Ranges (Up till 11.

55am HKT)
Currency

Currency

EURUSD

1.09005-345

EURJPY

131.595-132.36

USDJPY

120.58-121.18

EURGBP

0.7145-62

GBPUSD

1.5260-71

USDSGD

1.4012-38

USDCHF
AUDUSD

0.9934-54
0.7092-0.7119

USDTHB
USDKRW

35.60-665
1139.9-1145.0

NZDUSD

0.6664-0.6710

USDTWD

32.51-82

USDCAD

1.3090-1.3213

USDCNH

6.3784-6.4004

AUDNZD

1.0604-55

XAU

1155.5-1162.3

Key Headlines

According to the transcript of a speech Li made

to the Communist Party School, Chinese Premier
Li Keqiang said an annual 6.53% growth in the
next five years until 2020 is needed in order to
meet the government's target of building a
moderately prosperous society. Li also repeated
that China will not use yuan depreciation to
boost exports. Someone just queried how do
they derive with number 6.53%? My response Use of Abacus

Japan Sept industrial output was stronger than

expected this has been key data for BOJ and
UsdJpy fell to 120.75 from 121.00.

One thing that was discussed this morning, our

strategist Patrick Bennett said Fed has now
removed the possibility of Asian central banks
move. There are 2 labour reports before the next
Fed meeting so anything can happen. What
happens if Fed unchanged in Dec? Ball back to
other central banks?

FX Flows
Japan Sept industrial output surprised market. Monthon-month rose 1% versus estimates of fall 0.6%. This is a
turnaround from Augusts 1.2% drop. UsdJpy fell from
121.00 to 120.75 as the unexpected strength could deter
BOJ action on Friday. However some said the annual
industrial production number is still weak at minus 0.9%
and they still see BOJ action. UsdJpy bids are reported
at 120.50 and offers 121.50. There was demand into fix
and this somehow helped to hold up UsdJpy.
Tokyo names were picking up EurJpy as they walked in;
but somehow EurUsd had thick offers above 1.0930.
Buyers turned around after the Japanese industrial
output and sent the cross into 131-handle. EurUsd
backed off to 1.09005. I hear bids are placed below
1.0890 belonging to positive gamma. There is a decent
size option expiry today at 1.1000.

We were told that domestic buyers in AudUsd below

0.7100 and now, exporters have gathered under 0.7080.
Aussie rates have stabilized and little reason to sell spot.
Both our spot and rates traders prefer to buy this on
dips. On the day, Jon suggesting range of 0.7080 to
0.7140.
Post-FOMC, attention turned to RBNZ. According to our
Toronto strategist Bipan Rai, the statement maintains
that further easing is likely which will undo the 2014
hike cycle. RBNZ is clearly pushing against the recent
rally in the Nzd but overall for now are content to wait.
Failing to return above 0.68, pressure has now increased
for NzdUsd. Rates are also indicating weaker NzdUsd,
nearer to 0.6430.
We have had number of queries on the oil move
overnight. Crude Oil Futures jumped near 5% and some
linked this to the announcement by Pemex. Mexicos
state-owned company said it had received permission
from the USD to import as much as 75,000 barrels a day
of high-quality light crude starting this month. Our oil
specialist Katherine Spector disagreed saying this talks
were ongoing and nothing new. The move in oil is purely
short covering. In fact there was also a speculation that
Saudi, Kuwait and Russians are holding talks but no one
can confirm this.
UsdCad came back on less dove FOMC. Oil futures are
paring gains and lending support to UsdCad. One real
money account just sold into the 1.3200 but easily
absorbed. We see offers lined up above 1.3240 from
corporate accounts. Bipan reminded us of Canadian GDP
to be released on Friday. We maintain a bullish shortterm bias and would prefer to respect the trend line
(1.3145) for the time being. 50-day SMA is at 1.3183.
FOMC left door opened for Dec, cuts reference to global
economic and financial developments, adding household
spending and business fixed income investments
increasing. Remember, there are 2 labour reports before
the next Fed meeting so anything can happen.

Asians
Interesting remark by PBOC assistant Governor Yin
Yong that Chinas interest rate has relatively big room.
This sounds like indication of further rate cuts.
Witnessed a large sell off in USDCNH at the open and
led to speculation of official interest. The move from
6.40 to 6.39 caused a panic among interbank traders.
Pair continued to come under pressure, marking 6.3835
low from morning high 6.4004.
Just got this from MNI, that according to the transcript
of a speech Li made to the Communist Party School,

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.

Chinese Premier Li Keqiang said an annual 6.53%

growth in the next five years until 2020 is needed in
order to meet the government's target of building a
moderately prosperous society. Li also repeated that
China will not use yuan depreciation to boost exports.
Apparently this speech is being circulated via WeChat.
While Usd was mixed in the majors, it held well versus
the Asian currencies. One thing that was discussed this
morning, our strategist Patrick Bennett said Fed has now
removed the possibility of Asian central banks move.

