USD retraces some of its recent gains as markets dial back Fed rate hike bets


– The main theme is a weak USD amid fears of a global recession, triggered yesterday by weak US earnings and lackluster consumer confidence. Markets are betting on a slower path for Fed rate hikes; The Euro’s gains allow it to test against the USD for the first time in 5 weeks.

– UK Prime Minister Sunak has written about delaying the Government’s financial plan, for Monday, in the hope of considering all alternative options.

– Yesterday It has been reported that Russia has informed the United States about the plans to start the Grom annual exercises; The exercises may begin today, October 26, to test nuclear-capable missiles; Russia’s Grom exercise usually takes place at the end of October every year and involves submarines, warplanes and ballistic missiles.

– European focus on tomorrow’s ECB rate decision, consensus for a 75bps hike.

– The company’s earnings season is headed for a higher peak.

– Asia closed higher with NSZ50 by +1.3%. EU indices are mostly higher in the range of +0.1-0.6%. US futures range from 0.0% to -1.3%. Gold +1.2%, DXY -0.8%; Commodities: Brent +0.2%, WTI +0.6%, UK Nat Gas +1.5%; Crypto: BTC + 7.3%, ETH + 15.6%.


– Australia’s Q3 CPI data recorded its highest annual pace since 1990 (Q/Q: 1.8% v 1.6%e; Y/Y: 7.3% v 7.1%e).

– Australian Treasurer Chalmers said he did not expect the CPI forecast to change significantly. Inflation is expected to peak at the end of the year.

– Australian debt agency AOFM) cut 2022/23 bond issuance from A$125B to ~A$95.0B (**Note: Announcement follows final budget release).

– Japan Top FX Diplomat Kanda: Trade with the US daily, including FX; Talking to G7 members every day including FX; US Treasury Secretary Yellen gives credit to Japan for not revealing the intervention.

Ukraine conflict

– Russia said that it has informed the US about the plans to start the annual Grom exercises; The exercises may include tests of nuclear-capable missiles starting on Wednesday, October 26.

– Defense of Ukraine Min Reznikov: Really optimistic that it is possible to supply Abrams tanks in the future; Of course, fighter jets like the F-16, F-15 or Gripen would also be possible; The first two NASAMS air defense systems are now in Ukraine.


– UK Prime Minister Sunak said he is considering postponing the financial statement scheduled for October 31 until next month to allow more time to explore options.

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– Crude Oil Weekly API: +4.5M v -1.3M previously.

Speakers / fixed income / FX / assets / erratum


Index [Stoxx600 +0.17% at 408.30, FTSE -0.24% at 6,996.62, DAX +0.61% at 13,133.22, CAC-40 +0.28% at 6,268.24, IBEX-35 -0.45% at 7,760.08, FTSE MIB -0.05% at 22,279.00, SMI +0.18% at 10,792.20, S&P 500 Futures -0.53%].

Market Focus / Key Themes: European indices open mixed and fail to take direction in the early part of the session; Austria closed for holiday; Up-and-coming sectors include materials and telecom; Downtrending sectors include consumer discretionary and technology; The technology sector weighed in yesterday on the disappointing results of Microsoft and Google; Della Valle’s plea for Tod’s defeat; Inditex releases its Russian assets; Earnings expected in the upcoming meeting of the United States include CME Group, Bristol Myers Squibb, Boeing and Meta.


Consumer Choice: Sodexo [SW.FR] +2% (profit), Heineken [HEIA.NL] -2.5% (trade renewal).

Finance: Deutsche Bank [DBK.DE] -1% (profit), UniCredit [UCG.IT] +3% (profit), Barclays [BARC.UK] -1% (profit), Santander [SAN.ES] -3.5% (profit), As always Chartered [STAN.UK] -1% (profit).

Industry: Mercedes-Benz [MBG.DE] -1% (profit; leaving Russia), BASF [BAS.DE] +1.5% (profit), Skanska [SKAB.SE] +4.5% (profit).

Telecom: WPP [WPP.UK] -4% (profit).


British Prime Minister (Fin Min) Hunt said he met with BOE Gov Bailey on Tuesday (October 25). Hunt reiterated his commitment to BOE independence and inflation targeting. Both men said they agreed to work closely to restore confidence and stability to the UK economy.

British Foreign Office to Intelligence indicated that the Prime Minister wanted to take time to look at the details of the financial statement.

Spain Econ Min Calvino stated that the country will not go into recession.

Central Bank of Sweden (Riksbank) Dep Gov Ohlsson stated that inflation expectations on the five-year horizon look good.

Vice President of the Czech Central Bank Zamrazilova stated that the interest rates were high enough.

Japan Fin Min Suzuk reiterated the position that he was watching the FX markets carefully.

Japanese Prime Minister Sec Matsuno stated that it is important to maintain sufficient FX reserves to support the currency in the event of acute and excessive market volatility.

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Chinese President Xi It is said that he asked the party to fulfill the goals defined in the party congress.

Currencies / fixed income

– The USD edged higher against a range of peers after more signs of economic weakness in the US fueled speculation about a less dovish Fed. Traders still expect a 75 bps rate hike from the Fed at the November meeting, but are facing strong calls for a 50 bps rate hike in December. .

