Ranges (Up till 11.

20am HKT)
Currency

Currency

EURUSD

1.1045-695

EURJPY

133.31-90

USDJPY

120.48-121.105

EURGBP

0.7198-0.7207

GBPUSD

1.5347-56

USDSGD

1.3905-40

USDCHF
AUDUSD

0.9813-35
0.7228-55

USDTHB
USDKRW

35.46-52
1128.7-1134.0

NZDUSD

0.6760-88

USDTWD

32.354-708

USDCAD

1.3152-75

USDCNH

6.3791-6.3900

AUDNZD

1.0668-1.0705

XAU

1162.7-1165.1

Key Headlines

China tells US Navy not to act blindly

Some guys are saying that US warships have

navigated towards the artificial islands built by
China in the South China Sea giving investors
the jitters thus weakness is equity markets. We
dont agree. Move down in AudUsd to 0.7228 is
linked to trigger of AudJpy stops below 87.50.

Few have noticed that China Sept Industrial

Profits Y/Y fell 0.1% from -8.8%. True it is a
huge improvement but still a negative number.
EurUsd revisited 1.10695 where decent offer
seen at 1.1070 in platforms. UsdJpy touched
120.48 low following trigger of AudJpy stops
near 87.50.

FX Flows
EurUsd offers, as mentioned yesterday, thickens into the
1.1070s coming from macro names and hence kept the
EurUsd neatly tucked. Japanese were buyers of EurJpy
early morning but found good supply in the sixties.
Buyers turned sellers and took EurUsd back to 1.1040s.
Into late morning, risk off took EurUsd to 1.10695,
where we encountered decent offers at 1.1070, planted in
platforms. Be aware there are build-up of stop buy order
above 1.1180 and into 1.11-handle. Nothing interesting in
EurUsd option expiries, notable one is this Oct 29 strike
1.1000 worth more than Eur1.6bn.
Nzd slipped from 0.6785 to low of 0.6760 following a
widening Sept trade deficit. But somehow no real
interest out there. We have been in this 0.68-0.69 since
Oct 14 and I see dangerous stops developing upside, atop
0.6920s. Rates are telling us NzdUsd should be lower
0.65-mid and AudNzd should be up at 1.11s.
Believe it or not! We are into eleventh day of this 0.720.73 AudUsd range. Announcement from Nippon Life
that it will acquire 80% of NAB life insurance unit for
about Aud2.28bn failed to move market. We spent most

of the time near 0.7250 then a sharp fall in equities sent

AudUsd to 0.7229. Seemed that stop sell orders in
AudJpy were triggered below 87.50. Usual chatter of
sellers near 0.7265-75 and also at 0.7300. Exporters are
rumoured to be at 0.7200-10. Keep an eye on this Oct 30
0.6900 option expiry, worth Aud3.7bn.
At the start of our session, Japanese names were better
buyers of EurJpy but they were challenged by EurUsd
offers above 1.1060. Both EurJpy and UsdJpy turned
lower hearsay exporters were better sellers. AudJpy
stops were then triggered, caused UsdJpy low 120.48.
Attention is on BOJ this Friday. Many believe it is the
Oct anniversary and Governor Kuroda is likely to add
QQE. A Nikkei article argued BOJ remains cautious for a
number of reasons. First, room for further relaxation is
limited due to scale of JGB market. Second, changes in
stance both within the government and among business
leaders that more QQE will lead to further Jpy
weakness. Finally, Fed uncertainty.
UK releases its Q3 Advanced GDP today and growth is
expected to slow to 0.6% from 0.7%. Data will be
published at 9.30am BST.
Crude oil futures continue to stay under pressure in Asia
thus a weaker Loonie. Sharp fall in WTI pushed UsdCad
to 1.3175. The 50-day SMA is at 1.3177. The pair is still
struggling to clear this 1.3200-level we see some
decent selling there from real money accounts. Bids are
mild unless under 1.3150.

