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Ranges (Up till 11.

35am HKT)
Currency

Currency

EURUSD

1.11725-975

EURJPY

134.66-89

USDJPY

120.40-575

EURGBP

0.7370-905

GBPUSD

1.5141-68

USDSGD

1.4204-45

USDCHF
AUDUSD

0.9751-68
0.7068-0.7118

USDTHB
USDKRW

36.30-36
1161.8-1166.7

NZDUSD

0.6479-0.6514

USDTWD

32.66-33.09

USDCAD

1.3081-96

USDCNH

6.3500-93

AUDNZD

1.0899-1.0925

XAU

1135.1-1137.4

Key Headlines

RBA leaves cash rate unchanged at 2.0% nothing changed.

TPP trade agreement, US with 11 other nations;


Canada, Mexico, Peru, Chile, Japan, Vietnam,
Malaysia, Singapore, Brunei, Australia and New
Zealand. But hurdles ahead.

Someone asked our trader Jon where he sees


UsdCad. Jon replied 1.2665. Ill be satisfied with
1.28s.

Patrick Bennetts recommendation of


weakness in Usd/Asia. He likes UsdSgd, UsdKrw
and USDCNH higher.

FX Flows
So US reached a TPP trade agreement with 11 other
nations; Canada, Mexico, Peru, Chile, Japan, Vietnam,
Malaysia, Singapore, Brunei, Australia and New Zealand.
However, the deal there are some difficult hurdles lined
up ahead. According to Nikkei, Canadian general
election Oct. 19 poses a more immediate threat. Should
the current government fall, parliamentary sentiment
could turn against the TPP. The trade agreement's path
forward in the country is thus unclear. In US, President
Obama cannot sign the pact until early January. A
month or more after that, legislation to ratify the
agreement could be introduced. Debate on the
agreement would then begin in earnest sometime next
spring.
Australias Aug trade deficit widened to Aud3.095bn
versus estimates of Aud2.4bn. Julys number was also
revised down, to Aud2.792bn from Aud2.46bn.
AudUsd dipped just 20 pips from 0.7088 to 0.7068.
Came back to 0.7085 as we focused on RBA rates
decision. Our strategists our strategist Bipan Rai/Patrick
Bennett said they see no change just yet, but to watch for
dovish tones. I hear buying interest at 0.7045.

RBA left rates unchanged; statement werent different


and AudUsd popped to 0.7109 and subsequently
triggered stops near 0.7115.
NZIER Q3 Business Opinion Survey falls 14 from +5;
this is a very weak number. NZIER said weak inflation
environment suggesting one more RBNZ rate cut for
2015. Not much to pen on NzdUsd, seen tracking the
Aussie. Popped to 0.6509.
Yield spreads still showing a lower UsdCad, edged higher
from yesterday to 1.2665. Buy orders are light, better
below 1.3030. No economic data from Canada today. We
saw speculative names buying UsdCad on the Aussie
number, which we felt was wrong. The Usd rose to
1.3096 then backed off to 1.3084.
Seemed strange that Tokyo names were sellers of UsdJpy
as the traders sat down. We suspected these are just
proprietary trading. Gains in stock market and UsdJpy
climbed to 120.575 where we experienced profit taking
from CTA and regional prop accounts. I am told stops
are through 120.60 but dont get excited, renewed selling
atop 120.85. Downside bids surround 120.00.
EurUsd was trading up at 1.1190 and then fell to 1.11725
very promptly. Price action suggested a good amount of
Usd bought versus Jpy and Eur. Our trader suspected
EurJpy interest caused the move just when UsdJpy was
trading firmer. Some chatter of buying from sovereign as
well as macro names from 1.1160 to 1.1140. Offers atop
1.1220.

Asians
One of the best performing currency is the Indonesian
Rupiah. Strongest gain in 6 years. Supported by rally in
the Jakarta Composite Index and also that Fed Res may
hold off rate hike, the 1-month UsdIdr NDF came off to
14,380 NY close of 14,615. Our trader Gary said the
optimism in Rupiah is also linked to reports that
Indonesia is going to issue Usd Bills. In past, they only
has Usd denominated bonds and with short-end bills, it
will allow them to pay interests and could potentially use
Usd for intervention.
Rest of the Usd/Asia traded higher pure profit taking.
UsdSgd opened at 1.4208 and climbed to 1.4245.
Looking at positions, although some were stopped out,
there are still some long positions out there and we could
see another wave of selling from technical accounts if
1.4175 breaches. MAS has yet to firm up the date for GDP
and Semi-Annual Monetary Policy review (sometime
between Oct 7-14). Macro names we spoke to see MAS
will re-centre and likely to move the slope to neutral.

