Sample Category Title

Daily Pivots: (S1) 1.3370; (P) 1.3413; (R1) 1.3483; More....

No change in GBP/USD's outlook. Correction from 1.3651 could extend. But we'd continue to expect strong support from 38.2% retracement of 1.2773 to 1.3651 at 1.3316 to contain downside and bring rally resumption. Break of 1.3651 will turn bias back to the upside for 1.3835 support turned resistance next. Break there will target 55 month EMA (now at 1.4405).

In the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bull

Daily Pivots: (S1) 111.99; (P) 112.59; (R1) 112.94; More...

Outlook is unchanged in USD/JPY even though it continues to lose upside momentum. But still, with 111.46 minor support intact, further rise is expected. Sustained break of medium term channel resistance will argue that correction from 118.65 is already completed with three waves down to 107.31. Break of 114.49 will confirm this bullish case and target a test on 118.65 next. On the downside, however, break of 111.46 will suggest rejection from the channel resistance and turn bias back to the downside.

In the bigger picture, rise from 98.97 (2016 low) is seen as the second leg of the corrective pattern from 125.85 (2015 high). It's unclear whether this this second leg has completed at 118.65 or not. But medium term outlook will be mildly bearish as long as 114.49 resistance holds. And, there is prospect of breaking 98.97 ahead. Meanwhile, break of 114.49 will bring retest of 125.85 high. But even in that case, we don't expect a break there on first attempt.

Personal income rose 0.2% in August, in line with expectations, but from a downwardly revised 0.3% increase in July. Controlling for inflation and taxes, real disposable personal income edged down 0.1% in the month.

Personal consumption rose by 0.1% in nominal terms (in line with the consensus). In real terms spending fell 0.1%. By component, real spending on durable goods saw the biggest decline, falling 1.0%. Nondurable goods also fell 0.2%, while services edged up 0.1%.

The PCE price deflator rose 0.2% month-on-month (below consensus for 0.3%), while the core PCE deflator ticked up just 0.1%. Year-on-year, PCE inflation was up 1.4%, while the core rate decelerated to 1.3%.

Key Implications

The consumer appears to have lost some momentum after a strong second quarter. However, we have to take this report with a grain of salt given the distortionary impact of Hurricane Harvey. The negative impact could continue through September, before spending gets a lift as rebuilding begins. So, it will be a few months before we get a clear read on the state of household spending.

Having said that the broader outlook for U.S. consumers remains positive. With few signs of a slowdown in the pace of job growth and increasing evidence of accelerating wage growth, household spending should continue to support demand growth.

The continued deceleration in inflation (as measured by the price deflator for personal consumption) is notable. Core pries in particular did not show any of the acceleration recorded in the CPI measure in August. While Chair Yellen noted this week that the Fed does not have to see inflation reach 2.0% before raising interest rates, she was also at a loss to fully explain its recent weakness. Signs that inflation is deteriorating further casts some doubt on the Fed's plans for a December hike.

Daily Pivots: (S1) 0.9679; (P) 0.9718; (R1) 0.9740; More....

USD/CHF continues to gyrate lower today but overall outlook is unchanged. On the upside, decisive break of 0.9772 key resistance will suggest that whole down trend form 1.0342 has completed. In that case, near term outlook will be turned bullish for 0.9860/1.0099 resistance zone. Nonetheless, with 0.9772 resistance intact, outlook remains bearish. Below 0.9587 minor support will turn bias back to the downside for retesting 0.9420 low.

In the bigger picture, focus remains on whether 0.9443 key support (2016 low) could be taken out firmly as down trend from 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Dollar weakens pare gains as markets are heading to weekly close. In particular, Swiss Franc has overtaken Dollar's place as the strongest one for the week. Economic data from US are providing little boost for the greenback. Instead, tamer than expected inflation is weighing mildly on Dollar. And traders should be taking profit at quarter end, and ahead of next week's employment data. Meanwhile, some more time is needed to reassess the impact of US President Donald Trump's tax plan, before traders take a more decisive stance. US personal income rose 0.2% in August, spending rose 0.1%, in line with consensus. Headline PCE was unchanged at 1.4% yoy while core CPI slowed to 1.3% yoy. Both were below expectations. From Canada, GDP rose 0.0% in July, below expectation of 0.1% mom. IPPI rose 0.3% while RMPI rose 1.0% mom in August.