Asians
People are pinning the story about US warships in South
China Sea causing some fear, thus fall in China equities.
Seriously, story came out hours ago, before Shanghai
opened. Furthermore, market was not paying attention
to the China Industrial Profits falling 0.1% in Sept from
-8.8%. True that it is a huge improvement but still a
negative number.
Market participants predicted USDCNY fix at 6.3525 but
disappointed when PBOC set it at 6.3494. That sent
USDCNH down to 6.3791. Onshore players disagreed
and bought USDCNY off 6.3480 back into 6.35-handle
and took offshore back to 6.3850.

Who said what

Nippon Life: To buy 80% of NAB life insurance

unit for Jpy200bn
Fitch: Some Malaysia 2016 budget details look
optimistic
Fitch: Malaysias fiscal outlook to remain under
pressure

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.

Fitch: Malaysia broader economic outlook to

stay under pressure
Fitch: Malaysia budget deficit could exceed 3.1%
projection
Fitch: Malaysia 2016 nominal GDP growth about
7%
China: Urges US not to act blindly, make
trouble out of nothing

News & Data

South Korea Oct Consumer Confidence at 105

from 103
New Zealand Sept Trade Deficit at Nzd1.222bn
(f/c Nzd825mio; prev. Nzd1.035bn)
New Zealand Sept Exports Nzd3.69bn (f/c
Nzd3.9bn; prev. Nzd3.73bn)
New Zealand Sept Imports Nzd4.91bn (f/c
Nzd4.87bn; prev. Nzd4.77bn)
New Zealand Sept Trade Balance 12-Month YTD
widened to -Nzd3.235bn from Nzd3.331bn
Australia ANZ Roy Morgan Weekly Consumer
Confidence 113.4 from 113.3
China Sept Industrial Profits Y/Y fell 0.1% (prev.
-8.8%)

Jon Hilsenrath in WSJ: The Fed Strives for a

Clear Signal on Interest Rates
Federal Reserve officials are widely expected to
announce Wednesday that short-term interest rates will
remain near zero, leaving mid-December as the central
banks last chance to raise rates this year. The timetable
poses twin challenges for Fed Chairwoman Janet Yellen:
Deciding whether the U.S. economy is ready for an
interest-rate increase, and signaling central bank
intentions without causing further market confusion.
http://www.wsj.com/articles/the-fed-strives-for-a-clearsignal-on-interest-rates-1445910613?
mod=wsj_nview_latest
WSJ: What Slowdown? Survey Suggests Chinas
Consumers Coping
A new survey of about 1,200 Chinese by consulting firm
McKinsey said while the world worries about Chinas
economic slowdown, Chinese consumers appear largely
optimistic. It showed Chinese consumers are largely
optimistic about the economy and its future direction.
More than 50% said their equity investments lost
money; 71% expect wages to increase this year, though
only moderately compared to three years ago, while 84%
expect to spend more.
http://blogs.wsj.com/chinarealtime/2015/10/27/whatslowdown-survey-suggests-chinas-consumers-coping/?
mod=wsj_nview_latest

