• EU and UK have reached a Brexit deal, sources indicate DUP against it; no word from DUP Leader Foster yet
• Sterling is stronger with Cable reaching just shy of 1.30 at best; other G10 currencies are firmer vs. USD
• There will be no discussions on further Turkey sanctions during the European Commission summit, according to a senior EU officials
• Looking ahead highlights include, US Housing Permits & Starts, Philadelphia Fed, Industrial Production and EIA Weekly Stocks, EU Council Summit Begins, Fed’s Evans, Bowman, Williams, RBA’s Debelle, ECB’s Coeure, Riksbank’s Ingves and Jansson
• Earnings: Morgan Stanley, Union Pacific

ASIA-PAC

Asian equity markets traded mixed after the lacklustre tone rolled over from Wall St where all majors finished with marginal losses as participants digested earnings and with sentiment dampened by weak US Retail Sales. ASX 200 (-0.8%) was led lower by underperformance in tech and with mining names closely behind including BHP after its quarterly updates showed iron ore output was flat Y/Y, while Nikkei 225 (U/C) was choppy around the 22500 level and near its YTD highs with mild JPY weakness just about keeping the index afloat. Conversely, Hang Seng (+0.7%) outperformed as property names surged and Shanghai Comp. (Unch.) failed to benefit from recent comments by China’s Cabinet that it will step up efforts to attract foreign investment and will not allow forced technology transfers, while China will also ensure lower tax for manufacturing and other sectors. Finally, 10yr JGBs declined as Japanese stocks remained afloat near 10-month highs and following mixed results at the 5yr JGB auction which showed slightly higher yields and lower accepted prices.

PBoC skipped open market operations but announced a CNY 6.0bln central bank bill swap. (Newswires)

PBoC set CNY mid-point at 7.0789 vs. Exp. 7.0720 (Prev. 7.0746)

US Treasury Secretary Mnuchin said there is still work to so in documenting the trade agreement with China but added he is very pleased with how it concludes, he also stated there is currently no invitation from China for further trade talks in Beijing and that he and USTR Lighthizer are prepared to travel to China. Mnuchin said he has not determined how to treat China in the next Treasury currency report but had discussions with Chinese officials on currency that made the Treasury more comfortable. (Newswires)

Chinese government alleged the latest US rules for diplomats violate the Vienna Convention. (Newswires)

GEOPOLITICS

There will be no discussions on further Turkey sanctions during the European Commission summit, according to a senior EU officials cited by NYT's Stevis-Gridneff. (Twitter)

US Treasury Secretary Mnuchin said US President Trump expects there will be a cease-fire regarding Turkey's actions in Syria and suggested that increased tariffs on Turkey's goods have been successful in the past. In related news, US conducted a pre-planned air strike in Syria to destroy some ammunition and abandoned vehicles as troops depart according to a US official. (Newswires)

UK/EU

A EU-UK Brexit deal has been agreed; according to both the EU and UK side. However, initial reports noted that the DUP were on board with this, subsequently, multiple DUP sources have noted that their position has not changed from the statement earlier (see below) as such they do not support the deal. FT’s Khn notes the new protocol on the NI consent mechanism does not provide the DUP with a veto for the first 8-years. (Twitter) Which pushes back the veto time-line from 6-years to 8-years as was reported overnight (see below). (Newswires)

              - Note: we are still awaiting an offical statement from DUP’s Leader Foster on this

DUP state that they cannot support PM Johnsons Brexit plan, stating there are issues on customs, consent along with a lack of VAT clarity., Politics Home Schofield. (Twitter) Additionally, reports indicate UK PM Johnson has no plans to meet with the DUP today. (Newswires)

According to reports the Northern Ireland Assembly will be allowed to hold a vote on whether to continue the border arrangements in six years and, if they agree to continue, every four years after this. (Newswires) ITV's Peston suggested that EU leaders can still ratify before the weekend if legal text can be agreed by 0800BST on Thursday but added if not, there will be no deal before the weekend. (ITV) EU Council President Tusk said a deal is ready, but cautioned there are "certain doubts on the British side". (Telegraph)

UK Labour Party leader Corbyn is reportedly preparing to back a 2nd referendum on potential new Brexit deal. (The Times)

ECB's Villeroy said ECB is determined to reach inflation goal and that causes of Euro area slowdown are mainly internal, while he added a review of ECB monetary policy framework will be very welcome. (Newswires)

BoE Governor Carney says negative rates have not hurt bank profits in Europe, adds does not see negative rates as part of BoE's toolkit, UK could reduce countercyclical buffer to spur bank lending if more stimulus is required. (Newswires)

EQUITIES

Major European Bourses (Euro Stoxx 50 +0.3%) are in the green, albeit off highs, after EU officials confirmed a provisional Brexit deal had been agreed ahead of the EU Council Summit today/tomorrow (although the DUP are reportedly yet to be onboard), news which saw the DAX (+0.5%) make fresh YTD highs earlier in the session. The FTSE 100 (+0.5%) enjoyed some early outperformance on an initially weaker pound but remain choppy as the currency surged on the latest Brexit updates, although the index is supported by domestic banks and housing names. Separately, some outperformance is being seen in periphery bourses (FTSE MIB +0.8%, IBEX 35 +0.8%); Italy’s Cabinet yesterday approved its draft 2020 budget and submitted it to the EU, while the latest polling out of Spain saw the country’s conservative People’s Party making healthy gains following the sentencing of Catalan separatist leaders at the expense of the ruling Socialist Party (ahead of 10 November elections). Sectors are mixed but mostly in the green, with outperformance seen in Health Care (+0.6%) and underperformance in Tech (-0.1%). Energy (+0.5%) is higher despite lower crude prices. Chip names, including Wirecard (-2.9%), were weighed after Taiwan’s TSMC warned of a single digit Y/Y decline in global semiconductor market growth this year in its earnings report (although Q3 earnings were strong). In terms of notable movers; Ericsson (+6.7%) shot higher after the Co. posted strong earnings, including an increase to its 2020 revenue guidance. Unilever (+1.0%) were also buoyed by decent earnings. Conversely, weak earnings from Faurecia (-4.3%), Telia (-5.2%) and Pernod Ricard (-3.4%) saw their respective stocks under pressure. Elsewhere, Iliad (+4.8%) shares moved higher after the Co. was upgraded at JPM.

