MNI China Daily Summary: Thursday, October 17

MNI BRIEF: Beijing Awaiting EU Response On Next Stage Talks

MNI INTERVIEW: Muted Impact On EU Inflation From MidEast Oil

MNI BRIEF: PBOC Eyes Real Estate Relending Tools Enhancement

MNI: PBOC Net Drains CNY17.4 Bln via OMO Thursday

MNI: PBOC Sets Yuan Parity Higher At 7.1220 Thurs; +2.76% Y/Y

MNI: EUROZONE SEP FINAL HICP -0.1% M/M, +1.7% Y/Y

Australia Sep Unemployment Rate 4.1%

MNI:AUSTRALIA SEP UNEMPLOYMENT RATE +4.1%

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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USD: Greenback Looks Further Down the Curve for Source of Strength

USD
USGlobalBulletMarketsForeign Exchange BulletsRegionNorth America
  • As mentioned this morning, broad greenback strength across Asia-Pac trade and a further push higher in USD/JPY has tipped the USD Index through yesterday's highs, meaning the index has now posted higher highs in 11 of the past 15 sessions. This puts the ICE USD Index at it's strongest since early August, a pattern repeated in the slightly less narrow BBG Dollar Index, signalling broader USD strength rather than being more closely tied to e.g. EUR weakness.
  • US equity exceptionalism is lending background support - this quarter's earnings are providing another tailwind (we see average S&P 500 EPS running 8% ahead of expectations so far) and contrast with European performance (the EuroStoxx50's two largest constituents are down 18% and 8% this week alone). The S&P 500 is outperforming the MSCI World Index by ~5ppts this year.
  • Persistent Dollar buying also comes despite general stability in the front-end of the US curve across October - with the growing gap between OIS-implied Fed and ECB rates further up the curve underpinning greenback demand: the Sep'25 Fed-ECB spread has risen ~40bps month-to-date.
  • Elevated USD implied vols in maturities covering the election make Nov 5th the focus. Druckenmiller late yesterday said he sees the Fed "much more hawkish" under Trump, and that the market is "convinced" Trump will win - which will also be tilting focus to the upside.
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  • As mentioned this morning, broad greenback strength across Asia-Pac trade and a further push higher in USD/JPY has tipped the USD Index through yesterday's highs, meaning the index has now posted higher highs in 11 of the past 15 sessions. This puts the ICE USD Index at it's strongest since early August, a pattern repeated in the slightly less narrow BBG Dollar Index, signalling broader USD strength rather than being more closely tied to e.g. EUR weakness.
  • US equity exceptionalism is lending background support - this quarter's earnings are providing another tailwind (we see average S&P 500 EPS running 8% ahead of expectations so far) and contrast with European performance (the EuroStoxx50's two largest constituents are down 18% and 8% this week alone). The S&P 500 is outperforming the MSCI World Index by ~5ppts this year.
  • Persistent Dollar buying also comes despite general stability in the front-end of the US curve across October - with the growing gap between OIS-implied Fed and ECB rates further up the curve underpinning greenback demand: the Sep'25 Fed-ECB spread has risen ~40bps month-to-date.
  • Elevated USD implied vols in maturities covering the election make Nov 5th the focus. Druckenmiller late yesterday said he sees the Fed "much more hawkish" under Trump, and that the market is "convinced" Trump will win - which will also be tilting focus to the upside.