- US Tsys futures have edged slightly higher throughout the session, ranges have been narrow, while volumes are well down on Monday's.
- This helped yen outperform in the G10 FX space. Japan jobless data was better than expected, while political uncertainty continues. JGB futures were little changed. AUD was off, as USD/CNH broke higher.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
MARKETS
US TSYS: Tsys Futures Edges Slightly higher, Ranges Narrow, Volumes Low
- Tsys futures have edged slightly higher throughout the session, ranges have been narrow, while volumes are well down on Monday's. It has been a very quiet session for headlines or economic data. Asian equities have seen some weakness over the past hour, however nothing major to note. TU is +00⅜ at 103-01⅞, while TY is +02 at 110-24+, key support is seen at 110-13 (61.8% retracement of the Apr - Sep bull cycle (cont))
- Cash tsys are little changed today, the 2yr is -1.2bps at 4.126%, while the 10yr is also -1.2bps at 4.270% while the 3-7yr tenors are unchanged for the session.
- Fed fund futures have remained steady over the past week, there is 24.1bps priced at the November meeting and 43.1bps priced by year-end.
- Betting markets continue to swing further in Trumps favor, with Polymarket now showing a 66.3 vs 33.7, Kalshi show 62 vs 38 both at or near widest levels, while RealClear Politics Poll average shows Trump with a slight lead of 48.6 vs 48.4 and although close, this is the highest Trump has been since June.
- Later today, Wholesale Inventories & Conf. Board Consumer Confidence is due out
GLOBAL MACRO: Oil Prices Helping To Reduce Headline Inflation Below Core
Both core and headline inflation were generally lower or stable in September across the OECD and non-Japan Asia. Lower oil prices over August/September helped to bring headline inflation down across most countries, but with core inflation generally running above headline most OECD central banks will continue to monitor domestic price pressures closely.
- OECD underlying inflation was still close to 0.5pp above headline in August. Both moderated further in most countries in September, but core remained materially above target, apart from Canada and Sweden. The slow moderation in domestically-driven services inflation has been a problem across much of the group.
OECD CPI y/y% vs Brent y/y%
- Non-Japan Asia is more mixed with only Korea, Indonesia, Thailand and the Philippines recording underlying inflation greater than headline, and it is well contained in all of them.
- Non-Japan Asia ex China September headline inflation picked up to 3.5% y/y driven by India, while core was stable at 1.8%. Headline was down in the rest of the group, apart from Thailand where it is very low anyway. Oil has less of an impact as many countries subsidise fuel. China continues to struggle with inflation close to zero. It printed at 0.4% y/y and 0.1% respectively in September.
Non-Japan Asia ex China CPI y/y%
Source: MNI - Market News/Refinitiv/IMF
- Geopolitics have been a major driver of energy markets in 2024, but oil’s risk premium has been predominantly unwound and the focus has returned to the expected market surplus in 2025, which is likely to weigh on prices. The Middle East remains volatile though and this could change very quickly.
- Brent fell in August and September, which contributed to lower headline inflation, and while it is 4.8% m/m higher in October, it currently looks likely to be lower again in November. The October average is also down 13.9% y/y.
GLOBAL MACRO: Inflation Outlook Positive But Food & Metal Prices Trending Higher
Global factors have been mixed over September and October, but they are generally likely to put downward pressure on inflation or be neutral going forward, which is good news for central banks as most continue to reduce policy restrictiveness. The stand out though is food prices which rose sharply in September. Metal prices are also higher in October boosted by China stimulus announcements, but they are vulnerable to disappointing growth outcomes.
- Food prices may add to price pressures with the FAO global index rising 3% m/m in September, the fastest since March 2022. The increase was also broad based and the annual rate is now up 2.1% driven by dairy, meat and oils. While rice prices rose in August and September, they are down in October.
G20 CPI inflation vs food prices y/y%
Source: MNI - Market News/Refinitiv
- The NY Fed global supply chain pressure index was positive for the second straight month in September but the 3-month average is close to neutral signalling that bottlenecks have been worked through while shipping problems are not having a significant impact. While supply is unlikely to be deflationary as it has been for the last 18 months, it probably won’t add to price pressures either.