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.

In Patrick Bennetts latest Macro Strategy, he wrote


Usd/Asia pairs have traded lower in the last couple of
sessions, though we are not inclined to aggressively
follow markets lower at this point. We are better buyers
of weakness in Usd/Asia and reiterate our preferred
trades below; including long USDCNH. Pats concern
now is that softer US payroll growth and weaker PMI
readings across Asia and much of the rest of the globe
only heighten the threats from still stilted global demand
at the same time as the US economy is falling short of
expectations.
Patrick recommended trade long of USDCNH entered at
6.3475, target 6.50 and stop on close below 6.30. He is
now recommending to buy UsdKrw spot at 1,158, target
1,195 and stop below 1,150. For the 1-month NDF the
corresponding levels are 1,160, target 1,195 and stop
below 1,152. He also recommend to buy UsdSgd at
1.4120, target 1.45 and stop below 1.40.

Who said what

ECB Exe Board Coeure: Attractiveness of Euro


not in any way reduced
ECB Exe Board Coeure: Important for new
Greek government to implement Aug pact
ECB Exe Board Coeure: A genuine union would
improve Euro international role
Japan Aso: No intention to interfere in BOJ
policy
Japan Aso: Will tell G20 Japan economy in
gradual recovery
Japan Aso: Jpy weakening to 120 has helped
enhance Japan export competitiveness
Moodys: Malaysias political factors may affect
fiscal outlook
Moodys: Malaysia political risk has not led to
more policy risk

News & Data

NZIER Q3 Business Opinion Survey falls 14


from +5
Australia ANZ Roy Morgan Weekly Consumer
Confidence Index slipped to 110.0 from 110.6
Australia Aug Trade Deficit widened to
Aud3.095bn from Aud2.46bn
RBA left rates unchanged at 2.0%

WSJ: Yuan Picks Up Pace as Global Currency


According to SWIFT, there was a substantial increase
in usage of the currency in the final week of August was
triggered by market volatility caused by concerns about
the Chinese economy and Beijings devaluation of the
yuan. To be sure, the yuan remains a small player on the
global stageit was used in 2.8% of global payments in

August, compared with 44.8% for the dollar, 27.2% for


the euro and 8.5% for the British pound.
http://www.wsj.com/articles/yuan-picks-up-pace-asglobal-currency-1444093200?mod=wsj_nview_latest
Nikkei: Trade pact still faces political hurdles in
member countries
Under a requirement for 90 days' advance notice,
President Obama cannot sign the pact until early
January. A month or more after that, legislation to ratify
the agreement could be introduced. Debate on the
agreement would then begin in earnest sometime next
spring. Canada's general election Oct. 19 poses a more
immediate threat. Should the current government fall,
parliamentary sentiment could turn against the TPP. The
trade agreement's path forward in the country is thus
unclear. Japan will likely begin ratification proceedings
during next year's Diet session, which begins in January.
Debate is also seen stalling in Malaysia, where complying
with the TPP will demand reforms at state-owned
enterprises and other politically difficult changes.
http://asia.nikkei.com/Politics-Economy/InternationalRelations/Trade-pact-still-faces-political-hurdles-inmember-countries
FT - TPP trade deal: seven things you need to
know
The US, Japan and 10 other Pacific Rim economies,
representing some 40 per cent of the global economy,
reached an agreement on Monday on what is the biggest
trade deal signed anywhere in two decades.
1. The TPP is as much about geopolitics as it is about
trade.
2. China is not in it. But it may be some day.
3. Embedded in the TPP is a free-trade deal between two
of the worlds three largest economies.
4. This would be a pivotal deal for Shinzo Abe, Japans
prime minister.
5. The TPP is controversial in many of its member
countries.
6. The TPP is only flirting with the issue of currency
manipulation...
7. The TPP would break new ground on environmental
and labour standards for trade agreements.
http://www.ft.com/intl/cms/s/0/df9ce46c-6aea-11e58171-ba1968cf791a.html#axzz3nhcLrEUY
FT: US, Japan and 10 countries strike Pacific
trade deal
The US, Japan and 10 other Pacific Rim nations have
struck the largest trade pact in two decades, in a huge
strategic and political victory for US President Barack
Obama and Japanese Prime Minister Shinzo Abe. The
Trans-Pacific Partnership covers 40 per cent of the
global economy and will create a Pacific economic bloc
with reduced trade barriers to the flow of everything

