MNI China Daily Summary: Wednesday, October 16

MNI: ITALY FINAL HICP +1.2% M/M, +0.7%Y/Y

MNI BRIEF: BOJ's Adachi Sees Conditions For Normalisation

MNI: PBOC Net Injects CNY581.4 Bln via OMO Wednesday

CHINA PBOC CONDUCTS CNY642.4 BLN VIA 7-DAY REVERSE REPOS WEDS

MNI: PBOC Sets Yuan Parity Higher At 7.1191 Weds; +2.66% Y/Y

US MBA: REFIS -26% SA; PURCH INDEX -7% SA THRU OCT 11 WK

MNI: US MBA: MARKET COMPOSITE -17.0% SA THRU OCT 11 WK

MNI: UK SEP OUTPUT PPI -0.5% M/M, -0.7% Y/Y

CANADA: Politics Week: Trudeau Faces More Pressure To Resign

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

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FOREX: Markets Look to Budget for Next Leg in GBP

FOREX
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  • GBP/USD's break lower Wednesday puts the pair through support at both the 1.3002 level as well as the 1.30 handle - making for a second key technical break across major markets this week. Soft UK inflation data drove the spot price lower, as markets sharply raised the implied probability of back-to-back BoE rate cuts for the November and December meetings. 44bps of rate cuts are now priced by year-end, up from ~36bps before this morning's release.
  • The next focus for G10 FX will be the sustainability of the next GBP leg lower. The 100-dma undercuts as next support at 1.2953, and it's this level that could come into focus headed into the UK Budget on October 30th - at which the Chancellor is looking to raise as much as £40bln in tax revenues to plug the black hole in government finances.
  • The greenback is the firmest currency in G10, aided by both the GBP/USD leg lower and the persistent buy-on-dips theme in USD/JPY. This keeps Y150.00 in view for the pair, clearance of which would resume the underlying uptrend posted off the mid-September lows.
  • European equities are soft - with continental indices off 0.4-1.0% and extending losses posted off yesterday's highs. Earnings remain the key driver here, with the EuroStoxx50's two biggest stocks (LVMH and ASML) both posting sharp declines on their updates this week. The next key release comes next week, with SAP's Q3 performance update on the 21st October.
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  • GBP/USD's break lower Wednesday puts the pair through support at both the 1.3002 level as well as the 1.30 handle - making for a second key technical break across major markets this week. Soft UK inflation data drove the spot price lower, as markets sharply raised the implied probability of back-to-back BoE rate cuts for the November and December meetings. 44bps of rate cuts are now priced by year-end, up from ~36bps before this morning's release.
  • The next focus for G10 FX will be the sustainability of the next GBP leg lower. The 100-dma undercuts as next support at 1.2953, and it's this level that could come into focus headed into the UK Budget on October 30th - at which the Chancellor is looking to raise as much as £40bln in tax revenues to plug the black hole in government finances.
  • The greenback is the firmest currency in G10, aided by both the GBP/USD leg lower and the persistent buy-on-dips theme in USD/JPY. This keeps Y150.00 in view for the pair, clearance of which would resume the underlying uptrend posted off the mid-September lows.
  • European equities are soft - with continental indices off 0.4-1.0% and extending losses posted off yesterday's highs. Earnings remain the key driver here, with the EuroStoxx50's two biggest stocks (LVMH and ASML) both posting sharp declines on their updates this week. The next key release comes next week, with SAP's Q3 performance update on the 21st October.