- Metals saw broad based increases in September and October with the LME index up 4% m/m and 17.9% y/y in October. Currently they could add to inflation but with the global manufacturing PMI signalling a slowdown in IP growth, this could change.
- While China stimulus measures boosted iron ore and wool prices this month, the effect on the economy remains to be seen and they are still down 10.2% y/y and 0.8% y/y respectively.
- Shipping costs should help disinflation with the 3-month annualised change in the Baltic Freight and Global Container indices down 13.5% and 32.3% respectively with sharp falls in October.
G20 CPI inflation vs shipping rates
JGBS: Futures Little Changed, Strong 2Y Auction, Light Local Calendar Tomorrow
JGB futures are little changed, -1 compared to settlement levels, after a choppy Tokyo session.
- Outside of the previously outlined labour market data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are ~1bps richer in today’s Asia-Pac session after yesterday’s sell-off extension. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Cash JGBs are flat to 2bps richer across benchmarks beyond the 1-year (+2.1bps). The benchmark 2-year yield is 1.1bps lower at 0.452% after today’s supply.
- The 2-year bond auction displayed strong demand metrics today. The auction took place with an outright yield that was 5-10bps above last month’s level and just below the cyclical peak reached in early August - the highest level since 2009.
- Swap rates are flat to 2bps lower, with a flattening bias. Swap spreads are mixed.
- Tomorrow, the local calendar is light, with the Consumer Confidence Index as the sole release.
JAPAN DATA: Jobless Rate Back To Cycle Lows, But Employment Growth Eases
The Japan Sep jobless rate ticked down to 2.4%, versus 2.5% forecast, which was also the August outcome. This leaves the jobless rate back at cycle lows (Jan 2024 also recorded a 2.4% rate), suggesting tight labour market conditions prevail. The job to applicant ratio also ticked up to 1.24 (versus 1.23 forecast), although it remains within recent ranges, see the chart below (this series is the white line and inverted on the chart, the jobless rate is orange).
- The detail was slightly less upbeat. The participation rate edged down to 63.5% from 63.6%, while the total number of people employed fell 90k m/m, after a strong 250k rise in the prior month. The y/y pace of total people employed was back to 0.38%, from 0.62% in August. The Sep pace was just below the average for the past 12 months.
- Job offers were up 0.1% m/m, after falling for the 3 prior months. Still, job offers remain -3.9% in y/y terms.
Fig 1: Japan Labour Market Remains Tight
AUSSIE BONDS: Richer But Off Bests, Q3 CPI Tomorrow
ACGBs (YM +2.0 & XM +2.5) are richer but off Sydney highs on another data/newsflow light session.
- The move away from session cheaps was aided by cash US tsys, which are ~1bps richer in today’s Asia-Pac session. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Australian Q3/September CPI data are released tomorrow and will be an important input into the November 5 RBA decision. Headline will be impacted by temporary government energy relief and so the trimmed mean will be the focus. There will also be continued attention on domestically-driven services.
- Cash ACGBs are 3bps richer with the AU-US 10-year yield differential at +18bps.
- Swap rates are 2bps lower, with EFPs slightly wider.
- The bills strip is slightly stronger across contracts, with pricing flat to +2.
- RBA-dated OIS pricing is flat to 3bps softer across 2025 meetings. A cumulative 4bps of easing is priced by year-end.
AUSTRALIA: Q3 Underlying Inflation Should Progress Towards Top Of Band
Australian Q3/September CPI data are released on Wednesday and Q3 will be an important input into the November 5 RBA decision. Headline will be impacted by temporary government energy relief and so the trimmed mean will be the focus, as well as the continued attention on domestically-driven services. Consensus Q3 projections are in line with the RBA’s August Q4 forecasts, which may result in a downward revision to its inflation outlook in the November Statement on Monetary Policy next week.
- Bloomberg consensus is forecasting trimmed mean CPI to rise 0.7% q/q with the annual rate easing to 3.5% from 3.9%, equal to the RBA’s Q4 projection. Most analysts are around consensus. Westpac is exactly in line, CBA is forecasting 0.7%q/q but 3.4% y/y, while both ANZ and NAB have 0.8% and 3.5%.
- Headline is expected to rise 0.3% q/q and 2.9% y/y, below the RBA’s 3.0% for Q4, after 1.0% and 3.8% in Q2. All four local banks are in line with consensus.
