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Ranges (Up till 11.

25am HKT)
Currency

Aussie dollar traded mostly on cross-play; retreated off


0.7216 high and down to 0.7178.

Currency

EURUSD

1.12345-60

EURJPY

134.74-135.01

USDJPY

119.84-120.12

EURGBP

0.7337-525

GBPUSD

1.5310-21

USDSGD

1.4095-1.4135

USDCHF
AUDUSD

0.9723-39
0.7178-0.7216

USDTHB
USDKRW

35.87-36.01
1156.9-1161.6

NZDUSD

0.6594-0.6630

USDTWD

32.555-880

USDCAD

1.3053-71

USDCNH

6.3409-6.3536

AUDNZD

1.0874-1.0903

XAU

1141.9-1150.0

Key Headlines

Something odd Silver took a beating. No


reason behind the move. One FX journalist said
Silver is about 10% higher from where it was
when Chinese left. It is quite likely liquidation of
longs.

USDCNY fixed at 6.3505 was in line with what


traders were calling for. Shanghai Composite
opened and up 3+ pct.

Talk of buying interests emerging below 1.1170


from various names. Not a surprise for the 1.11handle houses 50, 100 and 200-day SMA.

Am out tomorrow, report resumes on Monday.

FX Flows
It is back to China Watching or to some, China Bashing.
Chinese market reopens today and obvious focus is on
the CNY fix and how their stocks will perform.
For start, USDCNY fixed at 6.3505 was in line with what
traders were calling for. Shanghai Composite opened and
up 3+ pct.
It is unheard of but spot Silver was dumped. It was
trading near 16.0 when I took over from New York and
fell to 15.68. No reason behind the move. One FX
journalist said Silver is about 10% higher from where it
was when Chinese left. It is quite likely liquidation of
longs.
First economic data release of the day Japan reported
its 14th consecutive current account surplus but machine
orders were weak. UsdJpy is seen struggling around this
120.00. We got to 120.12 post-fixing and backed off to
119-handle. For what its worth, positioning index is
showing leveraged accounts long Jpy.
Good two-way business in AudJpy this morning. It was
bought for fix and then un-liked once demand vanished.

Just like any other day I battle to put something on


EurUsd, the most loved currency pair in the world.
Talk of buying interests emerging below 1.1170 from
various names. Not a surprise for the 1.11-handle houses
50, 100 and 200-day SMA.
The Canadian dollar is paying no attention to rates but
instead to oil price. Crude oil futures declined little and
gave UsdCad a push to 1.3071. The rates space still
pointing to 1.26s but Ill be happy with 1.28. However,
our strategist Bipan Rai noted that UsdCad failed to
generate momentum below 1.3000 as there is still
sizeable interest to buy Usd. Indeed, the bearish
divergence between price action and oscillators appears
to have been resolved which suggests that we could see
some lift to UsdCad over the coming sessions. This is
also evident from the bullish candle that is close to
support at todays lows. Into the medium-term, our view
has not changed as we continue to see consolidation
between 1.30-1.35 and would look to play that range.

Asians
On the whole, Usd/Asia was slightly firmer for morning
session. We found buyers of UsdSgd out of North Asia
when the pair dipped below 1.4100. Positions for long
UsdSgd greatly reduced; most banks are suggesting
NEER mid-point at about 1.3850-1.3910.
USDCNY fixed at 6.3505 was in line with what traders
were calling for. Shanghai Composite opened and up 3+
pct. Like rest of Asia, USDCNH traded back into 6.35handle.
Short Thb reduced as well when spot UsdThb broke
35.90. The news article in Bangkok Post that Deputy PM
Somkid Jatusripitak said PM Prayuts visit to UN has
been successful and it is now time to woo foreign
investors. This is bullish Thailand but a reminded,
Somkid said the weakening baht has helped Thai
exporters and he has asked the new Bank of Thailand
Governor Veerathai Santiprapob to monitor the baht's
stability.
Intraday support is at 35.90; Usd/Asia sentiment could
push this pair to 36.30.

Who said what

Greek PM Tsipras: Greece cannot return to


markets with unsustainable debt
Greek PM Tsipras: Greece will recapitalise banks
by end of year
Greek PM Tsipras: Greece will start debt relief
talks by end of year

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.

