Ranges (Up till 11.
50am HKT)
Currency
Currency
EURUSD
1.1330-515
EURJPY
135.83-136.055
USDJPY
119.83-96
EURGBP
0.7348-58
GBPUSD
1.5410-35
USDSGD
1.3918-55
USDCHF
AUDUSD
0.9591-96
0.7205-39
USDTHB
USDKRW
35.575-64
1135.3-1141.5
NZDUSD
0.6702-85
USDTWD
32.421-670
USDCAD
1.3110-49
USDCNH
6.3634-6.3726
AUDNZD
1.0678-1.0746
XAU
1164.8-1168.1
Key Headlines
It is over to Draghi looks like market is
positioned for a dovish ECB but if ECB does
nothing, there will be pain all over.
Yesterday I mentioned Nzd, today I would keep
an eye on UsdJpy, danger lurking above 120.02.
Someone or some people had stops in AudNzd,
as well as NzdUsd above 0.6755
G10 FX Flows
The BIG event today is ECB meeting and will he be
Super Mario or just Mario?
Plenty of write-ups one in FT said the resilience of
Euro dollar is questioning the Draghi and ECBs
credibility. FT highlights 3 options for ECB - #1 extend
it; #2 expand it; or #3 cut deposit rate. The WSJ story
said the central bank is under intense market pressure to
announce a second program, preferably straight away,
but by Jan at the latest.
We hear speculation of short EurUsd position being
added as we move into ECB decision day. My colleague
mentioned weak stops were taken out at 1.1335. If you
look at the charts, since start of Oct, lows are getting
higher and real stops should be at 1.1320 and also
1.1300.
If ECB does nothing, there will be pain all over.
Someone or some people had stops in AudNzd, as well as
NzdUsd above 0.6755 and started pushing the cross
lower from 1.0720s. While most currency pairs were
calm, NzdUsd pushed higher slowly from 0.67300.6740s. Then the trigger came. The cross broke
through 1.0700 and NzdUsd rushed through 0.6760 and
touched 0.6785. Through the Usd legs, AudNzd low was
at least 1.0668. Rates still pointing NzdUsd lower
suggesting 0.6620.
It was all AudNzd. AudUsd did very little. Other day one
guy called for AudUsd at 0.75; yesterday strategist one
asset management said 0.80. Today a US money-centre
bank says 0.60. Rates are telling me AudUsd should be
0.7140. Order board sees small buying from 0.7200 to
80s. Away, I heard good orders on both sides 0.7200
and 0.7300.
Yes, a tricky Jpy day. Japanese equity index is flattish, no
ETF from BOJ, UsdJpy wedged. Japanese interests on
both sides, bids at 119.80 and offers 120.00. I would
keep an eye on UsdJpy, danger lurking above 120.02.
Oil futures up small, commodity currencies firmer, thus
UsdCad slipped. Overall not a good story to tell. I asked
our trader Jon what he thought of UsdCad and he said
this is a tough one. GDP downgrades and lack of
business investment, and BOC are not looking for a
return to full capacity until mid-17. These are extreme
dovish. Jon said you got to buy UsdCad. Jon suggests
this morning intraday buy 1.3110-20 (low 1.3110), with
stop loss below 1.3080. Bipan said we have targets at the
1.3200 handle, with retail sales and CPI due out today
and Friday but we do see another test of the 1.3500
handle likely in the near-term.
Who said what
German Fin Ministry: China slowdown remains
risk to Germany
German Fin Ministry: Expects slow labour
market integration of refugees
German Fin Ministry: Lower exports may be
result of lower EM growth
German Fin Ministry: Sees state surplus this
year, near-balanced next
Roubini: Fed interest hike expected to be very
gradual
SAFE: China had Forex outflows this year
SAFE: Confident to keep Chinas international
payment balance
SAFE: Capital flows remain controllable
SAFE: People more willing to hold Usd recently
SAFE: Fed hesitant in rate hike due to unstable
US economy
SAFE: Rate hike would help China expand
overseas demand
SAFE: Current FX market supply/demand still
balanced
SAFE: Normal for China to use FX reserves to
adjust market short term
Malaysia Insider: Former PM Mahathir under
police investigation
News & Data
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.
