Ranges (Up till 11.

30am HKT)
Currency

Currency

EURUSD

1.1072-1.1120

EURJPY

133.79-134.20

USDJPY

120.63-99

EURGBP

0.72005-155

GBPUSD

1.5376-1.5410

USDSGD

1.3836-1.3960

USDCHF
AUDUSD

0.9728-39
0.7198-0.7253

USDTHB
USDKRW

35.39-53
1124.0-1134.0

NZDUSD

0.6781-0.6846

USDTWD

32.36-67

USDCAD

1.3075-1.3111

USDCNH

6.3830-6.3918

AUDNZD

1.0565-1.0632

XAU

1165.3-1169.3

Key Headlines

The dovishness of Mr Draghi sent investors into

buying Asia. AFR said it, ECB has reignited
currency wars. Usd/Asia all lower and if BOJ
does the same along with nothing from Fed, then
Asian central banks will likely step in.

NAB followed and raised variable home loan

interest rate to 5.6% - this put more pressure on
AudNzd

I believe the buyer of Euro is.

FX Flows
Australia took out the EurUsd overnight low and printed
1.1075. Apparently bids were hidden below and rather
good, EurUsd reversed back up. Second round of selling
emerged from macro funds, sent EurUsd to 1.1072, again
1.1070 stood firm There were also sales of Euro linked to
Eur/Asia. What do we think? There is a trendline coming
in at 1.1075 and this bids at 1.1070. Jon said the 200-day
SMA at 1.1125 and is likely to attract sellers of all sorts.
Into late morning, regional name lifted Euros below
1.1105 and it went bid immediately.
The Tokyo banks lifted Jpy crosses when they walked in.
On the EurJpy side, It was easy for them because of the
EurUsd selling. That pushed the UsdJpy up to 120.99
where decent offers sat. Interesting that the 50-day SMA
at 120.77 and 200-day SMA at 120.96. Our trader Jon
likens patience, wait for dips 120.45-50 to get long.
As mentioned, Jpy crosses were bought by Tokyo names
and this gave AudUsd and NzdUsd decent support.
NzdUsd rose the most, took out stops at 0.6830 and
printed 0.6846.
On the other hand, AudUsd was mixed. Announcement
by NAB hiking home loan interest by 0.17% to 5.6% puts
pressure on AudNzd. Those who sold AudUsd on that got
squeezed by the Japanese doing AudJpy. AudUsd is still
locked between 0.72-0.73; rates are still pointing lower
0.7135.

UsdCad shifted lower purely on strength of the Aud and

Nzd. Not a lot to mention, bids are mostly under 1.3000.
Market will be watching todays CPI data. Bipan Rai the
BOC is not perturbed given its view that the underlying
figure is closer to 1.5-1.7% at this point (the risk is
skewed towards a firmer number tomorrow). Price
action continues to signal that it is recovering off of the
1.2850 mark and we still expect a test of the 1.3200 mark
in the near-term (our target).
Just reading an interesting comment sent to me from
friend at MNI, she highlighted that market participants
should/must keep Oct 26-29 as event risks dates. During
those days, the 5th Plenary Session of the 18th Central
Committee of the Communist Party will take place in
Beijing. Also within that time, we have FOMC, 5y and 7y
auctions, and the scheduled House Speaker election. She
warned that market volatility is likely to surge in this
period.

Asians
South Koreas third quarter preliminary economic GDP
growth was higher than expected. Over the quarter, it
expanded 1.2% from 0.3%; annually up 2.6% from 2.2%.
Looks like the temporary consumption tax cuts and an
extra budget after MERS spread to Korea in May, has
offset negativity.
Flight into Asia post ECB sending Usd/Asia lower across
the board.
Onshore UsdKrw opened at 1032 and strong equity gave
UsdKrw nudge lower. There was also talk of EurKrw
interest as well.
UsdSgd decided it is time to follow the rest and traded
into 1.38-handle.
The other event to look for is Malaysia. PM Najib Razak
will be presenting the 2016 budget today. What to watch
for? GST increase; cut in corporate tax rate market
looking for 1 percentage point cut; aid to SME; higher
minimum wage; cash assistance to households;
affordable housing; and finally infrastructure spending
and this is a tricky one. The local experts said
government may rely heavily on GLCs to spearhead the
economy via investments and new projects that are
financed off-budget. This will turn towards 1MDB.
Questions have been raised and got nowhere.

Who said what

Japan Aso: No need to change BOJ 2% inflation

target
Japan Aso: Direction of 2% inflation target is
correct

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

Japan Aso: Decisions on monetary policy should

be left to BOJ
Japan Aso: With oil prices falling, so difficult for
prices to rise
Japan Aso: Leave any decision on more easing
up to BOJ
Sweden AP Funds: Reform plans to reduce
pensions

News & Data

South Korea Q3 Prelim GDP SA Q/Q rose 1.2%

(forecast 1.0%; prev. 0.3%)
South Korea Q3 Prelim GDP Y/Y rose 2.6%
(forecast 2.4%; prev. 2.2%)
Japan Oct Prelim Nikkei Manufacturing PMI
rose to 52.5 from 51.0

