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In a rare joint  op-ed  article in Caixin magazine, French Ambassador Jean-Maurice Ripert and German Ambassador Clemens von Goetze  urged China to do more to open its markets. They said "French and German companies are looking forward to China demonstrating that it will not waver and will deepen its opening-up and reform policy in order to create a level playing field for foreign businesses in China." And, "European businesses should have the same opportunities in China as Chinese industries enjoy in Europe."

And, China should "go beyond tariff adjustments" but address the issues through "concrete and systematic measures". For example:

• China should enhance its reputation as an open and reliable export destination for producers, in additional to reducing import taxes.
• China should abolish joint venture requirements across all sectors to stimulate foreign direct investment
• China should ensure implementation of cybersecurity legislation follows the principle of proportionality but not lead to market access barriers or discriminatory practices
• China should  replace provisions in technology import-export and joint venture regulations that restrict foreign ownership and freedom to exert IP rights
• China should continue with reform of state-owned enterprises regarding their preferential treatment they received and competitive disadvantages for private companies.

The article also pledged that "together with China, the European Union is firmly committed to a strong multilateral trading system."

Full article here.

Italian Prime Minister Giuseppe Conte warned in a newspaper interview that it's "unreasonable and profoundly unfair" to blame the current government for weak economic data. He referred to GDP data released on Tuesday which showed 0% growth in Q3. Also, Conte emphasized that budget talk with EU will not be an "exchange of concession". He insist on sticking to the deficit target of 2.4% of GDP in 2019 despite EU rejection.

Indeed, Conte also said earlier this week that the weak economic performance is the reason for the "expansionary budget". This was echoed by Deputy Prime Minister Matto Salvini who said "the slowing GDP is another reason to go full steam ahead with the budget."

Daily Pivots: (S1) 143.52; (P) 144.33; (R1) 145.05; More...

GBP/JPY's rebound from 142.76 is still in progress and focus is on 145.81 support turned resistance. Firm break there will indicate completion of the fall from 149.70. Further rise should be seen back to 149.70. On the downside, break of 142.76 will extend the fall from 149.70 for retesting 139.88 low instead.

In the bigger picture, as long as 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) holds, up trend from 122.36 (2016 low) would still extend beyond 156.69 high. However, decisive break of 139.29/47 will suggest that such up trend is completed and turn outlook bearish. In that case, next target is 61.8% retracement at 135.43.

USDJPY is losing some ground after the sharp jump in the previous days towards a three-week high of 113.40, reached on Wednesday. It’s noteworthy that the price successfully surpassed the 20- and 40-simple moving averages (SMAs) but created a bearish crossover in the daily timeframe, indicating a possible negative retracement.

Zooming into the technical indicators, the RSI indicator is moving slightly to the downside in the positive territory, while the MACD oscillator climbed marginally above the trigger and zero line, suggesting weak momentum in the near term.

In case of a continuation of the downward correction mode, the pair could challenge the bearish crossover within the SMAs around 112.50, before heading lower towards the 23.6% Fibonacci retracement level of the upleg from 104.60 to 114.55 of 112.20. Strong support could be found on the upside of the diagonal line marginally below the latter level. A drop below this barrier could shift the positive bias to a more neutral one, breaking the ascending line and touching the 111.40 support level.

However, if the price rebounds on the SMAs and then surpasses the 113.40 key level, this could open the door for the 11-month high of 114.55 resistance hurdle, achieved on October 3. Above this obstacle the pair could hit 115.50, identified by the high on March 5.

Overall, USDJPY maintains a bullish outlook as it remains above the rising trend line over the last seven months, during which it has been creating higher highs and higher lows.

If the GBP/USD is indeed in awave4, then price will bounce at the Fibonacci retracement levels and continue for a lower low. vs 1. A bullish break above the 50% Fibonacci level makes a wave 4 pattern unlikely and increases the chances of a bullish ABC pattern (red) rather than a 123 (purple).

The GBP/USD seems to be completing an ABC correction (green) within wave 4 (blue). The Fibonacci levels and the support trend lines are key.

Dow futures ticker symbol: YM short-term Elliott wave view suggests that a bounce to 25845 high ended cycle degree wave “b”. Down from there, cycle degree wave “c” unfolded as ending diagonal structure i.e lesser degree cycles within primary wave ((1)), ((3)) & ((5)) also unfolded in 3 swings structure. Where primary wave ((1)) ended at 25220 low as zigzag structure. Up from there, a bounce to 25594 high ended primary wave ((2)). Below from there, primary wave ((3)) ended at 24515 low in another 3 swings.