Bipartisan congressional leaders and the White House

struck a major fiscal deal in principle Monday that would
raise the debt ceiling and lift budget caps on both
defense and domestic programs, according to
congressional sources familiar with the deal. The
agreement could be voted on as early as Wednesday, the
same day House Republicans are expected to nominate
Rep. Paul Ryan, R-Wisconsin, to replace retiring Rep.
John Boehner, R-Ohio, as House speaker.
http://edition.cnn.com/2015/10/26/politics/congressbudget-talks-hill/index.html?
sr=twcnnbrk102615congressbudgettalkshill739pVODtop
Link
AFR: NAB shares halted, Nippon Life may move
to buy 80pc of life insurance business
National Australia Bank has been placed in a trading halt
amid reports that Nippon Life will buy about 80 per cent
of the bank's life insurance business for 220 billion yen
($2.5 billion). Japanese news outlet Yomiuri reported
Nippon would own about 80 per cent of the unit,
according to Bloomberg.
http://www.afr.com/business/banking-andfinance/financial-services/nab-shares-halted-nipponlife-may-move-to-buy-80pc-of-life-insurance-business20151026-gkj8xz
FT: Deutsches Cryan to slash jobs, bonuses and
assets
John Cryan will aim to cement his reputation as an
unflinching cost cutter when he unveils a new strategy
for Deutsche Bank on Thursday by reducing bonuses,
slashing staff, selling assets and overhauling technology.
According to people with knowledge of his strategy, Mr
Cryan has told staff that many bonuses will go to zero
this year, as Deutsche slides to its first annual loss since
the 2008 financial crisis. It has already slashed its
dividend after taking 4bn of litigation provisions and a
5.8bn goodwill writedown this year.
http://www.ft.com/intl/cms/s/0/7af8c8cc-7b17-11e5a1fe-567b37f80b64.html#axzz3pcxwzlf3
FT: US targets two-prong debt-budget deal
Congressional leaders and the White House are in
detailed talks on a deal that would avert a US debt
default and allow modest increases in budget spending
for two years, according to people familiar with the
matter. A deal combining an increase in the US debt
limit with an unexpected budget accord would prevent a
government default which could have shaken global
markets and give the US some relief from recurring
budget battles.
http://www.ft.com/intl/cms/s/0/9a8bb0ac-7c23-11e598fb-5a6d4728f74e.html#axzz3pcxwzlf3

CNN: Lawmakers strike major budget deal

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.

Nikkei: BOJ policy meeting amid speculation

over additional easing
The Bank of Japan will hold a policy board meeting on
Friday and while central banks in major economies
appear intent on further relaxation, the BOJ remains
cautious for a number of reasons. First, room for further
relaxation is limited as the BOJ is already buying
Japanese government bonds at a pace of 80 trillion yen a
year. There have also been changes in stance both within
the government and among business leaders. Concern is
growing in the government that additional easing could
lead to a further weakening of the yen. A third reason for
caution comes in the form of uncertainties over U.S.
monetary policy.
http://asia.nikkei.com/Politics-Economy/PolicyPolitics/BOJ-policy-meeting-amid-speculation-overadditional-easing

http://www.telegraph.co.uk/finance/economics/119546
11/Why-Portugals-constitutional-crisis-a-threat-to-allEuropes-democracies.html

AFR: The Fed might cut - not raise - rates

Only a few weeks ago, US Federal Reserve watchers were
talking about an imminent increase in interest rates.
Now, talk in some parts of the market has turned to the
possibility of the Fed being forced to loosen policy via
negative interest rates or a fourth round of quantitative
easing (QE) next year. It's not the base case scenario, but
the fact QE IV is even being speculated about underlines
the swift reversal in sentiment about the US economy.
http://www.afr.com/news/economy/monetarypolicy/the-fed-might-cut--not-raise--rates-20151024gkhqyn
Business Times - Singapore must prepare for
economic slowdown: PM Lee
With the global economy facing cyclical headwinds,
Prime Minister Lee Hsien Loong has warned that
Singapore must brace itself to handle a possible
downturn. At a dinner organised by the labour
movement on Monday, he spoke of how the United
States - the world's largest economy - was soft, while
Europe was in a stagnant state and China was
experiencing a slowdown of its own.
http://www.businesstimes.com.sg/governmenteconomy/singapore-must-prepare-for-economicslowdown-pm-lee-0
Telegraph : Why Portugal's constitutional crisis
threatens all of Europe's democracies
On October 4, the ruling conservative coalition that has
governed Portugal for four years lost its parliamentary
majority. The centre-right alliance, led by PM Pedro
Passos Coelho, had overseen the implementation of one
of the toughest austerity packages in the euro following a
78bn bail-out in 2011. The incumbents still emerged as
the biggest party with 36.8pc of the vote share, but lost
17 seats and their parliamentary majority in the process.
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.