Forex - GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)...


 10:19 (GMT) 08 Oct

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop:

Asian currencies were modestly higher against USD on Tuesday, while trade talk jitters remained. CNY led gains, up by 0.4% against the greenback after onshore markets reopened after a week-long holiday. That was followed by KRW (+0.28%), PHP (+0.27%), TWD (+0.26%), CNH (+0.17%), IDR (+0.13%), SGD (+0.11%). Other currencies including THB, MYR, HKD were quite stable. Indian market remained closed for holiday.

Asia FX and News -

+ U.S. Blacklists 8 Chinese Firms Over Human Rights ~ BBG

+ Boris Johnson Preparing for Brexit Talks to Collapse ~ Spectator

+ NZ 2019 Budget Surplus NZ$4.04b Larger Than Forecast

+ Caixin China Sept. Services PMI 51.3; Est. 52

+ Markets looking on the brighter side with focus on the trade talks. There were numerous second-tier data which did not fuel the concern over global growth. AUD/USD unchanged on mixed business sentiment though was underpinned by a stronger Kiwi on the back of a larger than forecasted budget surplus. A stronger yuan also supportive for the antipodeans. USD/JPY inched higher towards Monday's high but offers kept it below that while in US yields and equities moved higher despite the US blacklisting Chinese firms and a miss on Caixin China services PMI.

Nikkei and JGBs -

GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)... (0101-PJFG-C01)

+ Nikkei +0.99%, JGB 10yr yield at -0.200%

Europe FX and News

+ A weaker GBP was the main feature of the European morning. EUR/GBP rose around 40 pips and GBP/USD fell 50 pips as the UK government rhetoric around Brexit became more aggressive. Downing St sources indicated that they would make efforts to prevent a delay, attempting to frustrate the Benn Act, and threatened to punish EU countries who supported a delay by being uncooperative going forward. They also promised that if the Conservatives won an election after a delay a no-deal would be the only option.

+ Otherwise, the USD was a little weaker against the lower yielders as equity markets softened after a firmer open, despite better than expected German industrial production data for August. The weakness in equities was generally put down to concerns about US/China trade rather than any geopolitical concerns in the Middle East, though heightened Brexit concerns may also have contributed.

Bonds and equities

+ Bunds initially leading yields modestly higher after Trump talks up trade deal possibilities, but the UK source press briefing on Brexit eventually catches up with gilts over the morning, leaving only bund 30s at +1.5bp. Aggressive briefings on forcing no deal, followed up by claims talks breaking down, EU position that deal 'essentially impossible [on UK terms] not just now but ever'. GB2s -2.5bp, GB-DE long end spreads towards 100bp. UST yields pulled off o/n highs

US DATA

Sep PPI is due today, as well as Sep's NFIB small business index on Tuesday. Fed's Powell, Evans and Kashkari all speak.


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