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.

from beef and dairy products to textiles and data, and


with new standards and rules for investment, the
environment and labour.
http://www.ft.com/intl/cms/s/0/d4a31d08-6b4c-11e58171-ba1968cf791a.html#axzz3ncfT5E10
Nikkei: Japan assembling TPP task force to aid
farmers
The Japanese government will establish a task force as
early as this week to help farmers deal with the expected
rise in low-cost imports under the Trans-Pacific
Partnership free trade agreement. "It's the responsibility
of politics to protect the beautiful original landscapes of
agriculture," Prime Minister Shinzo Abe said Monday
night.
http://asia.nikkei.com/Politics-Economy/InternationalRelations/Japan-assembling-TPP-task-force-to-aidfarmers
WSJ: Treasurys Jack Lew to Call on Other
Nations to Boost Economic Growth
U.S. Treasury Secretary Jack Lew will urge countries to
use all available policy tools to boost global growth, a
top Treasury official told reporters Monday in a
statement outlining the secretarys trip to a conference of
the International Monetary Fund and the World Bank in
Peru this week. The officials comments suggest the U.S.
is hoping to get more countries to implement the
necessary fiscal and monetary policies that could reenergize the global economy, which has fallen into the
doldrums falling the drop in commodity prices and a
slowdown in China.
http://www.wsj.com/articles/treasurys-jack-lew-to-callon-other-nations-to-boost-economic-growth1444076225?mod=wsj_nview_latest
FT: Spain faces Brussels rebuke over 2016
budget
Spains 2016 budget proposal falls short of the EUs
tough new spending rules and must include additional
cuts if it is to pass muster in Brussels, the European
Commission will warn on Tuesday in a stinging rebuke
for Madrid just two months ahead of national elections.
Pierre Moscovici, the commissions economic chief, said
that the Spanish budget would lead to a deficit of 3.5 per
cent of economic output next year, significantly above
the EUs 3 per cent ceiling and the 2.8 per cent target
Madrid had agreed last year.
http://www.ft.com/intl/cms/s/0/1d9b34da-6b8b-11e5aca9-d87542bf8673.html#axzz3ncfT5E10

bank massively expanded its asset purchases. Few


analysts expect a move on Wednesday but the data on
Japans economy have weakened in the past few weeks,
creating expectations of policy easing when the BoJ
updates its economic forecasts on October 30.
http://www.ft.com/intl/cms/s/0/d0867f3a-6b24-11e5aca9-d87542bf8673.html#axzz3ncfT5E10
Telegraph:
Portuguese
political
stalemate
threatens to derail eurozone's model pupil
Last weekend's vote saw the ruling centre-right coalition
of Prime Minister Pedro Passos Coelho come in first
place with 37pc of the vote. Coelho's government has
been dubbed "more Troika than the Troika" for its
zealous implementation of bail-out conditions in return
for a 78bn rescue four years ago. Despite being hailed
as the star pupil for the eurozone's cocktail of fiscal
discipline and structural reforms, public appetite for
austerity has waned. Brussels may hail Portugal as an
example of successful austerity but the economy is still
plagued by a series of intractable problems, warns the
IMF.
http://www.telegraph.co.uk/finance/economics/119123
33/Portuguese-political-stalemate-threatens-to-deraileurozones-model-pupil.html
Malaysian Insider: No confidence vote against
Najib as early as first week of Parliament
PKR will press ahead with a no-confidence vote against
embattled Prime Minister Datuk Seri Najib Razak
despite not having obtained the agreement of its
partners in Pakatan Harapan, with a motion to be filed
as early as within the first week of the next Parliament
sitting. Opposition parties, however, lack the numbers
for the two-thirds majority needed to push a noconfidence motion through, with 88 members in the
222-seat of the Dewan Rakyat.
http://www.themalaysianinsider.com/malaysia/article/
no-confidence-vote-against-najib-as-early-as-first-weekof-parliament

FT: Japan central bank chief weighs policy


easing options
When Haruhiko Kuroda faces the press this week the
Bank of Japan governor will be under more pressure
than at any time since last October when the central
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.