MNI US OPEN - USD Steadies as Waller Talks Down CPI Hopes

NEWS

EU (MNI): ECB Weighs 50 In December, Hawks To The Fore - MNI Sources

The European Central Bank will consider slowing its pace of hiking to 50 basis points at its December meeting, but while more dovish Governing Council members are increasingly worried about an economic slowdown, hawks are confident they have the numbers to sustain tightening well into the new year, eurosystem sources told MNI.

US (MNI): Better CPI ‘Just One Data Point’ - Fed’s Waller

Federal Reserve officials need to see more than just one better-than-expected CPI report before they can become comfortable inflation is coming down consistently, Fed Governor Christopher Waller said Sunday. “It was just one data point. The market seems to have gotten way out in front on this,” Waller said.

G20 (MNI): US-CHINA: Biden-Xi Meet in Bali Ahead of G20

US President Joe Biden and his Chinese counterpart Xi Jinping holding their first in-person meeting while in office (the two previously met in 2017 when Joe Biden was vice president) shortly. The meeting takes place in Bali, Indonesia ahead of the G20 leaders' summit.

G20 (MNI): Indonesia Asks West to Soften Russia Rhetoric as Joint G20 Communique Hangs in Air

Indonesian politicians are pressuring Western leaders to soften their criticism of Russia over its war against Ukraine as the G20 presidency worries that the summit in Bali could end without joint communique, POLITICO reports citing diplomatic sources.

RUSSIA (BBG): Russia Denies Lavrov Taken to Hospital in Bali After Report

Russia denied an Associated Press report that Foreign Minister Sergei Lavrov was taken to a hospital in Bali, Indonesia, after suffering a health problem while attending the Group of 20 summit. Maria Zakharova, the Russian Foreign Ministry spokeswoman, called the report “of course the highest level of fakes” in a Telegram post. Shortly afterward, she posted a video of Lavrov sitting on what appeared to be the terrace of his hotel in shorts and a T-shirt, reading documents.

UK (BBG): UK’s Hunt Seeks Budget Plan to Make Recession Short, Shallow

The UK’s new financial plan will seek to make any recession as short as possible, Chancellor Jeremy Hunt said. “I want to make sure that this recession, if we are in one, is as short and shallow as possible,” Hunt said in an interview on Sky News on Sunday. The UK economy shrank in the third quarter for the first time since the first quarter of 2021. That means Britain is the only Group of Seven economy that has yet to fully recover from the pandemic.

JAPAN (MNI): BOJ's Joint Statement with Govt 'Effective' - Kuroda

Bank of Japan Governor Haruhiko Kuroda indicated on Monday that he sees no need to review the joint statement between the BOJ and the government made in January 2013, saying the statement on policy coordination is effective in achieving price stability target. Kuroda told reporters that the BOJ continues to keep easy policy to achieve the 2% price target and the government conducts fiscal policy in a flexible manner.

DATA

EUROZONE DATA (MNI): Robust Sep Production Likely Short-Lived

• EUROZONE SEP IND PROD +0.9% M/M (FCST +0.5%); AUG +2.0%r M/M
• EUROZONE SEP IND PROD +4.9% M/M (FCST +3.0%); AUG +2.8%r Y/Y

Euro area industrial production recorded an upside surprise in September, expanding by +0.9% m/m after robust +2.0% m/m growth in August. Compared to 2021, September IP grew by +4.9% y/y, in part reflecting Covid base effects of slow production. Germany was a key upwards driver for the bloc. Looking forward, the euro area manufacturing PMI signalled a fourth month of contraction in October. Output fell at the fastest pace since the 2020 pandemic onset as demand dissipated. All eyes will be on developments in energy markets headed into the winter months, as the energy-intensive industry watches profit margins rapidly shrink.