FX

AUD/NZD - The Antipodean Dollars are outperforming in wake of overnight data showing an unexpected dip in the Aussie unemployment rate and a jobless tally that would have almost doubled consensus barring a decline in the part time count. Aud/Usd has crossed the 0.6800 mark, with perhaps some added impetus from positive Chinese trade chat regarding the outcome of recent talks in Washington, and nudging towards one of several hefty option expiries spanning the big figure (see 7.02BST post on the headline feed for details of all today’s major NY cut rollovers). In similar vein, the Kiwi has reclaimed 0.6300, albeit lagging in cross terms as Aud/Nzd rebounds over 1.0750 and sets sights on 1.0800 again.

GBP - Sterling may not quite be the biggest G10 winner, but it remains well on top in cumulative price and volatility terms given another 200+ pip gap from top to toe in Cable and full point+ range in Eur/Gbp. Another cascade of Brexit-related headlines has been paramount, and especially those relating ongoing intransigence from the DUP over several components of the compromised draft treaty hammered out by UK and EU negotiators. In short, EU diplomats and PM Johnson have declared that a deal is finally back on or even done pending Parliament approval, but HoC approval remains in doubt even discounting DUP rejection. However, the Pound has emerged from its latest bout of whipsaw trade firmer, albeit off best levels and seemingly relieved if not completely satisfied that another hurdle has been overcome, or perhaps merely assuming that enough progress towards a final withdrawal agreement has been achieved to warrant a further (technical) extension rather than a no deal departure on October 31. Cable is holding above 1.2900 and Eur/Gpp around 0.8600.

USD - The Greenback is softer across the board, with the DXY dipping under 97.500 and only the safest-havens alongside a few other laggards faring worse than the Buck ahead of more top tier US data/Fed speak and post-disappointing retail sales on Wednesday.

EUR/CHF/CAD - All benefiting from a largely Brexit-inspired upturn in risk sentiment, not to mention the aforementioned US Dollar demise, with the single currency scaling 1.1100, Franc back up near 0.9900 and Loonie edging closer to 1.3150 in advance of Canadian manufacturing sales.

NOK/SEK - The Scandi Crowns are striving to stop the rot after plumbing new multi-year/record lows in wake of significantly weaker than forecast Swedish labour stats, but the Nok is lagging after slipping below 10.2000 even though the data may yet convince the Riksbank to roll back or possibly remove its rate hike guidance next week.

Australian Employment Change (Sep) 14.7k vs. Exp. 15.0k (Prev. 34.7k). (Newswires) Australian Full Time Employment Change (Sep) 26.2k (Prev. -15.5k) Australian Unemployment Rate (Sep) 5.2% vs. Exp. 5.3% (Prev. 5.3%) Australian Participation Rate (Sep) 66.1% vs. Exp. 66.2% (Prev. 66.2%)

RBA watcher McCrann believes the RBA will leave its Cash Rate unchanged at the upcoming meeting following the Australian labour market report. (Newswires)

FIXED

Although the DUP may still hold out and it remains far from certain whether PM Johnson is able to do what his predecessor could not, debt futures have only manged a partial recovery from lows posted on the back of the latter claiming that a great deal has finally been forged with the EU to replace the backstop. For the record, Gilts have been down to 130.80, Bunds 170.73 and 10 year T-notes 129-16+ awaiting the next episodes in the saga/drama ahead of Saturday’s HoC showdown, and with US data plus Central Bank rhetoric providing some passing interest in the interim.

COMMODITIES

A choppy session thus far for WTI and Brent futures which initially received a double whammy from larger-than-forecast US crude stockpiles and as sentiment took a turn for the worse as Brexit developments reach a stalemate on the domestic front, albeit prices saw upside as EU announced that a Brexit deal has been reached. As a recap, the weekly API data (which was delayed due to Monday’s US Columbus Day holiday) showed a US inventory build of 10.5mln barrels vs. Exp. build of 2.9mln barrels. WTI and Brent futures immediately declined some 0.3-0.4/bbl and continued to be pressured throughout the APAC and early EU sessions. WTI futures reside just around the 53/bbl mark (having tested 52.75/bbl overnight) whilst Brent futures gained ground above 59/bbl level but pared some of the gains. Traders will continue eyeing Brexit/US-Sino newsflow for sentiment-driven action whilst the EIA is due to report weekly crude stocks at 1600BST with the headline forecast to show a build of 2.878mln barrels. Elsewhere, gold prices are flat intra-day and within a tight range below 1500/oz (1483-93/oz) as the yellow metal eyes Brexit developments, whilst copper recovered some losses and moved into positive territory amid mostly constructive comments from China’s MOFCOM whilst the red metal received a boost from the aforementioned Brexit headlines.

API Crude Inventories +10.5mln vs. Exp. +2.9mln (Prev. +4.1mln). (Newswires)