Above from there, a bounce to 25075 high ended primary wave ((4)) bounce. Then finally a decline to 24089 low ended primary wave ((5)), which also completed cycle degree wave “c” & super cycle wave (IV) pullback. Up from there, the index made a strong bounce higher & broke the pivot from 25845 thus suggests that the next leg higher in super cycle degree wave (V) could have started. Near-term, while dips remain above 24089 low the index is expected to resume the upside. But a break above 26962 10/03/2018 peak remains to be seen for final conviction of this bullish view & to avoid double correction lower in super cycle degree wave (IV) pullback. We don’t like selling it.

Dow 1 Hour Elliott Wave Chart

Global equity markets ended a scary October on a slightly brighter note following a rebound on Wall Street during the final two trading days of the month. The Dow Jones industrial average rallied 933 points from Monday’s lows, the S&P 500 bounced more than 4%, and similarly the heavy Techweighted Nasdaq composite bounced 5.5% after a 14.4% decline.

Robust corporate earnings and bargain hunting for undervalued stocks led the pullback, but the fundamental story hasn’t changed a lot yet. U.S. interest rates remain on the rise, trade tensions are not over, and global economic growth still looks weak. This will create a tricky environment for investors on whether to focus on the macro outlook or valuations which are becoming much more reasonable than a year ago. What investors may be certain about is for volatility to remain elevated especially with the U.S. midterm elections is just around the corner.

Despite the rally in equities, the Dollar rose to its strongest level in 16 months, reaching a high of 97.20 on Wednesday. The Greenback was supported by a larger than expected ADP employment report showing the U.S. private sector payrolls increased by 227,000 in October, the highestin eight months. However, the Greenback couldn’t hold its gains today as many major currencies reached significant support levels, particularly the Euro. For the Dollar to keep rallying it requires Friday’s nonfarm payrolls report to beat economists’ expectations, especially on wages. If wage growth accelerates further the Federal Reserve may have no excuse to turn less hawkish, thus providing further push to U.S. Treasury yields.

The Pound rallied sharply today on reports that Theresa May had struck a deal with Brussels for British financial services companies to continue operating in European markets after Brexit. However, with the U.K. remaining far from striking an agreement to resolve the Irish border issue, the currency gains may quickly evaporate. Traders’ attention will turn to the Bank of England monetary policy decision today which is expected to keep interest rates on hold. While Marc Caney’s speech and the Quarterly Inflation Report may move the Pound slightly, it’s still all about the Brexit deal that will decide the fate of the currency.

Daily Pivots: (S1) 127.46; (P) 128.01; (R1) 128.36; More....

At this point, we're still favoring the case of short term bottoming at 126.63. Intraday bias remains on the upside for 130.20 resistance first. Break will pave the way for 133.12 high. On the downside, below 127.24 will turn bias to the downside. Break of 126.63 will extend the fall from 133.12 to retest 124.89 low.

In the bigger picture, as long as 124.08 key resistance turn supported holds, larger up trend from 109.03 (2016 low) is still in progress. Firm break of 137.49 structural resistance will target 141.04/149.76 resistance zone next. However, decisive break of 124.08 will argue that such rise from 109.03 has completed and turn outlook bearish. In that case, deeper fall would be seen to 61.8% retracement of 109.03 to 137.49 at 119.90.

General Trend:

• Nikkei 225 underperforms
• Japanese telecoms decline after major telecoms indicate they will cut mobile pricing (under pressure from Govt)
• Docomo drops over 9% after confirming intention to cut prices for its phone plans
• Nomura declines by over 5%, reported H1 net loss
• Panasonic down after Q2 Op profit missed ests
• BHP rises over 4%, to return $10.4B to shareholders
• Australia’s Woolworth’s rises after Q1 sales rise y/y
• ASM Pacific notes in the short-term, trade dispute is casting uncertainties in the market
• British Pound (GBP) rises over 0.5%, PM May said to reach Brexit deal with the EU related to financial services
• Commodity currencies gain amid stimulus speculation related to China, NZD/USD +0.9%
• China Oct business outlook for output hits 11-month low amid trade concerns (Caixin PMI Manufacturing Survey)
• China to maintain the stamp duty on securities at 0.1%
• BoJ plans to purchase 1-3 and 3-5 yr JGBs four times per month (vs 5 times prior)
• Australian housing prices decline for the 13th straight month (CoreLogic)
• South Korea President Moon seeks a larger role for fiscal policy
• There is press speculation that South Korea’s Finance Minister could be replaced
• Japanese companies expected to report earnings include Suzuki and KDDI.
• Apple expected to report Q4 earnings after Thursday’s US close