Who said what

US House passes budget plan to avert US debt

default
PBOC: China spillover effect was exaggerated
PBOC: China monetary policy doesnt include
QE
PBOC: Chinas interest rate level still normal
PBOC: China has ample liquidity in Forex
PBOC: China FX reserves can secure its
economic safety
PBOC: China FX reserves calculation based on
IMF standard
PBOC: Chinas interest rate has relatively big
room
Japan Government: Japans economy remains
on moderate recovery
China Premier Li Keqiang: China needs annual
growth of at least 6.53% in the next five years
China Premier Li: Fiscal and financial risks are
increasing
China Premier Li: QE shouldnt be used to flood
the economy with too much money,
China Premier Li: Yuan depreciation is a
market action that wasnt aimed at boosting
exports

News & Data

RBNZ left OCR unchanged at 2.75%

Japan Sept Prelim Industrial Production M/M
rose 1% vs est. -0.6% (prev. -1.2%)
Japan Sept Prelim Industrial Production Y/Y at
-0.9% from -0.4% (est. -2.6%)
Australia Sept HIA New Home Sales M/M fell
4% from +2.3%
Australia Q3 Import Price Index Q/Q unchanged
at 1.4%
Australia Q3 Export Price Index Q/Q par from
-4.4%

Telegraph: Islamic State planning mass attack

on Britain, warns head of MI5

Islamic State terrorists are planning mass casualty

attacks in Britain the head of MI5 has warned. Andrew
Parker, director general of the security agency, said
threats from homegrown jihadis who want to fight for
the militant movement showed no sign of abating.
Delivering the Lord Mayor of Londons annual defence
and security lecture, he said the current level of threat
was the highest he had seen in a career spanning 32years. In the past 12 months his agency has thwarted six
terror plots in the UK and another seven abroad.
http://www.telegraph.co.uk/news/uknews/terrorismin-the-uk/11962037/Islamic-State-planning-massattack-on-Britain-warns-head-of-MI5.html
WSJ: Pfizer, Allergan Considering Combining
Drug makers Pfizer Inc. and Allergan PLC are
considering combining, in what would be a blockbuster
merger capping off a torrid stretch for health care and
other takeovers. Pfizer recently approached Allergan
about a deal, according to people familiar with the
matter, with one of them adding that the process is early
and may not yield an agreement. Other details of the
talks are unclear. Allergan currently has a market
capitalization of $112.5 billion, meaning that a deal for
the company could be the biggest announced takeover in
a year that is already on pace to be the busiest ever for
mergers and acquisitions.
http://www.wsj.com/articles/pfizer-allerganconsidering-combining-1446079506
Nikkei: Investors spooked by Kuroda's penchant
for surprise
Investors are taking a keen interest in Friday's BOJ
meeting. Many market players argue that the central
bank has no choice but to loosen monetary policy
further, citing weakness in domestic economic
indicators. But they are at a loss as to what it will do and
when. Kuroda's BOJ, with its emphasis on surprise, is
tougher to predict than other central banks, said Junpei
Kobayashi at Goldman Sachs Japan, echoing broader
investor sentiment.
http://asia.nikkei.com/Markets/TokyoMarket/Investors-spooked-by-Kuroda-s-penchant-forsurprise
Barrons Online: A Rate Hike in December? Fed
Hints It May Happen
Until now, the timing of liftoff from the near-zero federal
funds rate target has been uncertain, and the
preconditions for such a move seemingly changed with
the headlines. The statement released at the end of the
FOMCs two-day meeting Wednesday removed much of
the uncertainty by stating the Fed would determine
whether it will be appropriate to raise the target range
at its next meeting. But conspicuously absent was the
reference to global economic financial developments,

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.

which the FOMC said after its September meeting may

restrain economic activity somewhat and are likely to put
further downward pressure on inflation in the near
term.
http://www.barrons.com/articles/a-rate-hike-indecember-fed-hints-it-may-happen-1446068552?
mod=BOL_hp_highlight_1
FT: Top US trade official warns on Brexit
A British exit from the EU would see it lose its chance to
strike a preferential trade relationship with the US, and
leave it facing the same tariffs and other restrictions as
emerging economies such as Brazil, China and India, the
top US trade official has warned. Advocates of a Brexit
have argued that were the UK to leave the EU it could
negotiate its own trade agreements with the US and
other major trading partners. But Mike Froman, the US
trade representative, poured cold water on that idea on
Wednesday, warning that the US would have little
interest in negotiating any such agreement.
http://www.ft.com/intl/cms/s/0/9c6135b8-7dbe-11e598fb-5a6d4728f74e.html#axzz3pt1hhkgD
FT on Japans economy: Credibility on the line
Haruhiko Kuroda showed no mercy on arriving at the
Bank of Japan in April 2013. Repudiating what he called
the gradualism of his predecessor, the new governor
signalled that 15 years of deflation meant Japans central
bank had failed. There would be no half measures now.
Yet today consumption is lower than in 2012 and the
economy is flirting with a technical recession.
Tomorrow, the BoJ board is set to slash this years
inflation forecast to less than 0.5 per cent, and admit its
price goal is out of reach until nearly 2017. Most analysts
think even that is optimistic.
http://www.ft.com/intl/cms/s/0/4b26258e-7c86-11e5a1fe-567b37f80b64.html#axzz3poR44LZ9
Ambrose Evans-Pritchard in Telegraph: Paris
climate deal to ignite a $90 trillion energy
revolution
The fossil fuel industry has taken a very cavalier bet that
China, India and the developing world will continue to
block any serious effort to curb greenhouse emissions,
and that there is, in any case, no viable alternative to oil,
gas or coal for decades to come. Both assumptions were
still credible six years ago when the Copenhagen climate
summit ended in acrimony, poisoned by a North-South
split over CO2 legacy guilt and the allegedly prohibitive
costs of green virtue.
http://www.telegraph.co.uk/finance/economics/119589
16/Paris-climate-deal-to-ignite-a-90-trillion-energyrevolution.html

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.