- The ABS said that government energy rebates drove a 14.6% drop in August electricity prices. The 6.7% decline in nationwide petrol prices in Q3 will also add downward pressure on headline.
- Monthly September data is also published on Wednesday and headline CPI is projected to moderate to 2.3% y/y from 2.7% in August. There is more variability amongst analysts than the quarterly data with forecasts between 1.8% and 2.6% but forecasts are concentrated around 2.2-2.5%. CBA and Westpac are below consensus at 2.2%, ANZ is in line while NAB is higher at 2.4%.
AUSSIE BONDS: AU-US Curve Correlation Vulnerable Ahead Of Q3 AU CPI
In 2024, there have been three notable episodes of reduced cross-market curve correlation between Australia and the U.S., each suggesting a focus on domestic rather than global or U.S.-centric drivers.
- Each episode coincided with key Australian CPI releases. The first drop occurred in late April with the release of Q1 CPI data, while the second took place in late June, following the May Monthly CPI release.
- Both the April and June declines were brief, as cross-market correlation between the AU 3/10 cash curve and the U.S. Treasury 2/10 curve quickly returned to the upper end of its annual range.
- A third dip emerged in late September after the August Monthly CPI, though the cross-curve correlation has since rebounded to near its highest level this year, as ACGBs have been influenced by recent gains in U.S. yields.
- Based on recent patterns, Wednesday’s upcoming Q3 CPI release has the potential to refocus the curve driver on domestic factors.
- However, as global curve correlations typically weaken with the shift from policy tightening to divergent easing cycles, the current high level of correlation appears unsustainable.
Figure 1: Rolling 10-day Correlation – ACGB 3/10 Curve Vs. US Tsy 2/10 Curve
Source: MNI – Market News / Bloomberg
NZGBS: Cheaper But NZ-US 10Y Diff. Near YTD Low
NZGBs closed mid-range, with benchmark yields 2-3bps higher. Yields were 5bps higher early in the session as the local market played catch-up to the sell-off in US tsys after yesterday’s Labour Day holiday.
- The move away from session cheaps was aided by cash US tsys, which are ~1bps richer in today’s Asia-Pac session. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Notably, the NZGB 10-year has outperformed its US counterpart, with the NZ–US yield spread narrowing by 6bps since Friday’s close to reach +17bps. This places the differential just above July's low of +13bps, the narrowest level since mid-2021.
- Swap rates closed 3-4bps higher.
- RBNZ dated OIS pricing closed flat to 3bps firmer across meetings. A cumulative 99bps of easing is priced by February, with 54bps by year-end.
- Tomorrow, the local calendar is empty.
- On Thursday, the NZ Treasury plans to sell NZ$175mn of the 3.0% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.
NEW ZEALAND: Q3 Filled Jobs Decline Faster Than Q2 Pointing To Soft Labour Data
September filled jobs remained weak but posted the second straight month of no change after four months of declines. They are now down 0.9% y/y, the weakest since February 2010, but the level may now be stabilising. The RBNZ has cut rates 75bp since August and is likely to continue reducing policy restrictiveness at its November 27 meeting and in Q1 2025.
- The Q3 average of filled jobs is down 16.5k q/q a deterioration from Q2’s -12.7k, signalling that Q3 labour data is likely to be weak on November 6. In percentage terms, Q3 fell 0.7% q/q after 0.5% q/q in Q2 and are now down 0.8% y/y. Q2 employment grew 0.4% q/q to be up 0.6% y/y.
- Westpac is forecasting a 0.4pp increase in the unemployment rate to 5.0%, which it says is consistent with the Q3 filled jobs data.
- The weakness has been concentrated among young people with 15-19 year olds down 13% y/y and 20-24 years down 3.3% y/y. A rise in youth unemployment can be a lead indicator for the rest of the labour market.
- All major industries were soft in September with services up 0.1% m/m, primary industries down 0.8% m/m and goods down 0.2% m/m.
- On a year ago, health & social assistance jobs rose 3.9% but construction fell 5%, admin 6.8%, accommodation & food services 3.8% and manufacturing 2.4%. The weakness is broad based across NZ’s regions.
- August was revised down from +0.2% m/m to 0.0%.
