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Ranges (Up till 11.

30am HKT)
Currency

Currency

EURUSD

1.0857-735

EURJPY

131.9-132.1

USDJPY

121.39-61

EURGBP

0.7058-68

GBPUSD

1.5378-96

USDSGD

1.4021-43

USDCHF
AUDUSD

0.9925-38
0.7126-50

USDTHB
USDKRW

35.495-560
1135.1-1138.2

NZDUSD

0.6582-98

USDTWD

32.343-610

USDCAD

1.3145-72

USDCNH

6.3550-6.3676

AUDNZD

1.0821-45

XAU

1108.2-1110.7

Key Headlines

Although RBA Stevens said next rate move is


likely to be a cut rather than hike, market is sort
of pricing in a RBNZ cut first. Our rates trader
Pawan noted that this is not reflected in rates
space. Pawan suggesting receiving the 2-year
Kiwi and paying the 2-year Aussie, differentials
is 78bp. Next RBNZ is Dec 10, we should narrow
before that.

Have a look at the note by Tom Tucci on his


thoughts on Bernankes speech.

Today is Super Thursday for UK that is.

FX Flows
RBA Governor Glenn Stevens gave the assurance that the
near term change in interest rates would almost certainly
be a cut, although such a move is not needed now.
Whats more important, Stevens said the CPI rate is
clearly no impediment for rate cut.
On FX, following Stevens remarks, AudUsd did back off
0.7150 but everything was orderly. We tested the 50-day
SMA of 0.7133, printed 0.7126 then returned to 0.7141
on profit taking. I heard bids from exporters are placed
under 0.7110 while sellers are atop 0.7205. On rates
space, yield spreads of UST/Aussie bonds pointing the
spot to 0.7025. Option expiring today 0.7160 strike
worth about Aud1bn and Aud2bn at 0.7200.
UsdJpy is a struggle. Supply from exporters as well as
retail capped the pair locked under 121.60. Nikkei 225
Index rose above 19,000 yet UsdJpy found difficulty
advancing. I hear offers scattered up to 121.77, which is
the 100-day SMA. Stops thereafter.
EurUsd doesnt move in Asia, if it does, then something
is wrong. Asian sovereign names bought Euros in the
sixties while regional prop accounts sellers above 1.0870.
On back of Tom Tuccis note, our trader Sam Farrell
likens short EurUsd, given the divergent policies of the
Fed and ECB especially after Draghi reiterated yesterday

that the degree of monetary policy accommodation will


need to be re-examined at the Governing Councils Dec
meeting. EurUsd has failed to catch up with the move in
2yr rates they point to EurUsd trading closer to
1.0500.
Looks like Cad rates doing a catch-up last few sessions.
Spreads of 2-year Cad/UST yields have narrowed;
pointing spot UsdCad 1.3020. Toronto saw better buyers
overall but offers surround 1.3190-1.3205. Buyers are
into 1.3070s and nothing serious thereafter. Today we
will have the Canadian Ivey PMI. Out at 10.00 am local,
market is looking for an improvement to 54.0 from 53.7.
Our rates trader Pawan said market is pricing RBNZ to
cut rates first before RBA. However, this is not reflected
in rates space. Pawan suggesting receiving the 2-year
Kiwi and paying the 2-year Aussie, differentials is 78bp.
Next RBNZ is Dec 10, we should narrow before that.
Today is Super Thursday for UK that is. From FT,
today we will get: the latest interest rate decision;
minutes of the latest Monetary Policy Committee
meeting, including the voting breakdown; the quarterly
inflation report, which includes updated forecasts and
commentary on the BoEs latest thinking on the outlook
for the economy; and a press conference from BoE
governor Mark Carney.
CIBC head of UST Trading Tom Tucci attended a small
group gathering where former Fed Chair Ben Bernanke
was the speaker. Interesting summary from Tom Bernanke stated that the current funds rate is an
emergency rate and the Fed is interested in removing it
now. His own personal economic forecast was for
continued growth and that the US would be able to battle
the headwinds from weaker global growth. He reemphasized the need to focus on Yellen, Fischer and
Dudley. He felt their message was simple- they are
raising rates in December. Bernanke felt the biggest
mistake market made after September was to price the
Fed out. It seems they are committed to adjusting rates
and that it would take a very strong headwind to alter
their course. Unlike the past 12 months we will not try to
fade the Fed over next 6 weeks.

Who said what

RBA Stevens: Any policy change would be an


easing not tightening
RBA Stevens: Rate of CPI clearly no impediment
to easing
RBA Stevens: Would be good if growth was bit
stronger
BOJ Minutes: Easing is exerting intended effects
BOJ Minutes: Would continue QQE until 2%
inflation

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.

