USD at 7-month highs against EUR

Asian Mid-session Update: China State Council announces service industry support; USD at 7-month highs against EUR; PFE/AGN reverse merger expected Monday

Economic Data

- (SG) SINGAPORE OCT CPI M/M: -0.4% V -0.1%E; Y/Y: -0.8% V -0.4%E; CPI CORE Y/Y: 0.3% V 0.6%E

- (NZ) New Zealand Oct Net Migration: 6.2K v 5.6K prior

- (HU) Hungary Nov Economic Sentiment: -1.7 v -0.8 prior; Business Confidence: 4.6 v 5.8 prior; Consumer Confidence: -19.6 v -19.6

Index Snapshot (as of 04:30 GMT)

- Nikkei225 closed, S&P/ASX +0.3%, Kospi +0.7%, Shanghai Composite +0.1%, Hang Seng -0.3%, Dec S&P500 +0.1% at 2,090

Commodities/Fixed Income

- Dec gold -0.6% at $1,070/oz, Jan crude oil -1.9% at $41.11/brl, Dec copper -2.1% at $2.01/lb

- (KR) South Korea sells 20-yr govt bond, avg yield at 2.395%

- JJC: LME Copper falls below $4,500/ton; 6-year low

- USD/CNY: (CN) PBoC sets yuan mid point at 6.3867 v 6.3780 prior; Weakest Yuan setting since Aug 31st

- (AU) Australia MoF (AOFM) sells A$500M in 3.75% 2037 Bonds; avg yield: 3.5482%; bid-to-cover: 2.33x

Market Focal Points/FX

- Asia markets are seeing modest gains, tracking more strength on Wall St on Friday. The Kospi is outperforming the other key regional markets, while Hang Seng is down marginally coming out of its midday break. USD remains on the offensive across the major pairs, as short term US rates continue percolate in anticipation of the likely liftoff next month. USD/JPY was up some 50pips from Friday close above 123.20, EUR/USD fell some 40pips to a 7-month low of 1.06, while AUD/USD was down as much as 70pips around 0.7160.

- Shanghai Composite is heading for its 3rd straight day of gains, bolstered by the service/consumption stocks. China State Council announced it would promote service industry, expand consumer credit, and improve internet commerce. Chinese currency was also under pressure today after the PBoC set its midpoint fix at the lowest point since late Aug. Offshore Yuan fell some 100pips toward CNY6.43. PBoC's Yi Gang remarked that the currency would remain stable after inclusion into the IMF SDR basket ahead of the Nov 30th meeting.

- Japan markets were closed, but local press announced the Abe cabinet has prepared a new draft plan to deal with low inflation. Tokyo intends to raise minimum wage by 3% next fiscal year and support CAPEX by rewarding companies that invest in plants and equipment that improve energy use. Draft details of the plan are expected to be unveiled tomorrow. One of BOJ's more dovish members Shirai remarked the current QE program is conditional and subject to adjustment, noting the importance of continued accommodative stance to achieve 2% inflation target.

- Brussels security forces conducted wide-scale anti-terrorism operation that netted 16 arrests. Belgium authorities noted an "imminent threat" of attack from ISIS as authorities suspended school on Monday. At the ASEAN summit, Japan and Australia foreign mins urged for China restraint amid tensions on South China Sea.

- In M&A, Pfizer and Allergan are on the cusp of the a jumbo reverse merger tax inversion deal, whereby Dublin-based AGN would acquire PFE. Deal is said to value AGN at over $150B and include 11.3 PFE shares for 1 AGN share. Australia's consumer credit reporting company Veda was acquired by Equifax for $1.8B - shares were purchased for cash using proceeds available from senior credit facilities provided by a bank syndicate.

Equities

US equities/ADRs:

- PFE: Pfizer and Allergan on the cusp of a $150B merger deal; Allergan would technically be the acquirer in a reverse merger - financial press

- LGF: "Hunger Games: Mockingjay, Part 2" was the top earning film in weekend box office with $101M in US sales; lowest debut of any of the four installments

Notable movers by sector:

- Consumer discretionary: Jiangsu Hongdou Industry Co 600400.CN +10.0% (private placement); Nine Entertainment Co Holdings NEC.AU -1.4% (block sale from Apollo)

- Financials: Evergrande Real Estate Group 3333.HK +5.4% (acquisition); Macquarie Group Limited MQG.AU +0.2% (intention to issue notes); Guotai Junan International Holdings 1788.HK -10.5% (unable to reach CEO); New World Development 17.HK -1.0% (acquisition); Aspen Group APZ.AU -4.8% (Board recommends Discovery offer)

- Industrials: Air China 753.HK -2.2% (Oct result); Hyundai Engineering and Construction 000720.KR +1.1% (awarded order)

- Technology: Veda Group VED.AU +2.4% (acquisition from Equifax); UXC UXC.AU +8.5% (takeover with CSC)

- Materials: Aluminum Corporation of China 2600.HK -0.8% (President to resign); Samsung C&T Corp 028260.KR +6.7% (awarded order); G-Resources Group 1051.HK +8.0% (asset sale)

- Healthcare: Healthscope Ltd HSO.AU +0.4% (affirms guidance); Takeda Pharmaceutical Co 4502.JP +0.4% (FDA approves Ninlaro treatment)