• US futures are a touch softer ahead of Tier 1 events while European bourses have recovered slightly from initial downside with overall action fairly contained
• USD bid with the index eclipsing its end-October peak, JPY attempts to claw back post-BoJ downside while NZD slips after jobs numbers
• Fixed benchmarks cautious but have managed to benefit modestly from the risk tone
• Crude lifted by Iran’s Khamenei reiterating his call for Muslim nations to stop exporting oil to Israel
• The Rafah border crossing has opened from Gaza into Egypt; for humanitarian purposes to allow the transit of foreign nationals and those with severe injuries
• Looking ahead, highlights include US ADP, ISM Manufacturing, Construction Spending, JOLTS, BCB Policy Announcement, FOMC Policy Announcement & Chair Powell, US Treasury Quarterly Refunding Announcement, Speech from SNB’s Jordan. Earnings from Norwegian Cruise Line, Kraft Heinz, PayPal & Qualcomm.

EUROPEAN TRADE

EQUITIES

• European bourses are little changed on the session with cash picking up from a softer open while futures have deteriorated slightly, Euro Stoxx 50 -0.1%.
• Sectors are being dictated by earnings updates with Retail outperforming post-Next while Health Care benefits from GSK. At the other end of the spectrum, Media lags after Wolters Kluwer though Utilities are not far behind given pronounced losses in Orsted.
• Stateside, futures are in the red with specifics slim ahead of the FOMC and Quarterly Refunding, ES -0.3% & NQ -0.4%; preview and primer respectively available for both events. Following those Tier 1 events, after-market earnings include QCOM ABNB, ABNB, MDLZ, MET & PYPL.
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FX

• Greenback grinds higher ahead of Fed and packed agenda in the lead up, DXY eclipses month end high within 106.89-64 range.
• Yen claws back post-BoJ losses with the aid of more audible verbal intervention, USD/JPY retreats from 151.70 to 151.15 at one stage.
• Euro probes semi-round number support at 1.0550 vs Dollar after losing 1.0600+ status.
• Kiwi labours after weaker than forecast NZ jobs and labour cost metrics, NZD/USD drifts down from 0.5827 to sub-0.5800 and AUD/NZD cross pops back above 1.0900.
• PBoC set USD/CNY mid-point at 7.1778 vs exp. 7.3327 (prev. 7.1779)
• Japan's top currency diplomat Kanda said speculative FX moves seen cannot be explained by fundamentals and he is concerned that one-sided, sharp FX moves negatively affect the economy, while he added that authorities may or may not say when they conduct intervene, according to Reuters.
• Japanese Chief Cabinet Secretary Matsuno said it is important for FX to move stably reflecting economic fundamentals and rapid FX moves are undesirable, while he won't rule out any steps to respond to disorderly FX moves.
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FIXED INCOME

• Bonds remain cautious in advance of the FOMC, but pare some declines as broad risk sentiment waivers.
• Bunds, Gilts and T-note meander between 128.42-75, 92.63-91 and 105-27+/106-03 + parameters.
• 2028 UK issuance reasonably well received on the eve of the BoE and 7 year German supply may go well given current concession.
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COMMODITIES

• Commodities have, broadly speaking, spent the bulk of the European morning fairly contained with fresh catalysts limited ahead of a particularly busy US agenda headlined by Quarterly Refunding & the FOMC.
• The sessions current peaks of USD 82.26/bbl and USD 86.22/bbl for WTI Dec’23 and Brent Jan’24 respectively printed in the wake of remarks from Iran’s Supreme Leader.
• Iran's Supreme Leader Khamenei says Muslim countries should stop exporting oil and food to Israel, via Tasnim. Echoes recent remarks. For instance, on October 18th Khamenei called for for its neighbouring nations to impose an oil embargo on Israel alongside the expulsion of Israeli ambassadors.
• US Private Energy Inventories (bbls): Crude +1.3mln (exp. +1.3mln), Gasoline -0.4mln (exp. -0.8mln), Distillates -2.5mln (exp. -1.5mln), Cushing +0.4mln.
• Russian oil exports from the Black Sea port of Tuapse planned at 1.103mln/T in November (1.142mln/T in October), via Reuters citing traders.
• Spot gold is essentially unchanged and around recent levels ahead of the packed docket while base metals have a modest negative bias, following suit to the broader risk tone from an equity perspective and in the wake of disappointing Chinese PMIs.
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NOTABLE EUROPEAN HEADLINES

• The Times' Shadow MPC voted 7-2 in favour of keeping rates on hold.