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (NZ) New Zealand Oct ANZ Job Advertisements M/M: +1.4 v -0.2% prior
• NAB.AU Reports FY18 (A$) Cash profit 5.70B v 6.64B y/y; Net Op 17.9B v 17.9B y/y
• BHP.AU Plans to return $10.4B to shareholders through $5.2B off market buyback and $10.2B special dividend
• (AU) Australia government has granted 7 new offshore petroleum exploration permits
• (AU) Australia Oct CoreLogic House Prices m/m: -0.6% v -0.6% prior (13th consecutive month of decline)
• (AU) Australia Q3 Exports Price Index q/q: 3.7% v 2.2%e; Import Price Index q/q: 1.9% v 1.0%e
• (NZ) New Zealand sells NZ$100M v NZ$100M indicated in 2.5% 2040 bonds, avg yield 1.6952%, bid to cover 2.67x
• (AU) AustralianSuper's Ridout: The economy shoud get stronger before it gets weaker; Will be hard for Australia to avoid next global downturn

Japan

• Nikkei 225 opened -0.1%
• (JP) Japan Investors Weekly Net Buying of Foreign Bonds: -¥1.08T v +¥27.2B prior; Foreign Buying of Japan Stocks: -¥349.0T v +¥223.7B prior
• (JP) Bank of Japan (BOJ) announces Bond purchases for month of Nov (3rd straight month of tweaks) (after the close yesterday)
• NTT Docomo, [-11%], 9437.JP Reports H1 Net ¥407.1B v ¥392.1B y/y, Op ¥610.5B v ¥559.9B, Rev ¥2.4T v ¥2.30T y/y; Raises Q2 dividend, to buyback 600B, to reduce plan prices
• (JP) Japan Oct Final PMI Manufacturing: 52.9 v 53.1 prelim
• (JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.10% 10-yr JGBs, avg yield 0.135% v 0.141% prior, bid to cover 4.33x v 4.21x prior

Korea

• Kospi opened +0.3%
• (KR) South Korea said to be planning to replace Fin Min Kim and chief of policy Cheong Wa Dae; may not happen until early 2019 - Korean press
• (KR) US denies talk of sanctions on South Korea banks - Korean press
• (KR) SOUTH KOREA OCT CPI M/M: -0.2% V -0.2%E; Y/Y: 2.0% V 2.0%E
• (KR) South Korea Oct Trade Balance: $6.6B v $7.4Be
• (KR) South Korea Oct PMI Manufacturing: 51.0 v 51.3 prior
• (KR) South Korea President Moon: Expect 2% GDP level growth for awhile; markets volatility rises, thorough monitoring needed; time that fiscal policy plays more of a role - speaking to parliament

China/Hong Kong

• Hang Seng opened +1%, Shanghai Composite +0.6%
• (CN) CHINA OCT CAIXIN PMI MANUFACTURING: 50.1 V 50.0E
• (CN) China Politburo: China will take timelier measures to address increasing challenges facing the economy; external environment has changed profoundly - Caixing
• (CN) China PBoC Open Market Operation (OMO): skips v skips prior in 7-day reverse repos prior: Net: CNY100B drain v CNY150B injection prior (5th consecutive skip)
• (CN) China PBOC Vice Gov: Will step up monetary policy support for rural areas; to continue to maintain low RRR for rural financial institutions
• (CN) Some listed companies in China said to be borrowing from shareholders for liquidity - Securities Times
• (CN) China PBOC sets Yuan Midpoint Rate at 6.9670 v 6.9646 prior
• (HK) Hong Kong SFC CEO: To issue new rules for cryptocurrency exchanges later today
• (CN) China seeks feedback on draft stamp duty law related to CDRs
• (CN) China PBoc Deputy Gov Pan: Reiterates China capital markets to be more open to foreigners; China stocks at low level
• (CN) Moody's Report: China plan to cut the personal income tax is Credit Negative for regional and local governments
• 3308.HK CEO: May consider take private bid on share decline, no time line for any potential deal
• (HK) Macau Oct Gaming Revenue MOP27.3B v MOP22.0B m/m, y/y: +2.6% v 3.5%e