BOJ Minutes: Oil will affect timing of hitting 2%


target
BOJ Minutes: Watching effect of higher costs
amid weak Jpy
BOJ Minutes: CPI rises are driven partly by
weak Jpy
Canadian Finance Minister Morneau: Canada
must make investments to spur growth
Fed Fischer: Steady expectations due to Fed
independence, credibility
Fed Fischer: Makes no comment on rate hikes
and current economic outlook
Fed Fischer: Fed already very transparent about
monetary policy decision
Fed Fischer: Productivity growth been very low
lately
Fed Fischer: Not a lot of force for real wages to
rise today
Fed Fischer: Fed is not that far from 2%v
inflation target
China MIIT: Sees 2015 industrial output growth
to be above 6%
China MIIT: Weak demand and deflation add
pressure on overcapacity sector

News & Data


FT: What to watch for on Bank of Englands
Super Thursday
In the last big set piece UK monetary policy event of the
year, we will get: the latest interest rate decision;
minutes of the latest Monetary Policy Committee
meeting, including the voting breakdown; the quarterly
inflation report, which includes updated forecasts and
commentary on the BoEs latest thinking on the outlook
for the economy; and a press conference from BoE
governor Mark Carney.
http://www.ft.com/intl/cms/s/0/ac3ec324-8331-11e58095-ed1a37d1e096.html#axzz3qZFGk2Q6
FT: Washington vows to continue Keystone XL
probe
The Obama administration has knocked back an effort
by the company behind the Keystone XL pipeline to take
the project out of the presidents hands, vowing that its
own
decision-making
process
will
continue.
TransCanada, the pipeline developer, this week sought to
suspend its controversial application for a permit, a
move that could have left the decision on Keystone XL to
whoever wins the 2016 presidential election. But a
spokesman for the state department, which is assessing
the planned US-Canada project, said on Wednesday:
Were not required to pause it based on an applicants
request, theres no legal basis to do that. Weve told
TransCanada that the review process will continue.

http://www.ft.com/intl/cms/s/0/2a35528a-8345-11e58095-ed1a37d1e096.html?ftcamp=published_links
%2Frss%2Fcompanies%2Ffeed%2F
%2Fproduct#axzz3qZFGk2Q6
RBA: The Path to Prosperity
Monetary policy is contributing to that rebalancing,
consistent with its mandate, with a very accommodative
stance. It seems likely that an accommodative stance will
be appropriate for some time yet. Were a change to
monetary policy to be required in the near term, it would
almost certainly be an easing, not a tightening. The rate
of CPI inflation is clearly no impediment to easing. The
housing market may be calming, lessening risks from
that source, though by how much and how persistently
we cannot yet know.
http://www.rba.gov.au/speeches/2015/sp-gov-2015-1105.html
WSJ - Rep. Brad Sherman to Janet Yellen on
Interest Rates: Gods Plan Is That Things Rise in
the Spring
On Wednesday, Rep. Brad Sherman (D., Calif.) brought
up another argument, one that Ms. Yellen may not have
confronted: God does not want to see rates rise in the fall
or winter. Gods plan is not for things to rise in
autumn. As a matter of fact, thats why we call it fall,
Mr. Sherman said during a House Financial Services
Committee hearing with Ms. Yellen. Gods plan is that
things rise in the spring, and so if you want to be good
with the Almighty, you might want to delay until May,
he said.
http://blogs.wsj.com/economics/2015/11/04/rep-bradsherman-to-janet-yellen-on-interest-rates-gods-plan-isthat-things-rise-in-the-spring/?mod=wsj_nview_latest
Ambrose Evans-Pritchard in Telegraph: I'll eat
my hat if we are anywhere near a global
recession
Citigroup's Willem Buiter has issued a global recession
alert. Professor Nouriel Roubini from New York
University joined him this week, warning that the odds
of a fresh slump have doubled to 30pc. Mr Roubini's
gloom is unsettling for me. We saw the world in almost
exactly the same way in the lead-up to the Lehman crisis,
when it seemed obvious to both of us that sharply rising
interest rates would prick the US housing bubble and the
EMU credit bubble. This time I dissent. Years of fiscal
retrenchment and balance sheet deleveraging have
prevented the current global economic recovery from
gathering speed, and have therefore stretched the
potential lifespan of the cycle. The torrid pace of
worldwide money growth over recent months is simply
not compatible with an imminent crisis.

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.

http://www.telegraph.co.uk/finance/economics/119735
07/Ill-eat-my-hat-if-we-are-any-where-near-a-globalrecession.html
AFR: RBA governor Glenn Stevens says any rate
move 'almost certainly an easing'
Reserve Bank of Australia governor Glenn Stevens says
any near-term change in official interest rates would
almost certainly be a cut, but expressed growing
confidence that such a move wouldn't be needed.
Shrugging off the need to offset recent mortgage rate
increases by the major banks, Mr Stevens described their
impact on the broader economy as not "very large". Mr
Stevens estimates the increases take back around a
quarter of this year's 0.50 percentage point of official
rate cuts, with most households highly unlikely to notice
any significant increase.
http://www.afr.com/news/economy/monetarypolicy/rba-governor-glenn-stevens-says-any-rate-movealmost-certainly-an-easing-20151104-gkr438

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.