IMF set for green light on China's yuan joining currency basket-sources

Good morning,

- $AUD was the best performing major vs $USD on Friday with +0.11% spot-returns while $EUR was the worst performing with -0.82% returns.

- Dropping Milk Prices Drive NZD/USD Lower Ahead of RBNZ...In general, Australian and New Zealand Dollars Rise as China Cuts Interest Rates.

- US Equities Close: DJIA 17647.9 (+0.91%); S&P500 2075.19 (+1.10%); NASDAQ 5031.864 (+2.27%).

- As largely expected, following Friday's unexpected rate cut by the PBOC (which may have been mostly driven by 5th CCP Plenum considerations), and today's drop (Monday's Opening), in the onshore Yuan which traded down 0.13% vs the Dollar to 6.3554, China's stocks opened solidly in the green, led by construction names, with recently troubled Vanke shares jumping 7.4% in early trading, the most since July 10, to their highest level since Aug. 11 (2 months high).

- Gold Sinks as USD Soars- FOMC to Setup Bigger Picture Advance..Commodities Tumble and Dollar Rises as China Rate Cuts Signal Slowdown.

- So the ECB and PBoC steped up the dovish pressure the previous week. All Fed has to do is say next move will be a hike.

- Oct 25 International Monetary Fund staff are set to give the all-clear for China's yuan to be included in the lender's benchmark currency basket, laying the groundwork for a favorable decision by policymakers, people familiar with the discussions said on Sunday. The IMF's executive board is scheduled to decide in November on putting the yuan on a par with the dollar, yen, euro and pound sterling and a key factor will be its performance against a checklist of technical criteria, as assessed by IMF staff.

- An increase in Britain's rock-bottom interest rates is not guaranteed although households should prepare for higher borrowing costs, Bank of England Governor Mark Carney said in comments published on Saturday. "If we think there is a prospect, a possibility – that's a possibility not a certainty – of rate rises, then that is far, far better to let the British people know so they can prepare," he said in an interview with the Mail on Sunday newspaper. "If events mean that does not happen and rate rises are not appropriate, then we will do the right thing and we will not adjust rates," Carney was quoted as as saying..The Bank cut interest rates to a record low of 0.5 percent in 2009 and has kept them there ever since, even as Britain's economy recovered strongly over the past two years.

- Swiss National Bank Vice President Fritz Zurbruegg said "At its current level the Swiss franc remains markedly overvalued ... The depreciation has been positive, but we expect further development in this direction" Zurbruegg was speaking in an interview with Zentralschweiz am Sonntag newspaper Also: Said current negative rate (at -0.75%) is appropriate for now Can't say in advance how low negative rates can go Rates will stay low as long as necessary - The CHF has appreciated against the plunging EUR in the wake of ECB President Draghi's comments on Thursday. The SNB would like to put a stop to that.

- Nomura to it's clients...''In coming weeks, risk sentiment and US data may be the most important drivers of the EUR/USD cross...If risk sentiment stays more constructive, such that capital outflows from the Eurozone can recover, we would not be surprised to see a move to 1.08 in coming weeks, even if Fed expectations remain fairly stable. A double-whammy of easy ECB, Fed lift-off in December and a re-test of 1.05 seems fairly unlikely, also because the speculative community has limited trading ammunition after a couple of rough months," Nomura projects.''

- Major news for today: German Ifo Business Climate, US New Home Sales , NZ Trade Balance.

Have a great day!