- 09:30 GMT - UK: 1.75% 2037 Bond Auction (GBP 2.5bn)

- 14:00 GMT - US: Fed's Kashkari Speaks in Minnesota

- 15:30 GMT - US: 3mth Bills Auction

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 52wk Bills Auction

- 15:30 GMT - US: 6mth Bills Auction

- 18:00 GMT - CA: BoC's Wilkins Speaks in Washington

- 23:00 GMT - US: Fed's Kaplan Speaks in Stanford, California


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