EUROPEAN DATA

• UK S&P Global/CIPS Manufacturing PMI Final (Oct) 44.8 vs. Exp. 45.2 (Prev. 45.2)

NOTABLE US HEADLINES

• White House said US President Biden would veto a House supplemental request for Israel aid which includes poison pill offsets and no aid for Ukraine, according to Reuters.
• US House panel seeks ban on federal purchases of Chinese drones, via FT.

GEOPOLITICS

• US Secretary of State Blinken is to travel to Israel on Friday to meet with the Israeli government and will make other stops in the region, according to the State Department. Furthermore, Blinken held a call with Israel's President and emphasised the need to take precautions to minimise the harm to civilians.
• US Pentagon said an additional 300 US troops will be heading to the Middle East but will not be going to Israel.
• Chilean President Boric said Chile recalled its ambassador to Israel for consultations given Israel's 'violations of international humanitarian law' in the Gaza Strip, according to Reuters.
• Iranian Defense Minister says they will unveil a new long-range defense system in a couple of weeks, via IranNuances.
• The Rafah border crossing has opened from Gaza into Egypt; for humanitarian purposes to allow the transit of foreign nationals and those with severe injuries.

CRYPTO

• Bitcoin is a touch softer on the session perhaps given some modest USD strength but generally BTC is fairly contained and exhibiting similar price action to the broader market which is moving into a pre-FOMC/Quarterly Refunding tone.

APAC TRADE

• APAC stocks traded predominantly higher albeit with upside capped for some indices heading into the FOMC announcement and as the region digested another deluge of data releases including disappointing Chinese Caixin Manufacturing PMI which printed its first contraction in three months.
• ASX 200 was positive as outperformance in the mining and real estate sectors picked up the slack from defensives and helped shrug off the surprise contraction in building approvals data.
• Nikkei 225 was the biggest gainer amid reports that Japan’s new economic package is to total around JPY 17tln and after recent currency weakness in the aftermath of the BoJ’s modest YCC tweak.
• Hang Seng and Shanghai Comp were cautious as Chinese Caixin Manufacturing PMI data followed suit to the recent deterioration seen in the official release and amid some disappointment after the PBoC’s open market operations resulted in a net daily drain despite prior reports that the central bank is likely to add further liquidity.

NOTABLE ASIA-PAC HEADLINES

• White House said US President Biden is aiming to have a constructive conversation with Chinese President Xi in San Francisco in November.
• Japan's government is considering spending over JPY 17tln for a package of measures to ease the pain from rising inflation and will compile a supplementary budget for the current fiscal year of around JPY 13.1tln to fund part of the package, according to a draft cited by Reuters.
• Total size of Japan's economic package is expected to be around JPY 37.4tln, according to Jiji News.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Oct) 49.5 vs. Exp. 50.8 (Prev. 50.6)
• Australian Building Approvals (Sep) -4.6% vs. Exp. 1.3% (Prev. 7.0%, Rev. 8.1%)
• Australian Manufacturing PMI (Oct F) 48.2 (Prelim. 48.0)
• Australian AIG Manufacturing Index (Oct) -20.9 (Prev. -12.8); Construction Index (Oct) 18.5 (Prev. 7.1)
• New Zealand HLFS Job Growth QQ (Q3) -0.2% vs. Exp. 0.4% (Prev. 1.0%); Unemployment Rate (Q3) 3.9% vs. Exp. 3.9% (Prev. 3.6%)
• New Zealand HLFS Participation Rate (Q3) 72.0% vs. Exp. 72.5% (Prev. 72.4%)
• New Zealand Labour Cost Index QQ (Q3) 0.8% vs. Exp. 1.0% (Prev. 1.1%); YY (Q3) 4.1% vs. Exp. 4.2% (Prev. 4.3%)