BoE Carney affirms rate hike in "relatively near term"

BoE Governor Mark Carney said in a BBC radio interview that "if the economy continues on the track that it's been on, and all indications are that it is, in the relatively near term we can expect that interest rates would increase somewhat." That is affirming to the view that BoE will hike in the next MPC meeting in November. Carney also noted that there is a "speed limit" for UK's growth. Brexit will be as immigration slows and investment in capacity being held off, the economy will not be able to grow as fast as before, without pushing up inflation. And, "if the speed limit has slowed and we're in a position where we've used up a lot of the capacity in this economy ... it means that we should be thinking about, and we are open about this, we're thinking about taking our foot a bit off the accelerator." 

Released from UK, Q2 GDP growth was finalized at 0.3% qoq, 1.5% yoy. Current account deficit widened to GBP -16.9b in Q2. Mortgage approvals dropped to 67k in August. M4 money supply rose 0.9% mom in August. Index of services rose 0.5% 3mo3m in July. Gfk consumer sentiment improved to -9 in September.

Macron won Merkel backing on EU reforms

In Eurozone, German Chancellor Angel Merkel hailed French President Emmanuel Macron's proposals on EU reforms. She said that Macron's ideas could be the foundation for an "intense" Franco-German cooperation on the future of Europe. And, Merkel noted that "as far as the proposals were concerned, there was a high level of agreement between German and France. We must still discuss the details, but I am of the firm conviction that Europe can't just stay still but must continue to develop."  Meanwhile, Macron said after an EU summit dinner that "we're all convinced Europe must move ahead faster and stronger, for more sovereignty, more unity and more democracy."

Released from Eurozone, CPI was unchanged at 1.5% yoy in September, below expectation. Core CPI dropped to 1.1% yoy in September, below expectation of 1.2%. German unemployment dropped -23k in September. German unemployment rate dropped to 5.6%, hitting the lowest level since the data series began in January 1992. German retail sales dropped -0.4% mom in August. Also from Europe, Swiss KOF leading indicate rose to 105.8 in September.

One BoJ member called for expanding stimulus

Summary of opinions in the September BoJ meeting showed that one policymaker called for expanding monetary stimulus. Meanwhile, all other nine-members were in consensus to maintain the current program. The dovish member was quoted saying that "it's necessary to stimulate demand further with additional monetary easing to achieve and stabilize inflation at the BOJ's target, given a scheduled sales tax hike in October 2019." The dissenting member was not named in the summary, but it's rather clear that the meeting statement showed newcomer Goushi Kataoka dissented last time. And Kataoka is widely known as a dove that advocates aggressive easing. The summary also showed concerns over escalating tensions between US and North Korea. One member was quoted saying that "if geopolitical risks heighten further, the BOJ must be ready to consider taking necessary policy adjustments to prevent deflationary mindset from re-emerging." 

Released from Japan, National CPI core accelerated to 0.7% yoy in August, up from 0.5% yoy. Tokyo CPI core rose to 0.5% yoy, up from 0.4% yoy. Unemployment rate was unchanged at 2.8%, household spending rose 0.6% yoy, retail sales rose 1.7% yoy, industrial production rose 2.1% mom. Housing starts dropped -20% yoy in August.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9679; (P) 0.9718; (R1) 0.9740; More....

USD/CHF continues to gyrate lower today but overall outlook is unchanged. On the upside, decisive break of 0.9772 key resistance will suggest that whole down trend form 1.0342 has completed. In that case, near term outlook will be turned bullish for 0.9860/1.0099 resistance zone. Nonetheless, with 0.9772 resistance intact, outlook remains bearish. Below 0.9587 minor support will turn bias back to the downside for retesting 0.9420 low.

