Nervous, jittery, out of sorts. It was ever thus.*
From Marc Chandler at Bannockburn Global Forex:
Overview: The dollar has begun the new week on a firm note, rising against most major and emerging market currencies. Sterling and the Canadian dollar are the most resilient, while the euro has been sold back below $1.1700, and the greenback is nearing JPY111.00. The US 10-year yield is up another four basis points to 1.49%. European yields are also 2-4 bp higher. Oil prices have risen to new highs, with November WTI straddling $75. Natural gas is up more than 3% for the third consecutive session. Gold extended its recovery but ran into a wall of sellers above $1760 and has returned to below $1750 near midday in Europe. Iron ore is traded higher in China for the third session, and it gained in Singapore for the fifth session. Copper has come back lower after gaining nearly 1% last week. Equities in the Asia Pacific region were mixed, with Tokyo, Shanghai, and Shenzhen lower. Europe's Dow Jones Stoxx 600 snapped a three-week drop last week and is posting small gains today. US futures are trading with a modest upside bias.
Asia Pacific
China's "cultural revolution" may be turning to finance. Reports suggest the anti-corruption campaign will start "routine" inspections fo [sic] 25 financial institutions, including the four large asset managers, including Huarong. The focus reportedly is on "political awareness gaps." Separately, the energy crisis is broadening. Households in several northern areas have suffered blackouts, and reports claim traffic lights were being turned off in Guangdong. Some provinces have ordered industrial cuts to meet emissions and energy-use goals. For others, there is a genuine lack of electricity due to rising coal and natural gas prices. This could further weaken output measures of the world's second-largest economy and could excite price pressures.
Before the weekend, a deal was struck that allowed the release of Huawei's Meng and the two Canadian's that Beijing nabbed in retaliation (Spavor and Kovrig). Press reports say that China's Xi was directly involved, seemingly underscoring the political nature of the developments, but can it be forgotten that then President Trump said he would have the charges against Meng dropped in exchange for a trade deal. It seems the more relevant question is about the timing of the agreement. It follows the first call between Biden and Xi in several months. The US initiated the call and seemed to be the first to move on the "prisoner exchange." It is also notable that the "swap" was made after the Canadian election.
This is a busy week for Japan, though it begins slowly. On Wednesday, the LDP will choose a new leader. Kono appears to be the favorite. However, there are two issues for which there seems to be a strong agreement. First, a large fiscal package that could be as large as JPY30 trillion (~$270 bln) will be assembled. While most other large economies are poised to reduce fiscal support, Japan is moving in the other direction. Second, several wings of the LDP have been advocating stronger defense for years, and China's aggressiveness in the region is providing a fresh impetus. The highlights of the high-frequency data this week include August industrial production, retail sales, employment, and on October 1 in Tokyo, the Q3 Tankan Survey.Rising US yields are helping the dollar extend its gains against the Japanese yen....
....MUCH MORE
*