AFR: Big banks should lift rates again

Not only are the big banks justified in hiking mortgage
rates, they actually need to lift them further. After raising
investment loan rates by 0.27 percentage points in July,
CBA announced on Thursday that it would jack up all
investment and owner-occupied costs by another 0.15
percentage points. NAB followed suit with a 0.17
percentage point top up on Friday.
http://www.afr.com/business/banking-andfinance/financial-services/big-banks-should-lift-ratesagain-20151022-gkgjdq
WSJ: Europes New Tax Raid
Europes war on low taxes went on the offensive again
this week, with a ruling from Brussels that not taxing
enough now constitutes a form of illegal state subsidy.
Really. Competition Commissioner Margrethe Vestager
reached that conclusion in a case concerning how much
tax Starbucks pays to the Netherlands and Fiat Chrysler
to Luxembourg. Each company based a subsidiary in the
offending jurisdiction and then arranged intra-company
transactions between those and other units in a way that
the Commission says was designed to minimize their tax
bills.
http://www.wsj.com/articles/europes-new-tax-raid1445558535?mod=wsj_nview_latest
WSJ: Paul Ryan Declares Bid for House Speaker
Rep. Paul Ryan (R., Wis.) on Thursday officially declared
his bid to for House speaker, saying Republicans were
ready to move forward as a unified team. In a letter to
colleagues, Mr. Ryan put aside his earlier hesitation to
give up his dream job chairing the Ways and Means
Committee and said he was ready and eager to be our
speaker.
http://www.wsj.com/articles/paul-ryan-gains-enoughsupport-to-run-for-house-speaker-1445541068?
mod=wsj_nview_latest

AFR: ECB president Mario Draghi reignites

currency war talk
Global currency wars are back on in earnest, with the
euro tumbling after European Central Bank (ECB) boss
Mario Draghi signalled the bank stood ready to boost the
"size, composition and duration" of the bank's bondbuying program. The ECB's move to boost its monetary
stimulus, which drives down eurozone bond rates and
puts downward pressure on the euro, comes as US
Federal Reserve board members appear deeply divided
on whether to proceed with plans to raise US interest
rates this year.
http://www.afr.com/markets/debt-markets/ecbpresident-mario-draghi-reignites-currency-war-talk20151022-gkge2i
Business Times - Feeble US inflation: does the
Fed still hold temporary factors responsible?
But it now seems that the incoming economic data would
make it less likely that Federal Reserve chair Janet
Yellen and her colleagues on the Federal Open Market
Committee (FOMC) will hike rates after their two last
meetings this year, in October and December. That, at
least, is the new conventional wisdom. Some inflation
"hawks" also argue that raising rates is necessary to
temper the "irrational exuberance" that has led investors
to pour money into risky markets, while inflation "doves"
warn that an untimely move on the part of the Fed could
ignite a recession. Ms Yellen's views could determine the
outcome of the debate that will take place in the
upcoming last two meetings this year.
http://www.businesstimes.com.sg/opinion/feeble-usinflation-does-the-fed-still-hold-temporary-factorsresponsible
WSJ; Large Money Managers Suffer Bruising
Quarter
Large money managers were bruised in the third quarter
by market declines and investor outflows, the latest sign
of the ills afflicting the U.S. mutual-fund industry. A
round of quarterly reports, released Thursday, included
Franklin Resources Inc.s largest investor withdrawal in
more than a dozen years. But shares of the company and
smaller rivals Janus Capital Group Inc., T. Rowe Price
Group Inc. and AllianceBernstein Holding LP rose from
3.5% to more than 6%. Even so, shares of many asset
managers remain down for 2015, and many analysts said
the investor shifts that have hit results will likely
continue to hamper the firms. Short interest, reflecting
bets that share prices will fall, have risen this year at
both Franklin and T. Rowe Price.
http://www.wsj.com/articles/large-money-managerssuffer-bruising-quarter-1445543763?
mod=wsj_nview_latest

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

Telegraph: EU takes member states to court over

'bail-in' laws to protect taxpayers
The European Commission is taking legal action against
member states including the Netherlands and
Luxembourg, after they failed to implement rules
protecting European taxpayers from funding billions in
bank rescues. Six countries will be referred to the
European Court of Justice (ECJ) for their continued
failure to transpose the EU's "bail-in" laws into national
legislation, the European Commission said on Thursday.
The referral comes after the Commission issued a
warning against Poland, the Netherlands, Luxembourg,
Sweden, Romania and the Czech Republic for their noncompliance earlier this year.
http://www.telegraph.co.uk/finance/economics/119479
86/EU-takes-member-states-to-court-over-bail-in-lawsto-protect-taxpayers.html
FT: Passos Coelho asked to form minority
government in Portugal
The possibility of political instability in Portugal and a
radical shift in government from a centre-right coalition
that co-operated closely with international lenders to an
anti-austerity leftwing alliance has caused apprehension
in other fiscally conservative eurozone governments.
Angela Merkel, the German chancellor, on Thursday
expressed concern that upcoming elections in Spain and
Ireland could see a swing to anti-austerity forces.
http://www.ft.com/intl/cms/s/0/72af7fe8-78f7-11e5933d-efcdc3c11c89.html#axzz3owVs6Xd6
SCMP: London Metal Exchange seeks to widen
China's access to commodities market
The world's largest trading forum for industrial metals,
London Metal Exchange, inked a memorandum of
understanding with seven institutions, including Bank of
China, Industrial and Commercial Bank of China, and
China Merchants Bank, to increase market access while
pledging to boost risk management and renminbi
internationalisation services. "This MOU further shows
our determination to provide a bridge between China
and the rest of the world," said LME chief executive
Garry Jones. "We're making it easier for Chinese
participants to engage in the LME's price-discovery
process."
http://www.scmp.com/business/commodities/article/1
871197/london-metal-exchange-seeks-widen-chinasaccess-commodities

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.