• AUD/USD slid following softer than expected Australian Q3 CPI in which all components of the release missed estimates
• Asian equities were mostly higher in what was once again a relatively quiet session overnight ahead of key risk events today
• Looking ahead, highlights include German IFO, UK GDP, US Durables, New Home Sales, BoC, DoEs, German 10yr and US 5yr Auction

ASIA

Asia-Pac stock markets were mostly higher after another record setting day for the DJIA which was underpinned by industrials after strong Caterpillar results and with outperformance in financials on rising yields amid prospects of a hawkish Fed Chair. However, gains in the Asia-Pac region were minimal for want of a catalyst, with ASX 200 (+0.1%) and Nikkei 225 (-0.4%) mixed. Hang Seng (+0.6%) and Shanghai Comp. (+0.1%) traded the green amid continued liquidity efforts by the PBoC, but with upside contained in the mainland as China remained focused on stability and earnings, as well as the unveiling of the nation’s politburo standing committee. Finally, 10yr JGBs were flat with demand subdued after the downside seen in USTs and as the win streak in Japanese stocks remained intact, although losses were also stemmed amid the BoJ’s Rinban operation for JPY 880bln in JGBs across the curve.

PBoC injected CNY 100bln via 7-day reverse repos and CNY 60bln via 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6322 (Prev. 6.6268)

President Xi Jinping was renamed as Communist Party General Secretary as expected. Furthermore, China kept the Politburo Standing Committee to 7 members with only President Xi and Premier Li retaining their positions in the highest body of the central committee, while there was also no clear successor for President Xi Jinping. (Newswires)

EUROPE/UK

ECB's Weidmann may agree to extend and reduce ECB's QE programme, according to reports. Adds that a set end-date would not be required. (Handelsblatt)

The ECB are divided over the wisdom of declaring an end to QE with hawks admitting that the door cannot be locked when it comes to QE but it must be clear that the door is nowhere near as open as it once was. (FT)

Spanish Senate summoned the Catalan President for 0900BST this Friday. (Newswires)

Portugal Parliament rejected motion of no confidence in government over fires, according to lawmakers. (Newswires)

FX

AUD/USD slid following softer than expected Australian Q3 CPI in which all components of the release missed estimates and stayed below the RBA’s 2%-3% target range. This also saw key levels taken out in related crosses as EUR/AUD broke above 1.5200, while AUD/NZD and AUD/JPY briefly gave up the 1.1200 and 88.00 handles respectively. Elsewhere, the rest of FX was very quiet amid a scarce calendar, although the USD-index held onto the prior session’s gains and tested the 94.00 level to the upside after reports that a straw poll conducted by Trump among GOP senators was said to have put hawkish Fed Chair candidate Taylor in the lead.

Australian CPI (Q3) Q/Q 0.6% vs. Exp. 0.8% (Prev. 0.2%); (Q3) Y/Y 1.8% vs. Exp. 2.0% (Prev. 1.9%). (Newswires)

Australian Trimmed Mean CPI (Q3) Q/Q 0.4% vs. Exp. 0.5% (Prev. 0.5%); (Q3) Y/Y 1.8% vs. Exp. 2.0% (Prev. 1.8%)

COMMODITIES

Commodities trade was lacklustre as gold marginally extended on losses, due to a firmer greenback and amid prospects of a hawkish Fed Chair. Elsewhere, copper and oil futures were flat in which WTI crude held on to the majority of the prior day’s gains and above the USD 52/bbl level, while the API inventory release failed to trigger a sustained reaction as the surprise build in headline crude inventories was counterbalanced by significant drawdowns to gasoline and distillate stockpiles.

US API Weekly Crude Inventories (Oct 20) 0.519M (Prev. -7.130M). (Newswires)

US

The risk-on tone saw Treasuries bear-steepening – seemingly taking its cue from Europe, where German yields hit a two-week high after decent business and bank lending surveys. There was also quite a bit of attention on 10-year yields breaching 2.40% to the upside, with rate differentials between Japan and the US continuing to support USDJPY.  Yields were resilient amid the souring risk tone late in the day, but were once again supported by news that GOP Senators preferred John Taylor as Fed chair. US T-Note Futures settled 6 ticks lower at 124-23+.

US President Trump reportedly asked Senate GOP for show of hands poll on Fed chair according to Senator Cornyn who declined to say who got the most votes, while US Senator Scott said Taylor appeared to win the Senate GOP straw poll. (Newswires)

GOP Senate Leader Mitch McConnell said he is hopeful the budget resolution will be passed on Wednesday. (Newswires)

Tspanee GOP Senators were said to not back the tax plan, according to reports. (CNBC)

US President Trump said if NAFTA talks do not work out we'll have to do a new agreement. (Newswires)