Brexit Scenario Could Cost the UK 66bln GBP Annually
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Asian equities were seen mostly higher overnight amid yesterday’s gain in energy prices with the Nikkei 225 outperforming in a catch-up play
• USD gained against its major counterparts with underperformance seen in antipodeans in which AUD/USD and NZD/USD broke below 0.7600 and 0.7100 respectively
• Looking ahead, highlights include German ZEW, IEA Monthly Report, ECB's Coeure, BoE's Saunders, Fed's Kashkari all speak and Alcoa kick off earnings season
Asia equity markets traded mostly higher as they took the impetus from the positive lead from Wall St. where gains in oil prices and an increase in Clinton’s lead in the polls supported sentiment, while markets in Japan also played catch-up to yesterday’s gains. ASX 200 (+0.1%) was led by commodity names after WTI crude rose above USD 51.00/bbl and Brent crude printed a 1-year high on reports Russia backed a production freeze deal. Nikkei 225 (+1.0%) outperformed on a weaker JPY as the index also made up for lost ground after yesterday’s holiday closure. Shanghai Comp. (+0.4%) and Hang Seng (-1.3%) initially conformed to the positive tone although gains were capped following a weak liquidity injection by the Peoples Bank of China and weakness in the property sector after reports China was to tighten control of funds into the sector, while KOSPI (-0.9%) was the laggard amid losses in index heavyweight Samsung after the Co. told its partners to halt sales and exchanges of the Note 7.
Chinese Premier Li says global economic recovery is slow and that protectionism is increasing. Premier Li also stated China’s economy showed positive changes in Q3 but added that the economy still faces downward pressure.
The Peoples Bank of China set CNY mid-point at 6.7098 (Prev. 6.7008) and injected CNY 20bln in 7-day reverse repos and CNY 10bln 14-day reverse repos.
ECB’s Visco said that monetary policy alone is not enough and also added that an exit from QE would be dependent on data.
UK BRC Like-For-Like Sales (Sep) Y/Y 0.4% vs. Exp. -0.3% (Prev. -0.9%).
UK Treasury said that a hard Brexit scenario could cost the UK as much as 66bln GBP annually.
USD gained against its major counterparts with underperformance seen in antipodeans in which AUD/USD and NZD/USD broke below 0.7600 and 0.7100 respectively, with the latter pressured following dovish comments from RBNZ’s Assistant Governor McDermott. Strength in the USD coupled with safe-haven outflows supported USD/JPY towards 104.00, while GBP/USD remained weak and declined to briefly test 1.2300 to the downside.
RBNZ's Assistant Governor McDermott said policy is to remain accommodative and that projections indicate that further policy easing will be required.
Australian Home Loans (Aug) M/M -3.0% vs. Exp. -2.5% (Prev. -4.2%).
Australian Investment Lending (Aug) 0.1% M/M (Prev. 0.5%).
Oil prices were flat overnight to hold on to yesterday’s advances which saw WTI crude futures advance above USD 51.00/bbl while Brent crude printed its highest level in a year, after Russia said it backed an output freeze deal. Gold (Unch.) prices saw uneventful trade and consolidated around USD 1260/oz, while copper remained near yesterday’s highs amid a mostly positive risk tone seen in Asia.
Russia Energy Minister Novak is to meet with Saudi representatives today in Istanbul.
Saudi Arabia Energy Minister Al-Falih said oil could reach USD 60.00/bbl by the year-end.
Fed's Evans (Non-Voter, Dove) stated he would not be surprised by a hike in December and that he projects a very shallow path for hikes. Evans further commented election not an obstacle for a November hike but would prefer to wait for further data.
Latest NBC/WSJ poll shows Clinton leading Trump 46%-35%
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