In the bigger picture, focus remains on whether 0.9443 key support (2016 low) could be taken out firmly as down trend from 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Economic Indicators Update

GMT	Ccy	Events	Actual	Forecast	Previous	Revised
21:45	NZD	Building Permits M/M Aug	10.20%		-0.70%	-1.70%
23:01	GBP	GfK Consumer Confidence Sep	-9	-11	-10
23:30	JPY	Unemployment Rate Aug	2.80%	2.80%	2.80%
23:30	JPY	Household Spending Y/Y Aug	0.60%	0.90%	-0.20%
23:30	JPY	National CPI Core Y/Y Aug	0.70%	0.70%	0.50%
23:30	JPY	Tokyo CPI Core Y/Y Sep	0.50%	0.50%	0.40%
23:50	JPY	BOJ Summary of Opinions Sept.20-21 Meeting
23:50	JPY	Retail Trade Y/Y Aug	1.70%	2.40%	1.90%	1.80%
23:50	JPY	Industrial Production M/M Aug P	2.10%	1.80%	-0.80%
05:00	JPY	Housing Starts Y/Y Aug	-2.00%	0.60%	-2.30%
06:00	EUR	German Retail Sales M/M Aug	-0.40%	0.50%	-1.20%	-0.60%
07:00	CHF	KOF Leading Indicator Sep	105.8	105.5	104.1	104.2
07:55	EUR	German Unemployment Change Sep	-23K	-5K	-5K	-6K
07:55	EUR	German Unemployment Rate Sep	5.60%	5.70%	5.70%
08:30	GBP	Current Account (GBP) Q2	-23.2B	-15.8B	-16.9B
08:30	GBP	Mortgage Approvals Aug	67K	67K	69K
08:30	GBP	M4 Money Supply M/M Aug	0.90%	0.20%	0.50%
08:30	GBP	GDP Q/Q Q2 F	0.30%	0.30%	0.30%
08:30	GBP	GDP Y/Y Q2 F	1.50%	1.70%	1.70%
08:30	GBP	Index of Services 3M/3M Jul	0.50%	0.70%	0.50%
09:00	EUR	Eurozone CPI Estimate Y/Y Sep	1.50%	1.60%	1.50%
09:00	EUR	Eurozone CPI - Core Y/Y Sep A	1.10%	1.20%	1.20%
12:30	CAD	GDP M/M Jul	0.00%	0.10%	0.30%
12:30	CAD	Industrial Product Price M/M Aug	0.30%	0.50%	-1.50%	-1.60%
12:30	CAD	Raw Materials Price Index M/M Aug	1.00%	0.30%	-0.60%	-0.90%
12:30	USD	Personal Income Aug	0.20%	0.20%	0.40%	0.30%
12:30	USD	Personal Spending Aug	0.10%	0.10%	0.30%
12:30	USD	PCE Deflator M/M Aug	0.20%	0.30%	0.10%
12:30	USD	PCE Deflator Y/Y Aug	1.40%	1.50%	1.40%
12:30	USD	PCE Core M/M Aug	0.10%	0.20%	0.10%
12:30	USD	PCE Core Y/Y Aug	1.30%	1.40%	1.40%
13:45	USD	Chicago PMI Sep		58.7	58.9
14:00	USD	U. of Michigan Confidence Sep F		95.3	95.3

 

USDJPY - The pair closed lower on Thursday leaving risk on further downside on the cards. On the downside, support comes in at the 112.00 level where a break if seen will aim at the 111.50 level. A cut through here will turn focus to the 111.00 level and possibly lower towards the 110.50 level. On the upside, resistance resides at the 113.00 level. Further out, we envisage a possible move towards the 113.50 level. Further out, resistance resides at the 114.00 level with a turn above here aiming at the 114.50 level. On the whole, USDJPY now faces further bear pressure.