Greek government wins confidence vote;


155/300
RBA Simon: Low rates risky when growth
strong, less supervision
RBA Simon: Concern over existing low rates
probably over done
RBA Simon: Low rates appropriate amid current
weak global growth

News & Data

UK Sept RICS House Price Balance at 44% from


53% (est. 55%)
Japan Aug Machine Orders M/M fell 5.7% from
-3.6%
Japan Aug Machine Orders Y/Y fell 3.5% from
+2.8%
Japan Aug BOP Current Account Balance
Jpy1.653trln
from
Jpy1.808trln
(est.
+Jpy1.226trln)
Japan Aug BOP Current Account Adj. up
Jpy1.59trln from Jpy1.321trln
Japan Aug Trade Balance BOP Basis fell
Jpy326.1bn from Jpy108bn

Jon Hilsenrath in WSJ: Ben Bernanke Says Fed


Decision Not to Raise Rates Was Reasonable
The Federal Reserve made a reasonable decision to hold
off on raising short-term interest rates at its September
policy meeting, its former chairman, Ben Bernanke, said
Wednesday in an interview with The Wall Street Journal.
Bernanke said he believes it will take a few months to
gauge how much international economic and market
developments are affecting a growing U.S. economy,
setting central bankers up for a difficult decision on
when to start lifting their benchmark short-term rate
from near zero.
http://www.wsj.com/articles/ben-bernanke-says-fedfaces-a-tough-call-on-raising-interest-rates1444228744?mod=wsj_nview_latest
WSJ: White House Compares Trans-Pacific
Partnerships Tariff Cuts to Tax Breaks
The White House is touting cuts to tariffs as a key selling
point as it begins the painstaking work of building
domestic support for a major trade deal with 11 Pacific
nations. The complex Trans-Pacific Partnership would
lower trade barriers, open new markets and set
commercial rules of the road. But to start, the Obama
administration is focusing its sales pitch on the cuts to
more than 18,000 tariffs other countries levy on
American goods and services.
http://www.wsj.com/articles/white-house-comparestrans-pacific-partnerships-tariff-cuts-to-tax-breaks1444258931?mod=wsj_nview_latest

Nikkei: Kuroda plays up positives to cool easing


hopes
The BOJ will put together its next economic outlook
report at the Oct. 30 meeting. Another top central bank
official said a policy response will be unnecessary if the
slump in crude oil is the only factor causing the inflation
outlook to fall shy of expectations. But Kuroda has said
that the bank will not hesitate to make policy
adjustments in response to changes in the inflation
trend. Although the governor stuck to an upbeat view
Wednesday, markets will probably keep trying to work
out his real intentions for some time yet.
http://asia.nikkei.com/PoliticsEconomy/Economy/Kuroda-plays-up-positives-to-cooleasing-hopes
Nikkei: Japan's leader must match words with
reforms on economy
Perhaps the biggest question for Japanese Prime
Minister Shinzo Abe on Abenomics' three new "arrows"
is how exactly he intends to raise nominal gross
domestic product to 600 trillion yen while righting the
nation's finances. Another is, why 600 trillion yen?
Nominal GDP stood at 490 trillion yen last fiscal year. In
setting his goal, Abe may have had in mind Cabinet
Office projections that see GDP topping 600 trillion yen
in fiscal 2021, assuming annual growth of at least 3%.
Capital Economics reckons Japan's economy will take at
least a decade to get to that size. But Abe is correct in
wanting to end deflation for good and enlarge the
economic pie. The problem is that he has not offered a
plan for doing so.
http://asia.nikkei.com/Japan-Update/Japan-s-leadermust-match-words-with-reforms-on-economy
FT: Bundesbank releases gold reserve details
The Bundesbank released a detailed 2,300-page
inventory of every single bar on Wednesday, amounting
to 3,384 tonnes of gold worth around 107bn, stored in
vaults in Frankfurt, London, Paris and New York. The
move is the latest by the central bank, which is in a
process of moving gold back to Germany after the
eurozone sovereign debt crisis broke out in 2012 and led
to public questions about the safety of the countrys
reserves.
http://www.ft.com/intl/cms/s/0/f2c48dde-6cf6-11e58171-ba1968cf791a.html#axzz3ncfT5E10
Nikkei: Norway's oil fund to invest in real estate
in Japan
Norway's sovereign wealth fund will start investing in
Japanese real estate, aiming to secure stable returns over
the long term, a move that could bring hundreds of
billions of yen to the market. The Government Pension
Fund Global, the world's largest sovereign wealth fund,
will soon set up an office in Tokyo. It will search for

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.

