MNI US OPEN - USD/JPY Through Sept Intervention Low as Greenback Weakness Extends

NEWS

US/CHINA (MNI): China's Xi to Meet U.S. President Biden at G20

Chinese President Xi Jinping will hold bilateral meetings with U.S. President Joe Biden and French President Emmanuel Macron at upcoming international meetings, Xinhua News Agency reported on Friday. A Ministry of Foreign Affairs spokesperson confirmed Xi will attend the 17th G20 Summit in Bali, Indonesia from November 14 to 17. Xi will also attend the 29th APEC Economic Leaders' Meeting in Bangkok and visit Thailand from November 17 to 19.

SECURITY (MNI): Russia & US to Hold Nuclear Arms Talks in Late Nov/Early Dec-RIA

Russia's state-run RIA reporting comments from the Russian Deputy Foreign Minister Sergei Ryabkov stating that the US and Russia are set to hold talks on the New START nuclear arms treaty in late November/early December in Cairo, Egypt.

RUSSIA (BBG): Kremlin Seeks to Distance Putin from Exit from Ukraine’s Kherson

The decision to pull Russian forces out of the Ukrainian city of Kherson came from the defense minister, Kremlin spokesman Dmitry Peskov said Friday in his first public comments on the dramatic setback. “It was the proposal of commander Surovikin and there was the decision of the defense minister,” Peskov said on a conference call. “I have nothing more to add, nothing to say about this topic,” he said, referring comments to the Defense Ministry.

EU (BBG): EU Says Recession Is Now Here and Inflation Shock Will Linger on

The euro zone faces a grim winter as a recession bites just as double-digit inflation grips the region and war rages nearby, according to the European Commission. European Union officials in Brussels on Friday slashed their forecast for growth next year, predicting barely any expansion, and raised all their projections for consumer prices.

CHINA (MNI): China’s Post-Covid Rebound Won’t Last - Pettis

China’s growth will slow to 2-3% despite hopes for a robust rebound once Covid restrictions are relaxed, as the nation’s new leadership confront a legacy of too much debt and a bumpy transition to consumption-led growth, Beijing University professor Michael Pettis told MNI.

CHINA (MNI): China Shortens Covid Quarantine for Travellers

China has shortened Covid-19 quarantine requirements for inbound travellers to eight days from 10 days, Xinhua News Agency reported citing a document with 20 measures to optimise Covid controls released on Friday. Arrivals will now spend five days in a quarantine facility and a further three days at home, compared to the current seven days of quarantine in a hotel room followed by three days of health monitoring at home. The change also applies to close contacts.

UK (MNI): Chancellor Warns Of 'Eyewatering' Autumn Statement To Plug Fiscal Holes

Doing breakfast TV rounds, Chancellor of the Exchequer Jeremy Hunt implies that the autumn statement he is set to deliver on 17 November is going to include some notable tax hikes and spending cuts to plug holes in the government’s fiscal outlook.

NEW ZEALAND (MNI): NZ Food Prices Soar at Fastest Pace in 14 Years

Rising prices for two minute noodles and cheddar cheese are complicating the Reserve Bank of New Zealand's fight to bring inflation back to target, as food prices rose at their fastest pace since 2008 in October, according to StatsNZ data released Friday. Food prices rose at a 10.1% y/y pace in October as grocery prices rose 9.7%, with two-minute noodles and cheddar cheese called out by StatsNZ as the largest drivers of the increase.

DATA

UK DATA (MNI): UK Economy Slowed in Q3, But Beats Worst Fears

• UK Q3 GDP -0.2% Q/Q, +2.4% Y/Y
• UK SEP GDP -0.6% M/M, -0.2% 3MM, +2.4% 3M Y/Y
• UK SEP IND PROD +0.3% M/M, -3.1% Y/Y
• UK SEP SERVICES INDEX -0.8% M/M, +0% 3MM
• UK SEP MANUF OUTPUT +0% M/M, -5.8% Y/Y
• UK SEP TRADE BALANCE GBP -3.13BN

The UK economy contracted in the third quarter of 2022, but the downturn wasn't as bad as expected, helped by monthly upward revisions to the July and August data, the Office for National Statistics said Friday. GDP fell 0.2% q/q in the three months to September, beating the -0.5% outcome expected by both financial markets and the Bank of England. Monthly estimates saw GDP fell by 0.6%, following 0.2 percentage point upward revisions for each of the previous two months.