NZ employment y/y%
BONDS: NZ-US 10Y Differential Close To YTD Low
NZGBs closed mid-range, with benchmark yields 2-3bps higher. Yields were 5bps higher early in the session as the local market played catch-up to the sell-off in US tsys after yesterday’s Labour Day holiday.
- Notably, the NZGB 10-year has outperformed its US counterpart, with the NZ–US yield spread narrowing by 6bps since Friday’s close to reach +17bps. This places the differential just above July's low of +13bps, the narrowest level since mid-2021.
Figure 1: NZ-US 10-Year Yield Differential
Source: MNI – Market News / Bloomberg
FOREX: A$, NZD Weighed By Weaker Yuan, Yen Firms Modestly
AUD and NZD have underperformed, particularly against the yen, as the Tuesday Asia Pac session has unfolded. The break higher in USD/CNH above 7.1500 to fresh multi month highs, has weighed on the antipodeans.
- The USD BBDXY index is little changed, last near 1262.50. US equity futures are down a touch, while regional equity markets are mixed. US yields sit down a down, helping yen at the margins.
- The softness in China and Hong Kong equities has also likely weighed on the AUD.
- AUD/USD last sits at 0.6565/70 (off 0.25%), fresh multi month lows back to the first half of August. NZD/USD is near 0.5970, down 0.20%. Earlier data showed softer jobs filled for September.
- Commodity prices in the metals space are also down, copper off 0.6%, iron ore back to $102.45/ton/
- USD/JPY is back under 153.00, around 0.20% stronger in yen terms. Still, we remain comfortably within Monday's ranges. Better jobless data and further FX jawboning may have helped at the margin, but follow through has been limited.
- There were reports PM Ishiba is seeking a partial coalition with centrist party DPP (per Yomiuri), but a press conference with the DPP leader played down such prospects.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
ASIA STOCKS: Equities Mixed Ahead Of Key Data & US Elections
Asian equities traded in a narrow range as investors focused on the upcoming US election, economic data, and Fed decision. While stocks rose in Tokyo and Australia, equities in China, Hong Kong, Taiwa and South Korea fell. US futures dipped, yield are steady as the market prepared for corporate earnings from major companies like Apple and Microsoft. Meanwhile, the Biden administration finalized restrictions on US investments in advanced technology in China, and Chinese ETFs saw outflows as recent stimulus measures underwhelmed.
- Japanese equities are the top performing in the region today, following on from Monday's bounce. The yen has recovered somewhat today, however still trades 0.60% off recent lows. The TOPIX is up 0.85%, with banking stocks outperforming (TOPIX Banks Index +2.63%), while the Nikkei is 0.55% higher, with Softbank 2.50% higher. Earlier, the Jobless rate missed estimates coming in a 2.4% vs 2.5% expected, and down from 2.5% in August.
- Hong Kong equities have erased earlier gains with the HSI now down 0.15%. Property is the worst performing with the Mainland Property Index falling 1.85%, the HSTech Index was up over 2% earlier, before paring some gains to now trade 1% higher for the session. China mainland equities are performing slightly worse today, with the CSI 300 down 0.60%.
- Large-cap Asian tech stocks are mostly lower today, which have dragged on both Taiwan & South Korean equities. South Korea's KOSPI is 0.30% lower after SK Hynix dropped 3.30%, while Taiwan's Taiex is 1.86% lower after TSMC dropped 2.40% & Hon Hai fell 2.80%.
- Foreign investors have been selling South Korean equities today, with a net outflow of $200m, with tech and chemicals seeing the majority of those outflows.
- Australia equities are 0.40% higher, with Financials contributing the most to index gains. Premium Investments have surged followed reports it has signed signed a binding share sale and implementation agreement with Myer. New Zealand equities have returned from a long weekend to closed 00.10% higher.
- US equities futures are slightly lower today, traders are positioning for a downside move heading into the US Election in the SPX. SPX Index which is currently trading at $5,823 shows the $4,700 strike puts have the most open interest for the Nov 8th maturity followed by the $5,000 puts while there is a 1.10 put/call ratio for the maturity.
ASIA STOCKS: Asian Equities See Small Outflows
Asian equity flows were slightly negative on Monday, however Taiwan continues to see inflows following TSMC earnings however the momentum of inflows is slowing.