North America

• US equity markets ended higher: Dow +1%, S&P500 +1.1%, Nasdaq +2.0%, Russell 2000 +0.3%
• (BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
• (IE) Ireland Foreign Min Coveney: it's possible to reach Brexit deal in Nov; its up to the UK side in particular to intensify negotiations
• (US) President Trump: There is sufficient supply of petroleum and related products from countries other than Iran to permit a significant reduction in purchases from Iran
• PPC Reports Q3 $0.12 adj v $0.93 y/y, Rev $2.70B v $2.8B y/y
• ALL Reports Q3 $1.93 v $2.17e, Rev $10.5B v $8.56Be; approves new $3B share repurchase (9% of market cap)
• ESRX Reports Q3 $2.43 v $2.42e, Rev $25.6B v $25.0Be; positive 2019 outlook

Europe

• (UK) Brexit Dept spokesperson: there is no fixed date for Brexit talks with the EU to conclude
• (UK) UK PM May said to reach Brexit deal with the EU related to financial services - UK Press; GBP rose 0.2% on the news
• Levels as of 01:30ET
• Hang Seng +2.0%; Shanghai Composite +1.1%; Kospi +0.3%; Nikkei225 -1.0%; ASX 200 +0.2%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 -0.4%
• EUR 1.1302-1.1416; JPY 112.72-113.05 ; AUD 0.7072-0.7134;NZD 0.6514-0.6584
• Dec Gold +0.4% at $1,219/oz; Dec Crude Oil -0.6% at $64.91/brl; Dec Copper -0.2% at $2.66/lb

Market movers today

In the UK, we do not expect any policy changes at today's Bank of England (BoE) monetary policy meeting. However, attention will be on the accompanying Inflation Report, the minutes and Governor Mark Carney's press conference.

In Sweden, PMI manufacturing numbers for October are due. The index stood at 55.2 last month and we expect the number to fall below that, especially in light of falling export orders and last week's decline in both Germany and euro Area PMIs.

In Norway, we will also get PMI manufacturing numbers , where contrary to Sweden, we expect a small increase to 56.0 from 55.7 last month due to positive signals from other leading manufacturing indicators and a positive outlook on ICE Brent.

Finally, in the US, ISM manufacturing data is due. We flag that this number has been too high compared to reality for the past couple of years. Therefore, focus should be on Markit PMI, which rose to 55.9 in October compared to 55.5 in September, to gauge US growth.

Selected market news

Stock markets ended a miserable month firmly in the black. Stoxx Europe 600 gained 1.7% and the S&P 500 closed up 1.1%, with tech stocks in the vanguard. Asian equity markets followed suit, Treasury yields edged up slightly and the dollar traded flat.

Positive Brexit news. Overnight, UK Brexit Secretary Dominic Raab posted a letter, stating that UK banks will continue to have access to EU markets post Brexit and that a deal may be reached as soon as 21 November.

Eurozone core inflation rose back to 1.08% in October , driven by higher service price inflation. Headline inflation rose to 2.21% from 2.07% in September, much of it again driven by higher energy price inflation. On balance, yesterday's stronger core inflation print is encouraging news for the ECB after recent inflation and growth downside surprises, although underlying inflation pressures still fail to show Draghi's 'vigorous' pickup despite accelerating wages. Therefore, we continue to hold the view that the ECB s core inflation forecast especially for 2019 (1.5%) and 2020 (1.8%) remains on the optimistic side that and downward revisions for 2018 are in store.

China's leadership pledged to act after China's economy exhibited further signs of weakness as the official manufacturing PMI fell to its lowest level in two years. See the article in Xinhua . The official manufacturing PMI dropped to 50.2 (consensus: 50.6) in October from 50.8 in September. Especially new export orders were very weak highlighting the negative effect of the trade war with the US. We look for more weakness in coming quarters before a rebound next year when the stimulus kicks in more, and we expect to see a trade deal at some point in 2019.

US ADP came in strong at 227,000 jobs. However, the historical relationship between ADP and non-farm payrolls has deteriorated in recent years.