FX SUMMARY: Greenback on Steadier Footing After Waller Talks Down CPI Hopes

• The dollar is firmer for the first session in three, with the USD Index recovering back to the 107.00 handle as recent price action stabilises. Comments from Fed's Waller proved USD supportive, stating that the FOMC need to see more than just a single lower CPI print before being comfortable that inflation is in decline. Waller added that "The market seems to have gotten way out in front on this".
• Background USD strength is keeping EUR/USD support at the 1.03 handle under pressure, with a break below opening retracement toward 1.0217, the 23.6% Fib for the November upleg.
• The JPY is the poorest performer in G10 amid solid performance for Asia-Pac equity markets after Chinese authorities moved to support the local property market. Regulators rolled out a series of 16 policy measures including liquidity support to looser pre-payment conditions. USD/JPY remains in range of the 100-dma at 140.82, the first upside level of note.
• Datapoints are few and far between Monday, with focus instead on the speaker slate. ECB's Centeno, de Guindos, Brainard and Williams are due as well as Nagel speaking in a Bundesbank capacity.

BOND SUMMARY: Treasuries Slide While Bunds and Gilts Recover

• Treasuries, Bunds and gilts all remain their post-US CPI highs. Treasuries have continued to slide in overnight/early European trading while Bunds have retraced around 50% of Friday's move lower and gilts are coming close to Thursday's closing levels.
• It's a huge week for the UK with the Autumn Statement due Thursday, labour market data tomorrow morning and inflation data due Wednesday (as well as 7/9 MPC members speaking).
• TY1 futures are down -0-9+ today at 112-00+ with 10y UST yields up 6.6bp at 3.880% and 2y yields up 4.1bp at 4.375%.
• Bund futures are up 0.67 today at 139.19 with 10y Bund yields down -5.9bp at 2.098% and Schatz yields down -6.5bp at 2.066%.
• Gilt futures are up 0.64 today at 104.79 with 10y yields down -6.4bp at 3.288% and 2y yields down -6.8bp at 3.047%.

EQUITIES: Equity Futures Remain Bullish After Last Week's Rally

A bullish EUROSTOXX 50 futures outlook remains intact following last week’s strong gains. 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 the current market sentiment. The focus is on a climb towards 3944.00, the Mar 29 high on the continuation chart. The initial firm support lies at Thursday's 3697.00 low. S&P E-Minis rallied sharply higher last Thursday and in the process cleared a key resistance at 3928.00, the Nov 1 high. The break 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 lower by 300.1 pts or -1.06% at 27963.47 and the TOPIX ended 20.86 pts lower or -1.05% at 1956.9.
• Elsewhere, in China the SHANGHAI closed lower by 3.891 pts or -0.13% at 3083.401 and the HANG SENG ended 294.05 pts higher or +1.7% at 17619.71.
• Across Europe, Germany's DAX trades higher by 104.28 pts or +0.73% at 14329.01, FTSE 100 higher by 61.91 pts or +0.85% at 7379.71, CAC 40 up 34.51 pts or +0.52% at 6629.13 and Euro Stoxx 50 up 19.65 pts or +0.51% at 3888.15.
• Dow Jones mini down 47 pts or -0.14% at 33718, S&P 500 mini down 8.5 pts or -0.21% at 3992.25, NASDAQ mini down 52.5 pts or -0.44% at 11796.25.

COMMODITIES: Gold Remains Bullish Following Clearance of October High

The pullback in WTI futures early last week undermines the recent bullish theme and suggests scope for a continuation lower near-term, despite recent gains. A bearish shooting star candle (Nov 7) was followed by a bearish engulfing candle the following day. These patterns highlight a short-term reversal. A continuation lower would open $81.30, Oct 18 low. On the upside, key short-term resistance is at $93.74, Nov 7 high. Gold rallied sharply higher last week and remains bullish. Last week’s gains resulted in the break of a number of important resistance points. The yellow metal has cleared $1729.5, the Oct 4 high. This strengthens the current bullish theme and paves the way for an extension towards the $1800.0 handle and resistance at $1807.9, the Aug 10 high. On the downside, initial firm support is seen at $1702.3, the Nov 9 low.

• WTI Crude down $0.06 or -0.07% at $88.97
• Natural Gas up $0.25 or +4.32% at $6.132
• Gold spot down $9.5 or -0.54% at $1761.91
• Copper down $1.1 or -0.28% at $390.45
• Silver down $0.06 or -0.27% at $21.6552
• Platinum down $11.6 or -1.12% at $1020.22