promising commercial properties, mainly office


buildings, and make purchases within a year or two.
http://asia.nikkei.com/Markets/Property/Norway-s-oilfund-to-invest-in-real-estate-in-Japan
Lawrence Summers in FT - Global economy: The
case for expansion
Policymakers badly underestimate the risks of both a
return to recession in the west and of a global growth
recession. If a recession were to occur, monetary
policymakers lack the tools to respond. There is
essentially no room left for easing in the industrial
world. Interest rates are expected to remain very low
almost permanently in Japan and Europe and to rise
only very slowly in the US. We are in a new
macroeconomic epoch where the risk of deflation is
higher than that of inflation and we cannot rely on the
self-restoring features of market economies.
http://www.ft.com/intl/cms/s/0/1e912316-6b88-11e58171-ba1968cf791a.html#axzz3ncfT5E10
WSJ: Deutsche Bank Sees Big Loss on WriteDown in Corporate Banking
Deutsche Bank AG warned it will take a 6 billion charge
on assets in its investment bank and retail- and privatebanking operations for the third quarter and said it could
cut its dividend this year. As a result, the German lender
said it expects to report a loss of 6.2 billion on Oct. 29
when it discloses third-quarter results and unveils
sweeping strategy changes, according to a statement
released late Wednesday night in Europe.
http://www.wsj.com/articles/deutsche-bank-sees-bigloss-on-write-down-in-corporate-banking-1444249402?
mod=wsj_nview_latest
WSJ: Brazil Sees Light Demand for Oil Block
Auction
The Brazilian governments auction of exploratory oil
blocks met with little demand on Wednesday, with no
bids from state oil company Petrleo Brasileiro SA, as
the low price of oil and local content-rules weighed on
interest. Brazils National Petroleum Agency, or ANP,
raised only 121 million reais ($31.4 million). The
minimum required bids on all the blocks up for sale
totaled 979 million reais.
http://www.wsj.com/articles/brazil-sees-light-demandfor-oil-block-auction-1444250455?
mod=wsj_nview_latest
FT: Widodo announces further stimulus to
revive economy
President Joko Widodo announced the third instalment
of his ambitious economic stimulus package on
Wednesday, cutting energy prices and offering
concessions to business in an attempt to kick-start
growth in Southeast Asias largest economy. Jakarta

announced plans to reduce subsidised fuel prices by


Rp200 per litre to Rp6,700 ($0.49) as of the end of this
week to prop up consumer sentiment. It also unveiled
plans to reduce electricity tariffs and lower gas prices for
some businesses, aiming to support labour-intensive
industries as payroll data in Indonesia worsens.
http://www.ft.com/intl/cms/s/0/b0a3e128-6cf3-11e5aca9-d87542bf8673.html#axzz3ncfT5E10
Telegraph: Back an integrated EU or quit,
Francois Hollande warns Britain
Britain must back deeper integration of the European
Union or quit altogether, Francois Hollande, the French
president, declared on Wednesday night. During furious
exchanges with Nigel Farage, the Ukip leader, Mr
Hollande said British voters who do not like the idea of a
strengthened EU must take the logical path of Brexit.
http://www.telegraph.co.uk/news/worldnews/francoishollande/11917960/Back-an-integrated-EU-or-quitFrancois-Hollande-warns-Britain.html
Kathimerini: Greek Opposition tells Tsipras he
has to go it alone
Ahead of a confidence vote in Parliament on Wednesday
night, which the coalition was expected to win thanks to
its five-seat majority, the main opposition parties made
it clear to Prime Minister Alexis Tsipras that he will not
be able to count on their support. In a deeply critical
speech, New Democracy leader Evangelos Meimarakis
made it clear that his party will not back the government
in its implementation of measures pledged to creditors.
Go ahead on your own, you have a very good majority,
he said, referring to the coalitions 155 seats in the 300member House.
http://www.ekathimerini.com/202301/article/ekathime
rini/news/opposition-tells-tsipras-he-has-to-go-it-alone
Bangkok Post: Thai Government to woo Western
investors
Prime Minister Prayut Chan-o-cha's UN trip has eased
international concerns over the military coup, paving the
way for other cabinet ministers to make overseas visits to
boost foreign investor confidence in Thailand, Deputy
Prime Minister Somkid Jatusripitak said Wednesday.
Somkid painted a brighter economic outlook for the
country this year and next, saying domestic consumer
confidence had improved after his new team introduced
a slew of stimulus packages to boost rural spending and
provide credit more easily to small and medium business
enterprises (SMEs). Somkid said the weakening baht has
helped Thai exporters and he has asked the new Bank of
Thailand Governor Veerathai Santiprapob to monitor
the baht's stability.
http://www.bangkokpost.com/news/politics/722624/go
vernment-to-woo-western-investors

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.