- South Korea: Recorded inflows of +$28m yesterday, bringing the 5-day total to -$843m. Year-to-date (YTD) flows remain positive at +$8.054b. The 5-day average is -$169m, worse than the 20-day average of -$133m and the 100-day average of -$66m.
- Taiwan: Experienced inflows of +$258m yesterday, totaling +$369m over the past 5 days. YTD flows are negative at -$9.887b. The 5-day average is +$74m, better than the 20-day average of +$98m but worse than the 100-day average of -$136m.
- India: Saw outflows of -$360m yesterday, with a total outflow of -$710m over the past 5 days. YTD inflows stand at +$1.224b. The 5-day average is -$142m, better than the 20-day average of -$527m but slightly worse than the 100-day average of +$42m.
- Indonesia: Posted outflows of -$16m yesterday, bringing the 5-day total to -$267m. YTD flows remain positive at +$2.676b. The 5-day average is -$53m, worse than the 20-day average of -$29m but better than the 100-day average of +$31m.
- Thailand: Recorded outflows of -$24m yesterday, totaling -$106m over the past 5 days. YTD flows are negative at -$3.236b. The 5-day average is -$21m, better than the 20-day average of -$37m but worse than the 100-day average of -$10m.
- Malaysia: Experienced outflows of -$27m yesterday, contributing to a 5-day outflow of -$81m. YTD flows stand at +$581m. The 5-day average is -$16m, worse than the 20-day average of -$11m but slightly better than the 100-day average of +$7m.
- Philippines: Saw outflows of -$1m yesterday, with net outflows of -$7m over the past 5 days. YTD flows are positive at +$93m. The 5-day average is -$1m, worse than the 20-day average of +$4m and the 100-day average of +$5m.
Table 1: EM Asia Equity Flows
OIL: Crude Holds Onto Monday’s Losses, Supply/Demand Trends In Focus
After falling over 5% on Monday in response to less inflammatory comments from Israel and Iran following Israel’s strikes on military targets, oil prices are moderately higher in APAC trading thus holding onto most of yesterday’s losses. WTI is off its intraday high of $68.08/bbl though to be up 0.3% to $67.56, close to the intraday low. Brent is 0.2% higher at $71.56/bbl, also near today’s trough. The USD index is little changed.
- Not only have the risks associated with the Iran/Israel conflict dissipated, but a Gaza ceasefire may be closer too, even if only a temporary one, with Israel voicing its willingness.
- With geopolitical risks in the background for now, the focus has returned to supply/demand fundamentals, especially as OPEC is planning to increase production from December. This puts renewed focus on US and China demand. Today industry-based US crude/product inventory data is released and oil markets will be watching Friday’s US payroll and ISM data closely too.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
GOLD: Hovering Below All-Time High Ahead Of Key US Data
Gold is 0.5% higher and just shy of its all-time high of $2758.49 in today’s Asia-Pac session, after closing 0.2% lower at $2742.46 on Monday.
- After a slow start to the week's US data and newsflow, things are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Market participants will be looking for US inflation and payroll data this week to guide on the pace of interest rate cuts by the Federal Reserve this year. Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, gold bulls remain in the driver’s seat, with sights on $2,767.1 next, a Fibonacci projection point, ahead of the $2,800.0 handle
SOUTH KOREA: BOK and the Outlook for Rates.
- The BOK’s Governor Rhee said during an interview in Washington at the IMF / World Bank meetings last week that ‘the Bank of Korea will likely revisit its economic growth forecasts next month with risks tilting to the downside.” (source BBG).
- Rhee also noted that “the exchange rate has become a factor to consider in the BOK’s monetary policy and that the current dollar exchange rate is higher than desirable and increasing at a fast pace.” (source BBG).
- Equally, South Korean President Yoon was quoted as saying “It’s important to respond promptly to prevent changes in supply chains, oil prices and FX from having a negative impact on (the) local economy.” (source BBG)
- Recent trading sessions has seen bond yields globally react to US yields and their move higher.
- Having touched 2.785% in mid-October, the KTB 2yr at 2.952%, is almost 17bps higher.
- Similarly, the yield on the KTB 10 year has moved higher, increasing to 3.11% from the October lows.