The British pound has recorded losses on Friday, erasing the gains which marked the Thursday session. Currently, GBP/USD is trading at 1.3389, down 0.39% on the day. On the release front, it's a busy day, with multiple releases in the both the UK and US. The UK's current account deficit widened significantly in the second quarter, climbing to GBP 23.2 billion. This was much higher than the forecast of GBP 15.8 billion. Britain's GDP expanded 0.35% in the second quarter, matching the estimate. In the US, Personal Spending XX

The negotiations between Britain and the European Union over the terms of Britain's withdrawal from the EU have been tortuous until now, with little progress to report after several rounds of negotiations. Key sticking points include the amount that Britain will pay upon leaving, whether the European High Court will have jurisdiction over EU citizens living in Britain, and the border with Ireland. British Prime Minister May has been keen to discuss trade relations with the continent, but the Europeans have insisted on first making progress on the other issues. However, the tone of the talks has improved recently, as Prime Minister May's conciliatory speech in Florence was received positively in Europe, although large gaps still remain between the two sides.

The US economy received strong marks on its report card for Q2, as Final GDP posted an impressive gain of 3.1%. This figure was revised upwards from the second estimate of 3.0% in August. The strong reading is being taken with some caution, however, as third quarter economic numbers could soften, due to the tremendous damage caused by hurricanes Harvey and Irma, which caused a slowdown in economic activity. The recent hurricanes have also impacted on the labor market, pushing unemployment numbers higher. Still, the US labor market remains strong, as underscored by unemployment rolls which have remained below the 300,000 level.

Donald Trump hasn't had any luck with his health care plan, which barely passed in the House of Representatives and appears doomed in the Senate, despite a Republican majority in both houses. The US president has now set his sights on tax reform, another key campaign platform. On Wednesday, Trump proposed a major overhaul of the US tax code, which includes reducing the corporate tax rate from 35 percent to 20 percent, as well as 25 percent tax rate for small businesses, such as partnerships. Like other Trump proposals, the tax plan was sketchy on details, including how the tax plan would be paid for. With Democrats and some Republicans wary of Trump, it's likely that tax reform will face a stiff battle in Congress.

Friday September 29: Five things the markets are talking about

This week has been one of the strongest this year for the mighty dollar against G10 currency pairs in particular. The month of September is looking to close out the first monthly gain for the ‘buck' in seven-months, backed by investors weighing up the prospects for U.S tax cuts and the possibility of another Fed hike before year-end.

Trump's proposed tax plan, currently lacks detail, leaving capital markets somewhat in the dark on what areas would be prioritized by the administration. It's this lack of context that seems to have persuaded a number of investors to consider putting Trumps ‘reflation' trade on hold.

Nevertheless, with fed fund futures odds of further tightening stateside this year hovering atop of +70%, continues to provide some underlying support for equities and sovereign yields. Investors prefer to shy away from owning gold, which remains on track to close out September as its worst month this year.

Data on tap today, stateside; the U.S Commerce Department reports personal income and spending data for August (08:30 am EDT). Investors are likely to see some distortions related to Hurricanes Harvey and Irma, while north of the border, Canada releases its GDP numbers.

1. Stocks in the black

A weaker yen (¥112.48) has managed to underpin Japanese equities in September. Overnight, the Nikkei share average ended almost flat, down -0.03%, but managed to post its biggest monthly gain this year as investors rebuild positions they were scaled back on geopolitical concerns. The broader Topix was down -0.08%, but ended the month up +3.5%.

In Hong Kong, stocks ended higher on Friday, but the benchmark index has closed out September with its first monthly loss in 2017, an indication that the market's upward momentum may be slowing amid worries over U.S monetary tightening and a China economic slowdown. The Hang Seng index rose +0.5%, but posted a -1.5% loss on the month and reduce 2017 gains to +25%. The China Enterprises Index gained +0.3%. For the month, it was up +0.2%, and for the quarter, the gauge gained +8.6%.