GERMANY FINAL OCT CPI +10.4% Y/Y (= FLSH); SEP +10.0% Y/Y

JAPAN OCT CORP GOODS PRICE INDEX +9.1% Y/Y; SEP REV
JAPAN OCT CORP GOODS PRICE INDEX +0.6% M/M; SEP REV +1.0%

FX SUMMARY: Greenback Extends Post-CPI Pullback

• The greenback is extending the post-CPI pullback, falling against all others in G10. The USD Index is now comfortably through the 100-dma, potentially opening another leg lower for the dollar. 107.037 Fib retracement marks first support, and a break through puts the dollar at the weakest level since mid-August.
• This has put USD/JPY through the September intervention lows and below Y140.00 for the first time since early September. This opens 138.64 next, a Fibonacci retracement.
• USD/JPY's sharp downtick puts JPY top of the G10 pile, with SEK and AUD similarly outperforming. AUD/USD prints the best level since mid-September, with the 100-dma of 0.6703 the next upside level.
• Focus turns to the prelim Uni. of Michigan release for November, with 1-yr inflation expectations seen ticking higher to 5.1% from 5.0%. The central bank speaker slate picks up, with ECB's Panetta, de Guindos, Lane, de Cos, Centeno and Nagel on the docket as well as BoE's Haskel and Tenreyro.

BOND SUMMARY: Giving Back Some of Yesterday's CPI Rally

• Core fixed income has been drifting lower this morning, but remains well above pre-US CPI levels. The biggest moves have been seen in Treasury futures, but cash USTs are closed today for Veterans Day.
• The gilt curve has flattened today after the BOE announced after the close yesterday that it would commence sales of long-dated and index-linked gilts on 29 November (not the QE stock, but the "temporary" purchases from October). We have also received UK activity data which was mixed - Q3 GDP was better than expected but still contractionary - and September's data is hard to interpret with the extra bank holiday for the Queen's funeral.
• Looking ahead we will hear from BOE's Haskel and Tenreyro today as well as a number of ECB speakers.
• On the data calendar, the highlight will be Michigan inflation expectation data.
• TY1 futures are down -0-2 today at 112-14+ with 10y UST yields unch at 3.814% and 2y yields unch at 4.334%.
• Bund futures are down -0.66 today at 139.84 with 10y Bund yields up 3.9bp at 2.044% and Schatz yields up 6.8bp at 2.045%.
• Gilt futures are down -0.29 today at 104.89 with 10y yields unch at 3.286% and 2y yields down -1.0bp at 3.045%.

EQUITIES: Eurostoxx Futures Eye March Highs

A bullish EUROSTOXX 50 futures outlook remains intact and yesterday’s rally reinforces this set-up. The contract has cleared resistance at 3810.00, the Aug 17 high and an important bull trigger. Moving average studies are in a bull mode set-up and this highlights current market sentiment. The focus is on a climb towards 3944.00, the Mar 29 high on the continuation chart. First support lies at yesterday’s 3697.00 low. S&P E-Minis rallied sharply higher Thursday and in the process cleared a key resistance at 3928.00, the Nov 1 high. The break of this hurdle strengthens a short-term bullish condition and price has established a sequence of higher highs and higher lows on the daily scale. This signals scope for gains towards 4023.44 next, a Fibonacci retracement. On the downside, key short-term support has been defined at 3704.25, the Nov 3 low.

• Japan's NIKKEI closed higher by 547.14 pts or +2.98% at 28263.57 and the TOPIX ended 41.1 pts higher or +2.12% at 1977.76.
• Elsewhere, in China the SHANGHAI closed higher by 51.16 pts or +1.69% at 3087.292 and the HANG SENG ended 1244.62 pts higher or +7.74% at 17325.66.
• Across Europe, Germany's DAX trades higher by 55.91 pts or +0.4% at 14195.28, FTSE 100 higher by 25.52 pts or +0.35% at 7402.57, CAC 40 up 65.59 pts or +1% at 6622.18 and Euro Stoxx 50 up 30.53 pts or +0.79% at 3875.85.
• Dow Jones mini up 242 pts or +0.72% at 33961, S&P 500 mini up 30.75 pts or +0.78% at 3992.5, NASDAQ mini up 109 pts or +0.94% at 11744.75.

COMMODITIES: Gold Target Shifts to $1800/oz Handle

The pullback in WTI futures earlier this week undermines the recent bullish theme and suggests scope for a continuation lower near-term. A bearish shooting star candle Monday was followed by a bearish engulfing candle formation on Tuesday. These patterns highlight a short-term reversal. A continuation lower would open $81.30, the Oct 18 low. On the upside, key short-term resistance is at $93.74, Nov 7 high. Gold found support again Thursday and rallied sharply higher. This week’s gains have resulted in the break of a number of important resistance points. Yesterday’s rally cleared $1729.5, the Oct 4 high. This strengthens the current bullish theme and paves the way for a climb towards the $1800.0 handle and resistance at $1807.9, the Aug 10 high. On the downside, initial support is seen at $1702.3, the Nov 9 low.

• WTI Crude up $2.15 or +2.49% at $88.62
• Natural Gas up $0.04 or +0.56% at $6.275
• Gold spot up $4.78 or +0.27% at $1760.93
• Copper up $9.9 or +2.63% at $386
• Silver up $0.1 or +0.44% at $21.8024
• Platinum up $21.14 or +2.04% at $1058.37