- Using BBG’s MIPR function, we can see that the market implied rate in six months’ time is 2.87% for monetary policy, a reduction of 38bps from the current base rate of 3.25%.
- Whist Korean yields’ correlation to US has always been high and is likely to remain so, there is still room for the front end of KTB rates to possibly react to any revisiting to the outlook for Korean growth.
SOUTH KOREA: Retail Sales Weaken.
- Retail Sales rose +6.7%YoY for September, down from the rise of +9.2% in August.
- Department Store Sales YoY rose just 0.3% for September, from +4.4% in August.
- Discount Store Sales declined -6.5% YoY following last months rise of +5.9%.
- The consumer has been the main focus from the government calling on the BOK to cut rates.
- With the BOK governor indicating that growth is moderating, these figures are likely to feed into the thoughts for monetary policy at the next BOK meeting on28th of November.
INDIA: The RBI Versus the Market.
- At a time when global growth is challenged, many Indian economists are questioning the Reserve Bank of India’s steadfast commitment to it’s 7.2% GDP growth forecast for the year ending March 2025.
- With data showing that recent economic activity is moderating (industrial production and PMI’s have come off their highs), the RBI’s forecast now is unusual in that the Central Bank’s forecast is higher than the government’s.
- The RBI maintains the view that rural spending is set to rise following a good monsoon season for rain.
- Economists point out that exports are off their peak and that demand in urban areas has weakened.
- This is likely helping drive the sell-side view of RBI rate cuts. Using BBG’s MIPR function, we can see that the market implied rate in six months’ time is 6.15% for monetary policy; a reduction in the base rate of 35bps from the current base rate of 6.50%.
- In the yield space, having touched 6.618% in early October, India’s IGB 2-year has tracked global yields higher and is now 12.5bps higher at 6.743%.
- Similarly, India’s IGB 10-year touched yield lows of 6.718% in late September and is now 15bps higher at 6.866%.
- Whilst the move in Indian yields has been impacted by the move in US yields higher, India yield correlation to the US moves are quite transitory and at times are lowly correlated. With 35bps of cuts priced in and a bullish RBI, it seems likely that the next move will likely depend on which one of these two are correct.
CNH: USD/CNH Breaks Above 7.1500, Through 100-day EMA, Implied Vols Higher
USD/CNH has finally broken above 7.1500, the pair hitting fresh highs of 7.1579 a little while ago. We are only 0.15% weaker for the session so far, in CNH terms, but the market bias has been to support dips in the pair so far today. Spot USD/CNY has also tracked to fresh multi month highs, last near 7.1400.
- For USD/CNH, highs in mid August around 7.1850 may present an upside target. Note before this we have the 200-day EMA near 7.1710. Today's break is a clear shift, if maintained, above the 100-day (near 7.1475).
- In terms of catalysts, there doesn't appear to be an obvious one in terms of FX drivers. The tick lower in onshore equity indices is likely not helping, with the CSI 300 unable to move beyond the 4000 level. Some catch up with higher US-CH yield differentials may also be in play.
- Proximity to the US election is another potential driver. The risk reversal space has got the 1 week and 2 week RR's close to flat and mostly trending higher, but the move is not sharp.
- 2 week implied vol is surging, above 10.7% in latest dealings. The 1 month is up to 8.78%, levels last seen in early 2023.
ASIA FX: SEA FX Weaker, IDR & MYR Again Lead
South East Asia currencies have mostly softened against the USD, with IDR and MYR, the two weakest performers. The break higher in USD/CNH above 7.1500, to fresh multi month highs hasn't helped sentiment, while higher beta plays are also weaker in the G10 space.
- USD/IDR spot is higher, last at 15770, up 0.30%. The pair is quickly closing in on the 15800 level. There are no fresh signs of BI intervention at this stage, with the central bank potentially waiting until later in the week or next week to curb dollar demand. Portfolio flows from offshore investors remain negative for equities and close to flat for bond investors.
- USD/MYR is above 4.3700, at marginal new highs back to mid September.
- USD/SGD is back in the 1.3245/50 region, eyeing Aug 7 highs at 1.3291. Earlier data showed a resilient labour market backdrop. This reinforces the on-hold MAS bias, although the 2025 outlook is more likely to be driven by inflation trends.