In China, stocks were higher, supported by hopes of further reforms to the mainland's state-owned enterprises. The blue-chip CSI300 index rose +0.4%, while the Shanghai Composite Index gained +0.3%.

Note: China now begins its weeklong National Day holiday.

In Europe, stocks remain in the black; the FTSE 100 Index has jumped +0.5% to the highest in almost two-weeks, while the DAX Index has gained +0.2%, hitting the highest in three-months with its fifth consecutive advance. Spanish stocks are underperforming leading into the weekend with expected (illegal) referendum vote in Catalonia.

U.S stocks are set to open little changed.

Indices: Stoxx50 +0.2% at 3,567, FTSE +0.5% at 7,361, DAX +0.2% at 12,732, CAC-40 flat at 5,292, IBEX-35 -0.4% at 10,292, FTSE MIB flat at 22,591, SMI +0.2% at 9,128, S&P 500 Futures -0.05%

2. Oil mixed but set for weekly gain, gold has a losing month

Ahead of the U.S open, oil prices are mixed, but both Brent and U.S crude are set to record another weekly gain as investors bet that efforts to cut a global glut are working.

Brent crude oil is up +1c to +$57.42 a barrel, heading for a fifth weekly climb and a nearly a +10% gain on the month, while U.S crude (WTI) is down -8c at $51.48 a barrel at 0641 GMT, after earlier rising slightly. Still, the contract is heading for a fourth consecutively weekly gain and is on track for a 9 percent advance this month.

Support has been found from OPEC and non-OPEC producers have indicated they will stick with output cuts to limit supply. The crude ‘bulls' are also getting support from Turkey's threats to cut off a pipeline from the Kurdish region of Iraq after a referendum where Kurds voted overwhelmingly in favour of independence.

Note: The Kurdish region exports about +500k bpd through a pipeline that runs through Turkey to the Mediterranean Sea.

Gold is trading little changed amid pressure from a stronger U.S dollar. The yellow metal is heading for its biggest monthly fall this year amid rising prospects of a U.S rate hike in December. Spot gold is unchanged at +$1,286.96 per ounce and is on track to register a -2.5%this month.

3. Yields end the week on a high

The prospect of higher U.S debt levels and expectations for another Fed hike has sent 10-year U.S Treasury yields to their highest since mid-July, with the 2-10 year yield curve steepening to its highest in a month.

This week's selloff saw yields jump +19 bps, the most since Trump's U.S election victory last November. Overnight, the yield on U.S 10-year notes has fallen less than -1 bps to +2.31%.

Comments this week from Fed Chair Janet Yellen that the U.S central bank needs “to continue with gradual rate hikes” have cemented expectations for policy tightening by year-end.

Note: U.S two-year notes are the most sensitive to overnight rates – yields have backed up to a nine-year high of +1.49% in anticipation of a rate rise in December.

Elsewhere, Germany's 10-year Bund yield has dipped -2 bps to +0.46%, while the U.K's 10-year Gilt yield has decreased -2 bps to +1.33%.

4. Sterling falls on higher Q2 U.K deficit

Ahead of the U.S open, Sterling (£1.3381) has been trading under pressure after data this morning showed that the U.K Q2 deficit came in much higher than expected at -£23.2B. The market was forecasting a deficit of -£16.1B. U.K Q2 GDP growth was unrevised at +0.3% q/q.

Note: The U.K. current account position alone is not enough of a reason to be bearish the pound, however, it's a risk that leaves the UK dependent on ‘the kindness of strangers' according to the BoE to fund its twin deficits.

Elsewhere, the EUR (€1.1811) is off its overnight highs after weaker preliminary CPI data (see below), nevertheless, the range remains relatively tight with little volume. Investors are starting to question in what form President Trump's tax reform will get through Congress. The potential of a delay and/or watering down of the plans is expected to limit the USD appreciation potential.