New Zealand Sept ANZ Job Ads rose 2.1% from
-1.7%
Australia Q3 NAB Business Confidence at par
from +4
China Oct MNI Business Indicator improved to
55.6 from 51.3
MNI China Business Indicator Rises to 55.6 in
Oct Vs 51.3 Sep
Sentiment among executives at China's largest
companies picked up in October following September's
fall, as firms reported that credit costs were lower and
that access to funds remained above average. Looking
past the noise of recent months, the indicator has been
generally trending up in 2015. The cumulative effect of
monetary easing to date appears to be continuing to flow
through, with businesses reporting that the interest rates
they paid fell further in October to the lowest since 2012,
while the Availability of Credit Indicator edged a little
further into expansion at 52.8 from 52.7 previously.
[Link]
AFR: Santos bidder Scepter Partners has
backing of royal families of Brunei and UAE
Earlier today, Australias Santos rejected all cash
Aud7.14bn bid from Specter Partners. Scepter Partners
has its head office in Bermuda, but also has offices in
New York and Hong Kong. The chairman of the Scepter
board is Prince Abdul Ali Yil Kabier, a scion of the Royal
Family of Brunei, and other directors include the United
Arab Emirates's Sheik Juma al Maktoum.
[Link]
Nikkei: Hong Kong stock exchange proposes
"London connect scheme"
Hong Kong stock exchange has signed a non-binding
memorandum of understanding for developing a
clearing link between Hong Kong and London called the
"London-Hong Kong Connect" The MOU was signed
part of a series of cooperation initiatives announced in a
ceremony led by Chinese President Xi Jinping and
British Prime Minister David Cameron, the stock
exchange said in a statement.
[Link]
Nikkei: Xi says China has reduced iron and steel
capacity
China has reduced capacity in its steel industry by 77.8
million tonnes, President Xi Jinping said on Wednesday,
fending off criticism that China's cut price steel exports
had brought the British steel sector to its knees. "China
has reduced capacity in its steel industry by 77.8 million
tonnes," Xi said. The comments were translated into
English by a Reuters native Mandarin speaker.
[Link]
CNN: Paul Ryan has the votes to be House
speaker - if he runs
Rep. Paul Ryan has enough support from a key group of
House conservatives to be the next speaker -- if he still
wants the job. In a closed-door session, more than 70%
of the House Freedom Caucus voted in favor of Ryan's
candidacy. But that is short of the 80% needed for an
official endorsement, something Ryan has demanded.
[Link]
FT: Bond investors nervous as US debt default
looms
The US risks breaching its $18.1tn debt ceiling on
November 3 and can only avert a default which the
country flirted with in 2011 and 2013 if Congress
raises or suspends the debt limit. So far neither the
House nor the Senate has announced bills that would do
so without carrying controversial conditions.
[Link]
AFR - 'Global economy is in serious trouble':
Larry Summers
Four of the world's eminent economists hit the speaking
circuit in the United States on Wednesday, offering
widely diverging views on US interest rates, China's
economic health and slumping commodity prices, in
assessments that underline the uncertainty shrouding
the outlook. The economist who President Barack
Obama originally wanted to lead the Federal Reserve
instead of Janet Yellen, Larry Summers, was the most
bearish. Summers urged the Fed not to "hit the brakes"
by raising interest rates any time soon, arguing the US
and world economies were too weak to cope with higher
borrowing costs. IMF financial counsellor Jos Vials
said global financial stability was "not yet assured"
because of the rising risks in emerging market
economies, including slower growth and high corporate
debt levels in China, Turkey, Thailand, Brazil and
Indonesia.
[Link]
WSJ: ECB May Be Pressed Into More Stimulus
Now the ECB, which is barely seven months into its first
EUR1 trillion (US$885 billion) quantitative easing
program, is under intense market pressure to announce
a second program, preferably straight away, but by
January at the latest. ECB needs to weigh the
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.
consequences of not acting and disappointing the
markets, which have convinced themselves that more
stimulus is on the way. So far, the ECB has managed to
reassure investors with dovish talk of being ready to act
if needed. But already the euro has risen by 9% on a
trade-weighted basis since its lows in April.
[Link]
MNI: German FinMin: China Slowdown
Remains Risk To German Exports
The German Finance Ministry said Thursday that the
economic slowdown in China remains a risk to German
exports, adding that the surprising August drop in
foreign trade may already be the result of slower
emerging markets growth. But the Ministry's October
Monthly Report also pointed to accelerating growth in
the US and the euro area as positive export drivers.
