US yield advantage continues to aid dollar heading into Oct payroll report

Notes/Observations

- Markets anticipating a strong Oct US payroll report

Economic Data

- (CH) Swiss Oct Unemployment Rate: 3.1% v 3.1%e; Unemployment Rate (Seasonally Adj): 3.2% v 3.2%e

- (DE) Germany Sept Industrial Production M/M: 1.4% v 2.0%e; Y/Y: -0.1% v -0.6%e

- (DE) Germany Sept Current Account Balance: €22.3B v €18.0Be; Trade Balance: €21.9B v €19.0Be; Exports M/M: +5.5% v +2.7%e; Imports M/M: +5.4% v +1.1%e

- (FR) Bank of France Oct Business Sentiment: 96e v 96 prior

- (FR) France Sept Industrial Production M/M: 0.0% v -0.2%e; Y/Y: -0.3% v -0.4%e

- (FR) France Sept Manufacturing Production M/M: 0.6% v 0.0%e; Y/Y: +0.2% v -0.3%e

- (FR) France Sept YTD Budget Balance: -€80.5B v -€94.1B prior

- (FR) France Sept Trade Balance: -€4.7B v -€5.2Be

- (TW) Taiwan Oct Trade Balance: $4.6B v $4.0Be; Exports Y/Y: 0.7% v 4.8%e; Imports Y/Y: -1.4% v +4.6%e

- (ES) Spain Sept Industrial Output NSA Y/Y: +3.6 v -2.3% prior; Industrial Output SA Y/Y: 1.0% v 0.7%e

- (CH) Swiss Oct Foreign Currency Reserves (CHF): 460.4B v 462.2B prior

- (HU) Hungary Sept Preliminary Trade Balance: €1.0B v €0.8Be

- (CH) Swiss Sept Real Retail Sales Y/Y: 0.3 v 1.4% prior

- (NL) Netherlands Sept Industrial Production M/M: -1.1% v +0.8%e; Y/Y: -1.2% v +1.4%e ; Industrial Sales Y/Y: -0.3% v -5.4% prior

- (SE) Sweden Sept Household Consumption M/M: -0.4% v +0.7% prior; Y/Y: 1.8% v 2.4% prior

- (SE) Sweden Oct Budget Balance (SEK): -6.3B v -8.0B prior

- (NO) Norway Sept Industrial Production M/M: 4.4% v -0.6% prior; Y/Y: +7.7% v 2.3% prior

- (UK) Sept Visible Trade Balance: -£9.8B v -£9.5Be; Overall Trade Balance: -£2.8B v -£2.3Be; Trade Balance Non-EU: -£4.0B v -£3.7Be

Fixed Income:

- (IN) India sold total INR150B in 2020, 2028,2033 and 2040 bonds

- (ZA) South Africa sold total ZAR800 in I/L 2022, 2025 and 2038 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.2%, FTSE 100 +0.7% at 6,599, DAX +0.3% at 9,403, CAC-40 0% at 4,226, IBEX-35 -0.5% at 10,213, FTSE MIB -0.2% at 19,237, SMI +0.1% at 8,872, S&P 500 Futures +0.1% at 2,031]

- Market Focal Points/Key Themes: Equity market opened slightly higher on positive results from ArcelorMittal and traded to mixed on light volume. Market focus will be on the US jobs report later in the session.

- Earnings Recap (ArcelorMittal earnings beat, raises demand forecasts; Swiss Re above est; Puma lowers profit margin, but raises rev forecast; Vestas Wind crushes estimates, raises forecast; Skanska above ests; Richemont slowdown not as bad as expected; Allianz raises dividend payout ratio from 40% to 50%; Admiral period rev down y/y Aker beats est.)

By Sector

- Financials [Songbird Estates SBD.UK +1.6% (Reject 295p/shr proposal), Tullett Prebon TLPR.UK -3.1% (report neg y/y rev, to further reduced headcount, confirms probe)]

- Technology [Morphosys MOR.DE +3.3% (MOR208 receives fast track designation)]

- Telecom [TeleKom Austria TKA.AT -1.5% (€1B capital raise)]

- Energy [Faroe Petroleum FPM.UK -0.6% (award 2 new exploration licenses)]

- Healthcare [UCB UCB.BE -2.2% (to sell US specialty generics subsidiary)]

Speakers

- ECB's Noyer (France) stated that low rates created the illusion of debt sustainability and delay structural reforms. Central bank bond buying could raise moral hazards for governments but could be right in case of run on govt debt or to avoid deflation risks. He added that he saw the risks of under-estimating inflation

- Bank of France Deputy Gov Lorier: Skeptical traditional monetary policy could achieve a sudden spike in inflation during a crisis