5. Eurozone inflation below expectations

Data this morning showed that the eurozone's annual rate of inflation was unchanged at +1.5% this month, below the consensus forecast for a pickup to +1.6%.

That leaves it well below the ECB's target of just under +2%. Digging deeper, the core rate of inflation fell to +1.1% from +1.2%, its lowest level since June, and a number that should leave Euro policy makers a tad concerned, but are unlikely to inspire a major rethink at the ECB.

All eyes on Spain

While the German elections (still a non-issue) continues to dominate Europe conversation, events in Spain are about to heat up. Where this story takes markets, confounds and worries this strategy desk. The Catalonia referendum on Independence is plan to take place on Sunday 1st October. The Sunday vote will ask Catalans if they would support a separate state from Spain. Based on the 1978 'unity' agreement the Spanish constitutional court has ruled the referendum illegal. The regional government remains committed holding a vote while Spain central government has increase efforts to eliminate any trace of a referendum including confiscating by force ballet boxes, shutting down social media site and detaining regional political figures. Markets are betting that the efforts by the Central government to stymie representative results will delegitimize any Sunday ballot. Yet these efforts by the Central Government in our view will most likely backfire as the Catalonian that do find a way to vote (eliminating balancing vote of opponents of independence) in a board majority vote for succession. A similar pattern witnessed in the 'non-binding' referendum in 2014. To defuse tensions, there has been signals from both sides that discussion for a calmer resolution are on the table. Offers to the Catalan government of a new financial constitution will address a primary point of contention. But overall we have the feeling passions are running high, were suggestions of future talks will not appease the Catalonians. Markets are not pricing in any risk for Sunday as short-term EURUSD implied volatility are actually lower then longer term. We would be wary of hold spec positions over the weekend as truly all things are possible in Barcelona.

CHF strengthens against Catalonian vote backdrop

The Helvetic currency has lost two figures since the start of the week going from 1.16CHF to 1.14CHF. Some Swiss economic indicators came in better. The UBS Consumption indicator has risen in August from 1.38 to 1.53. This morning the KOF Leading Indicator, an indicator trying to predict the future of the Swiss economy, has also risen.

Economic indicators are showing good optimism on the Swiss economy and markets tends to also adjust their optimism on the single currency which explains, in our view, the current decline in the EURCHF.

The EURCHF is also largely driven in the short-term on European political issues. The Catalonian vote is definitely a thorn in the side of the European Union which tend to be above nations. We believe that the right for self-determination will become a key issue in the Future of the European Union and as a result will continue weighing on the single currency. On top of that, we also consider that markets are still overly optimistic regarding the future tightening of the ECB.

In the short-term, we should nonetheless see the euro rising again the CHF as there are decent likelihood that Madrid invalidates the Catalonian vote.

Notes/Observations

UK FTSE rises on weaker cable after UK Q2 GDP was revised lower

EU flash CPI comes short of expectations, while French CPI was a slight beat and Italy misses

German jobless rates hits new record low in Sep

Overnight

Asia:

Raft of data out of Japan, prelim Industrial Production, National CPI comes ahead of expectations while Retail Sales, Household spending misses and Jobless rate comes inline.

BoJ Sept Meeting Minutes: One member said more easing is necessary to stimulate demand**Note: At the Sept BoJ meeting, the incoming member Kataoka was the lone dissenter (8 to 1 vote). The official said then that the yield curve control is not enough to meet the inflation target; Also, the official saw a low chance of CPI increasing from 2018.