– EUR/USD at 1-month highs ahead of Thursday’s decision by the ECB that returns the pair above equilibrium.

– GBP/USD is at a 6-week high and heading towards the 1.16 area as markets now consider another re-evaluation of the UK outlook. Prime Minister Sunak promised to restore stability to the economy.

– USD/JPY below the 147 area on the general weakness of the USD in the session. Japan Fin Min Suzuki reiterated its position that it was closely watching the FX markets and again declined to comment on whether the MOF had ordered FX. attack

Economic data

– (SE) Trade Balance of Septa Sweden (SEK): -1.8B v -18.0B previously (3rd straight deficit).

(FR) France Consumer Confidence of Oct: 82 v 77e.

– (ES) Spain August Total Mortgage Loans Y/Y: 12.7% v 18.8% previously; Mortgage Approvals Y/Y: 10.5% v 2.3% previously.

– (ES) Spain Aug House Sales Y/Y: 14.9% v 8.0% previously.

– (EU) Eurozone Sept M3 Money Supply Y/Y: 6.3% v 6.0%e.

– (CH) Swiss Oct Expectations Survey: -53.1 v -69.2 previously.

Issuance of fixed income

– (THREE) Sweden 12.5B kroner sold vs. 12.5B kroner indicated in 3 months invoices; Average yield: 1.4167% v 1.4142% previously; Bid-to-cover: 1.85x 2.90x ex.

– (I DON’T) Norway NOK2.0B sold against NOK2.0B in 1.25% Sept 2031 bonds; Average yield: 3.70% v 1.82% previously; bid-to-cover: 2.05x vs 3.59x ago.

– (UK) DMO £3.5bn sold in 0.50% January 2029 Gilts; Average yield: 3,763% v 1,955% previously; bid-to-cover: 1.96x 2.65x previously; Next: 0.8bps v 0.5bps previous.

– (IT) Italian Credit Agency (Tesoro) sold €2.5bn vs €2.0-2.5bn in 1.75% May 2024 BTP Bonds; Average yield: 2.88% v 3.27% previously; bid-to-cover: 1.60x 1.70x ago.

– (IT) Italian Credit Agency (Tesoro) for a total of €1.5 billion vs. €1.0-1.5 billion in 1/L 2026 and 2033 Bonds (BTPei).

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Looking ahead

– (ZA) South Africa’s medium budget presentation.

– 05:25 (EU) Daily ECB Statistics.

– 05:30 (GR) The Greek Debt Agency (PDMA) to sell €625.0 million in 26-week bills.

– 05:30 (PT) Portugal Credit Agency (IGCP) exchange auction.

– 05:30 (EU) ECB monthly distribution in 3-month LTRO tender.

– 05:30 (ZA) South Africa announces details of the next auction (held on Tuesdays).

– 06:00 (FR) France Q3 Total Workers: 2,945 M previously.

– 06:00 (IL) Israel September Trade Balance: Ne est v -$3.5B ex.

– 06:00 (RU) OFZ Russian Bond Auction (if available).

– 06:45 (USA) Daily Libor Fixing.

– 07:00 (US) MBA Mortgage Applications w/e October 21st: No est-4.5% upfront.

– 07:00 (BR) Brazil Oct FGV Manufacturing Costs M/M: 0.1% this 0.1% previously.

– 08:00 (ZA) South African Treasury mid-budget.

– 08:00 (UK) Baltic Dry Bulk Newspaper.

– 08:30 (US) Previous Trade Balance for September: -$87.5B v -$87.3B previously.

– 08:30 (US) First Sept Composites M/M: 1.0% this 1.3% previously; Retail Inventories M/M: 1.2% this 1.4% previously.

– 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to increase Interest Rate by 75bps from 4.00%.

– 10:00 (US) September New Home Sales: 580K v 685K previously.

– 10:30 (US) Weekly DOE Oil Inventories.

– 11:00 (CA) Bank of Canada (BOC) Gov Macklem press conference on the post rate decision.

– 11:30 a.m. (US) 2-Year Treasury FRN sells.

– 12:00 (RU) Russia Sept Sept Industrial Production Y/Y: -1.2% this -0.1% previously.

– 1:00 PM (US) Treasury Sells 5-Year Notes.

– 13:30 (BR) Brazil Last Sept. Total Federal Debt (BRL): No 5,781T previously.

– CO (CO) Colombia Septa Retail Trust: No est v 26.9 ago; Industry Trust: Not est v 7.1 before.

– 17:30 (BR) Central Bank of Brazil (BCB) Interest Rate Decision: The Selic Target Rate is expected to remain unchanged at 13.75%.

– 19:00 (KR) South Korea Q3 GDP Growth (1st reading) Q/Q: 0.3% vs 0.7% previously; Y/Y: 3.0% this 2.9% previously.

– 20:30 (AU) Australia Q3 Import Price Index Q/Q: 0.8% vs 4.3% previously; Export Price Index Q/Q: -6.5% vs. 10.1% previously.

– 21:30 (CN) China Sept YTD Industrial Y/Y: Ne est v -2.1% ago.

– 23:30 (JP) Japan selling 3-month bills.

– 23:35 (JP) Japan Sells 2-Year Bonds.


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