- USD/PHP is relatively steady, last near 58.30, tracking within recent ranges.
- USD/THB is tracking lower, but that followed a stronger close on Monday. The pair last near 33.70/75. Monday highs were near 33.87. The firmer gold backdrop, along with higher yen levels may be helping THB at the margins.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 29/10/2024 | 0700/0800 | * |  DE | GFK Consumer Climate |
| 29/10/2024 | 0700/0800 | ** |  SE | Retail Sales |
| 29/10/2024 | 0700/0800 |  SE | Flash GDP | |
| 29/10/2024 | 0930/0930 | ** |  GB | BOE M4 |
| 29/10/2024 | 0930/0930 | ** |  GB | BOE Lending to Individuals |
| 29/10/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 29/10/2024 | 1255/0855 | ** |  US | Redbook Retail Sales Index |
| 29/10/2024 | 1300/0900 | ** |  US | S&P Case-Shiller Home Price Index |
| 29/10/2024 | 1300/0900 | ** |  US | FHFA Home Price Index |
| 29/10/2024 | 1300/0900 | ** |  US | FHFA Home Price Index |
| 29/10/2024 | 1400/1000 | *** |  US | Conference Board Consumer Confidence |
| 29/10/2024 | 1400/1000 | ** |  US | housing vacancies |
| 29/10/2024 | 1400/1000 | *** |  US | JOLTS jobs opening level |
| 29/10/2024 | 1400/1000 | *** |  US | JOLTS quits Rate |
| 29/10/2024 | 1430/1030 | ** |  US | Dallas Fed Services Survey |
| 29/10/2024 | 1530/1130 | * |  US | US Treasury Auction Result for Cash Management Bill |
| 29/10/2024 | 1530/1130 | ** |  US | US Treasury Auction Result for 52 Week Bill |
| 29/10/2024 | 1700/1300 | ** |  US | US Treasury Auction Result for 7 Year Note |
| 29/10/2024 | 1700/1300 | ** |  US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 29/10/2024 | 1930/1530 |  CA | BOC Governor Macklem at House finance committee | |
| 30/10/2024 | - |  JP | Bank of Japan Meeting | |
| 30/10/2024 | 0030/1130 | *** |  AU | CPI inflation |
| 30/10/2024 | 0030/1130 | *** |  AU | CPI Inflation Monthly |
| 30/10/2024 | 0600/1400 | ** |  CN | MNI China Money Market Index (MMI) |
| 30/10/2024 | 0630/0730 | ** |  FR | Consumer Spending |
| 30/10/2024 | 0630/0730 | *** |  FR | GDP (p) |
| 30/10/2024 | 0700/0800 | *** |  DE | GDP (p) |
| 30/10/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 30/10/2024 | 0800/0900 | *** |  ES | GDP (p) |
| 30/10/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 30/10/2024 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 30/10/2024 | 0855/0955 | ** |  DE | Unemployment |
| 30/10/2024 | 0900/1000 | *** |  IT | GDP (p) |
| 30/10/2024 | 0900/1000 | ** |  IT | PPI |
| 30/10/2024 | 0900/1000 | *** |  DE | North Rhine Westphalia CPI |
| 30/10/2024 | 0900/1000 | *** |  DE | Bavaria CPI |
| 30/10/2024 | 1000/1100 | *** |  EU | EMU Preliminary Flash GDP Q/Q |
| 30/10/2024 | 1000/1100 | *** |  EU | EMU Preliminary Flash GDP Y/Y |
| 30/10/2024 | 1000/1100 | ** |  EU | EZ Economic Sentiment Indicator |
| 30/10/2024 | 1000/1100 | * |  EU | Consumer Confidence, Industrial Sentiment |
| 30/10/2024 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 30/10/2024 | - |  GB | UK Budget | |
| 30/10/2024 | 1215/0815 | *** |  US | ADP Employment Report |
| 30/10/2024 | 1230/0830 | *** |  US | GDP |
| 30/10/2024 | 1230/0830 | ** |  US | Advance Trade, Advance Business Inventories |
| 30/10/2024 | 1230/0830 | *** |  US | Treasury Quarterly Refunding |
| 30/10/2024 | 1300/1400 | *** |  DE | HICP (p) |