Europe:

UK Q2 Final GDP Y/Y revised lower to 1.5% from 1.7% prior, Cable falls Gilts rise

Eurozone prelim CPI comes in softer then forecast, Core CPI misses estimates and falls m/m

French CPI comes in slightly firmer then forecasts, Italy CPI misses

German Unemployment rate at fresh record low at 5.6%

ECBs Praet Economic recovery is not yet translating into higher inflation; ECB has to take economic improvement into account

Economic data

(UK) Q2 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.5% V 1.7%E

(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.6%E; CPI CORE Y/Y: 1.1% V 1.2%E

(UK) AUG NET CONSUMER CREDIT: £1.6B V £1.4BE; NET LENDING: £3.6B V £3.6BE

(UK) Q2 CURRENT ACCOUNT: -£23.2B V -£15.9BE

(DE) GERMANY SEPT UNEMPLOYMENT CHANGE: -23K V -5KE; UNEMPLOYMENT RATE: 5.6% (record low) V 5.7%E

(FR) FRANCE SEPT PRELIMINARY CPI M/M: -0.1% V -0.2%E; Y/Y: 1.0% V 1.0%E

(FR) FRANCE AUG CONSUMER SPENDING M/M: -0.3% V 0.2%E; Y/Y: 1.2% V 1.7%E

(IT) ITALY SEPT PRELIMINARY CPI (NIC INCLUDING TOBACCO) M/M: -0.3% V -0.2%E; Y/Y: 1.1% V 1.3%E

(DE) GERMANY AUG RETAIL SALES M/M: -0.4% V +0.5%E; Y/Y: 2.8% V 3.2%E

(UK) SEPT NATIONWIDE HOUSE PRICE INDEX M/M: 0.2% V 0.1%E; Y/Y: 2.0% V 1.9%E

(CH) SWISS SEPT KOF LEADING INDICATOR: 105.8 V 105.5E

Fixed Income Issuance:

Non seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.2% at 3,567, FTSE +0.5% at 7,361, DAX +0.2% at 12,732, CAC-40 flat at 5,292, IBEX-35 -0.4% at 10,292, FTSE MIB flat at 22,591, SMI +0.2% at 9,128, S&P 500 Futures -0.05%]

Market Focal Points/Key Themes: European stocks opened higher and maintained momentum; oil slightly higher, but not supporting energy stocks much; Spanish stocks underperforming leading into the weekend with expected vote in Catalonia; Israel closed for holiday; attention turning to personal income and spending data as well as PCE deflator from the US, to be released later in the session; upcoming earnings in the US session include Marine Products and City Holding; reminder that next week both South Korea and China markets to be closed for holidays

Equities

Consumer discretionary: Vivendi EX.FR +0.7% (analyst action), Volkswagen VOW3.DE -1.6% (increases impairment)

Energy: Electricite de France EDF.FR -2.3(analyst action), Lundin Petroleum LUPE.SE -1.1% (dry well), Rubis RUI.FR +1.9% (analyst action)

Financials: Beazley Group BEZ.UK +3.2 (trading update), Fonciere Des Regions FDR.FR +1.9% (analyst action)

Industrials: Advanced Metallurgical Group AMG.NL +8.2% (operations update), Carillion CLLN.UK -11.3% (results)

Materials: Covestro 1COC.DE +0.6% (Bayer sell stake) - Telecom: Telecom Italia TIT.IT -0.8% (new CEO)

Speakers

(EU) EU's Juncker: Not in favour of a Euro budget; Sees EU reform program stretching through next 7 years

(EU) EU's Tusk: To present schedule for reform of EU in two weeks; EU needs to take step by step approach with EU reform - speaking ahead of Summit in Estonia

(EU) ECB's Nouy (SSM Chief): Banking union headed in right direction

(CN) China Banking Regulator (CBRC): China to prevent fast rise in household leverage ratio

(UK) PM May: We are making progress on citizen's rights negotiations

(IT) Italy PM Gentiloni: EU reforms must boost economic growth

Currencies

GBPUSD trades lower after Q2 GDP was revised lower y/y, trading down to 1.3363. EURGBP rises to 0.8815 a 4 day high.

EURUSD trades slightly lower after weaker prelim CPI, the range remains narrow in quiet trade

(IN) India INR currency (rupee) off session lows on suspected dollar sales by RBI - dealers

Fixed Income

Bund futures trade at 161.20 up 28 ticks as euro are inflation data came in weaker than expected. Continued downside targets 160.25 while upside resistance stands initially at 162.07, followed by 163.27.