- Spain PM Rajoy said to tolerate the Nov 9th Catalan consultation vote as a 'freedom of expression

- Estonia Finance Ministry: Price decline has been bigger than forecasted; return to inflation has been postponed

- China and Japan said to have reached a 4-point agreement on their relationship which acknowledges different positions exist on the disputed islands

Currencies/Fixed Income:

- The USD was steady and holding onto weekly gains ahead of the Oct Non-Farm payroll data. Dealers noting that the US yield advantage continued to increase against the euro and yen and this helped the greenback test fresh trends highs against numerous pairs during the Asian session. The ECB press conference again highlighted the notable shift among the G3 and this has been aided by recent data out of the U.S., the BoJ's unexpected expansion of its QQE program, and the ECB's evolving path toward expanding asset purchase.

- RBA Quarterly Statement continued to promote a weaker AUD as it saw above it still above its fundamental value given commodities price-fall

- RUB currency (Ruble) moved off record low as rumors of an emergency Russia Central Bank meeting circulate

Political/In the Papers:

- (FR) France President Hollande: Will not seek a second mandate if unable to headway in reducing unemployment

- Japan Econ Min Amari stated that PM Abe remained neutral on next phase of the planned sales-tax increase

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (GR) Greece PM Samaras in Cyprus for 2-day visit

- (PT) Portugal Sovereign Debt Rating published by S&P

- (EU) EU Sovereign Debt Rating might be published by Moody's

- (BE) Belgium Sovereign Debt Rating might be published by Moody's

- (EU) EU Finance Ministers (EcoFin) hold Meeting in Brussels (ECB's Lautenschlager attending)

- (FR) Bank of France conference with Fed's Yellen, BOE's Carney, BOJ Kuroda and ECB's Coeure

- (IT) Bank of Italy Oct Balance-Sheet Aggregates

- (RU) Russia Narrow Money Supply w/e Oct 31st (RUB): No est v 8.35T prior

- 06:00 (BR) Brazil Oct IBGE Inflation IPCA M/M: 0.5%e v 0.6% prior; Y/Y: 6.7%e v 6.8% prior

- 06:00 (CL) Chile Oct CPI M/M: 0.4%e v 0.8% prior; Y/Y: 5.0%e v 4.9% prior; CPI Core M/M: 0.4%e v 0.6% prior

- 06:00 (EU) ECB announces 3-Year LTRO Repayment

- 06:00 (UK) DMO to sell combined £4.0B 1-Month Bills, 3-Month and 6-Month Bills (0.5B, 1.5B and 2.0B respectively)

- 06:15 (EU) ECB's Nouy (head of SSM) in Paris

- 06:15 (UK) BOE Gov Carney in Paris

- 06:30 (CL) Chile Oct Trade Balance: $0.7Be v $0.6B prior; Total Exports: No est v $6.1B prior; Total Imports: No est v $5.5B prior; Copper Exports: No est v $$3.3B prior

- 06:30 (IN) India Forex Reserves

- 06:45 (US) Daily Libor Fixing

- 08:00 (PL) Poland Oct Official Reserves: No est v $101.7B prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Oct Change in Nonfarm Payrolls: +234Ke v +248K prior; Change in Private Payrolls: +223Ke v +236K prior; Change in Manufacturing Payrolls: +10Ke v +4K prior

- 08:30 (US) Oct Unemployment Rate: 5.9%e v 5.9% prior; Underemployment Rate: No est v 11.8% prior; Change in Household Employment: No est v +232K prior; Labor Force Participation Rate: No est v 62.7% prior

- 08:30 (US) Oct Average Hourly Earnings M/M: 0.2%e v 0.0% prior; Y/Y: 2.1%e v 2.0% prior; Average Weekly Hours: 34.6e v 34.6 prior

- 08:30 (CA) Canada Oct Net Change in Employment: -5.0Ke v +74.1K prior; Unemployment Rate: 6.8%e v 6.8% prior; Full Time Employment Change: No est v +69.3 prior; Part Time Employment Change: No est v +4.8 prior; Participation Rate: No est v 66.0% prior

- 09:00 (MX) Mexico Oct CPI M/M: 0.6%e v 0.4% prior; Y/Y: 4.3%e v 4.2% prior; CPI Core M/M: 0.2%e v 0.3% prior

- 09:15 (US) Fed's Evans gives Introduction at Chicago Banking Conference

- 14:30 (US) Fed's Tarullo on community banking

- 15:00 (US) Sept Consumer Credit: $16.5Be v $13.5B prior

- 17:00 (PT) ECB's Constancio (Portugal) in Chicago

- (PE) Peru Sept Trade Balance: No est v -$237M prior