[Link]
Telegraph: UK must secure safeguards against
further eurozone integration, warns Mark
Carney
BOE Governor Mark Carney said membership of the
European Union had helped to lift UK growth and living
standards, while enhancing Britain's flexible jobs market
and "dynamism". Mr Carney said the UK had been the
"leading beneficiary" in many ways of the "Four
Freedoms" of the movement of goods, services, people
and capital across borders, first set out in the Treaty of
Rome. But while his remarks signalled the backing of
Britain's EU membership, Mr Carney said in a speech on
Wednesday at Oxford University that it was "essential"
that steps towards closer eurozone integration did not
ride roughshod over UK policymakers' ability to preserve
financial stability.
[Link]
34/[Link]
Kathimerini: Greek Cabinet to discuss actions
needed to unlock loans
After an initial day of talks with representatives of
Greeces creditors, Prime Minister Alexis Tsipras is to
chair a cabinet meeting on Thursday morning to discuss
the additional actions that must be taken to unlock
rescue loans. Finance Minister Euclid Tsakalotos and
several other top ministers met on Wednesday with
mission chiefs from the European Commission,
European Central Bank, European Stability Mechanism
and International Monetary Fund. According to sources,
the envoys pointed out the gaps that must be plugged
before a tranche of 2 billion euros in funding can be
released.
[Link]
rini/news/cabinet-to-discuss-actions-needed-to-unlockloans
FT: Europe to press ahead with bank depositor
bailout scheme
The European Commission has vowed to press ahead
with controversial plans for eurozone nations to support
each other in the event of a bank collapse by bailing out
depositors, despite protests from Berlin. German finance
minister Wolfgang Schuble had sought to pour cold
water on the initiative. A paper Germany submitted to a
meeting of EU finance ministers last month made it clear
that to now start a discussion on further mutualisation
of bank risks through a common deposit insurance or a
European deposit reinsurance scheme is unacceptable.
[Link]
Bangkok Post: BoT sounds cautious note on
outlook
The country faces the threat of increased downside risks
to its economic growth next year, says the Bank of
Thailand's chief. The warning comes despite the central
bank's projection of 3.7% GDP growth next year and its
hopes for multiplier effects from large-scale
infrastructure projects. Monetary policy remains
sufficiently accommodative, according to central bank
governor Veerathai Santiprabhob, who said Wednesday
that fiscal policy should play the main role in gathering
momentum for the economic recovery.
[Link]
ot-sounds-cautious-note-on-outlook
Nikkei: Japanese companies seek 2tn yen in
projects from Abe trip
Japanese corporations are looking to secure around 2
trillion yen ($16.5 billion) in orders for Central Asian
natural gas and power facilities during Prime Minister
Shinzo Abe's upcoming visit to the region. Abe will travel
to Mongolia and the Central Asian states of
Turkmenistan, Tajikistan, Uzbekistan, Kyrgyzstan and
Kazakhstan from Thursday to Oct. 28, holding top-level
talks in each nation. The prime minister will be
accompanied by a delegation of leaders from 50
businesses and other groups, including trading houses,
banks and universities.
[Link]
Ambrose Evans-Pritchard in Telegraph: Defiant
Portugal shatters the eurozone's political
complacency
The delayed fuse on the eurozone's debt-deflation
policies has finally detonated in a second country.
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.
Portugal has joined the revolt against austerity. The
rickety scaffolding of fiscal discipline and economic
surveillance imposed on southern Europe by Germany is
falling apart on its most vulnerable front.
Antonio Costa, Portugal's Socialist leader and son of a
Goan poet, has refused to go along with further pay cuts
for public workers, or to submit tamely to a Right-wing
coalition under the thumb of the now-departed EU-IMF
'Troika'. Against all assumptions, he has suspended his
party's historic feud with Portugal's Communists and
combined in a triple alliance with the Left Bloc.
[Link]
12/[Link]
Business Insider:
Cops investigating
Dr
Mahathirs Bersih statements, says Zahid
The police have opened three investigation papers
probing the defamatory statements former prime
minister Tun Dr Mahathir Mohamad had allegedly made
at the Bersih 4 rally in late August. Home Minister Datuk
Seri Ahmad Zahid Hamidi said all three investigation
papers probed Dr Mahathir under Section 500 of the
Penal Code, which touches on defamation and carries a
two-year jail term, a fine, or both upon conviction.
[Link]
cops-investigating-dr-mahathirs-bersih-statementssays-zahid#[Link]
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.