Gilt futures trade at 124.00 up 18 ticks after UK second quarter final GDP YoY was revised down to 1.5%. Continued downside eyeing 123.06. Upside targets 124.90 then 125.24.

Friday's liquidity report showed Thursday's excess liquidity fell to €1.712T from €1.723T and use of the marginal lending facility dropped to €48M from €131M.

Corporate issuance saw $2.2B come to market via 2 issuers headlined by Canadian Imperial Bank $1.75B 2-part senior notes offering. Which brings weekly issuance to $20.4B.

For the week ending Sep 27th Lipper US fund flows reported IG Funds net inflows of $1.19B bringing YTD inflows to $92.5B, High Yield funds reported net inflows of $432.6M bringing YTD outflows to $7.98B.

Looking Ahead

05:30 (SL) Sri Lanka Sept CPI Y/Y: No est v 6.0% prior

06:00 (IT) Italy Aug PPI M/M: No est v 0.0% prior; Y/Y: No est v 0.9% prior

06:00 (PT) Portugal Aug Industrial Production M/M: No est v 2.0% prior; Y/Y: No est v 6.4% prior

07:30 (IN) India Weekly Forex Reserves

08:00 (BR) Brazil Aug National Unemployment Rate: 12.7%e v 12.8% prior

08:00 (CL) Chile Aug Total Copper Production: No est v 473.5K tons prior

08:00 (CL) Chile Aug Manufacturing Production Y/Y: 1.8%e v 2.6% prior; Industrial Production Y/Y: 3.3%e v 3.3% prior

08:00 (CL) Chile Aug Unemployment Rate: 6.8%e v 6.9% prior

08:00 (PL) Poland Sept Preliminary CPI M/M: 0.2%e v -0.1% prior; Y/Y: 2.0%e v 1.8% prior

08:00 (ZA) South Africa Aug South Africa Budget Balance (ZAR): No est v -92.2B prior

08:00 (ZA) South Africa Aug Trade Balance (ZAR): 2.1Be v 9.0B prior

08:05 (UK) Baltic Dry Bulk Index

08:30 (CA) Canada July GDP M/M: 0.1%e v 0.3% prior; Y/Y: 3.9%e v 4.3% prior

08:30 (CA) Canada Aug Industrial Product Price M/M: 0.5%e v -1.5% prior; Raw Materials Price Index M/M: 0.3%e v -0.6% prior

08:30 (US) Aug PCE Core M/M: 0.2%e v 0.1% prior; Y/Y: 1.4%e v 1.4% prior

08:30 (US) Aug PCE Deflator M/M: 0.3%e v 0.1% prior; Y/Y: 1.5%e v 1.4% prior

08:30 (US) Aug Personal Income: 0.3%e v 0.4% prior; Personal Spending: 0.2%e v 0.3% prior

09:00 (RU) Russia Q2 Final Current Account: No est v -$0.3B prelim

09:30 (BR) Brazil Aug Primary Budget Balance: No est v -16.1B prior; Nominal Budget Balance: No est v -44.6B prior

09:45 (US) Sept Chicago Purchasing Manager: 58.7e v 58.9 prior

10:00 (MX) Mexico Aug Net Outstanding Loans: No est v 3.823T prior

10:00 (US) Sept Final University of Michigan Confidence: 95.3e v 95.3 prelim

11:00 (CO) Colombia Aug Exports: No est v $3.1B prior

11:00 (CO) Colombia Aug National Unemployment Rate: No est v 9.7% prior; Urban Unemployment Rate: No est v 11.3% prior

12:00 (US) USDA World Agricultural Supply and Demand Estimate (WASDE) Crop Report

13:00 (US) Weekly Baker Hughes Rig Count data

15:30 (MX) Mexico Aug YTD Budget Balance (MXN): No est v 119.3B prior