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Americas Roundup: Dollar Softens After Weaker-Than-Forecast U.s. Payroll Reading, Oil Ends down 1 Pct, Snapping Week-Long Opec-fueled Rally-October 8th, 2016

Market Roundup
• Computer-driven funds likely winners from sterling flash crash.
• US nonfarm payrolls miss expectations: +156k vs forecast 175k.
• Revisions on balance negative but jobless rate and participation up.
• Average hourly earnings +0.2% as forecast.
• Fed's Mester says US payrolls a "solid number".
• Canada jobs surge by 67,200 in Sept vs forecast 10k, heavily weighted to part-time.
• Brazil IPCA inflation 8.48% y/y vs forecast 8.6%, 8.97% previously.
• Brazil's central bank chief Goldfajn says CPI down, but doubts linger.
• Mexico inflation 2.97% y/y vs 2.91% forecast 2.73% previously.
• Canada's Ivey purchasing index jumps in September to 58.4 from 52.3. Looking Ahead - Economic Data (GMT)
• 01:45 China Caixin Services PMI Sep 52.1 -previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events

Currency Summaries

EUR/USD is supported at 1.1154 levels and currently trading at 1.1199 levels. The pair has made session high at 1.1206 and hit lows at 1.1144 levels. The dollar eased against the low-yielding euro on Friday after data showed that U.S. employment growth unexpectedly slowed in September but was stronger in August than initially reported, and traders kept bets that the Federal Reserve is likely to raise rates in December. The Labor Department said U.S. employment growth unexpectedly slowed for a third month in September and the jobless rate rose. Nonfarm payrolls rose by 156,000 jobs in September, missing economists' expectations of 175,000. Job gains for August were revised up to 167,000 from an initially reported 151,000. The dollar index was last down 0.1 percent at 96.682. It rose to a more than two-month high shortly before the release of the payrolls report. The greenback fell hard against the yen, losing as much as 1 percent after the jobs data. It was last down 0.7 percent at 103.17 yen. The euro rose 0.2 percent to $1.1199 but fell 0.7 percent to 115.22 yen.

GBP/USD is supported in the range of 1.2340 levels and currently trading at 1.2439 levels. It reached session high at 1.2469 and dropped to session low at 1.2348 levels. Sterling weakened again against US dollar in the US session after rebounding from a stunning plunge that injected volatility across markets. Sterling plummeted nearly 10 percent to a 31-year low in earlier trading in what traders called a "flash crash”. Even before a sudden plunge that briefly shaved off a tenth of the pound's value during Asian trading, sterling was headed for its worst week since January 2009 as some national leaders called for Britain to make a "hard" exit from the European Union in which it would leave the single market. The Bank of England was investigating the cause of the sudden price move, but the currency had already been on track for one of its worst weeks in seven years as some national leaders called for Britain to make a "hard" exit from the European Union. Sterling retraced to $1.2440 in U.S. trading, which was still down 1.3 percent on the day.

USD/CAD is likely to find support at 1.3180 levels and is trading at 1.3289 levels. It has made intraday high at 1.3312 and lows at 1.3184 levels. The Canadian dollar declined to hit six-month low against its U.S. counterpart on Friday as volatility in the foreign exchange market and lower oil prices offset stronger-than-expected domestic jobs data. Data showed Canada's economy created 67,200 jobs in September, far more than expected, though that was fueled by the biggest increase in self-employed workers in more than seven years. U.S. employment growth unexpectedly slowed for the third straight month in September, which could make the Federal Reserve more cautious about raising interest rates. Oil fell about 1 percent on Friday as players took profits on a rally over the past week that propelled prices nearly 15 percent to four-month highs on hopes of OPEC crude output cuts. The Canadian dollar was last trading at C$1.3289 to the greenback weaker than Thursday's close of C$1.3207, or 75.72 U.S. cents.

AUD/USD is supported around 0.7500 levels and currently trading at 0.7588 levels. It hit session high at 0.7623 and made session lows at 0.7553 levels. The Australian dollar initially inched higher against US dollar on Friday after data showed U.S. employment growth eased for the third straight month in September but reversed course as slowdown was not expected to prevent the Federal Reserve from raising interest rates later this year. The Australian dollar edged 0.1 percent lower to $0.7576, near two-week lows as the greenback gained on expectations of a Federal Reserve rate hike this year. Domestic data this week showed a rosy picture of Australia's economy, boosting expectations for gross domestic product growth of more than 3 percent for the year. However, a resilient Aussie, up about 4 percent this year, could spoil the party. It fell nearly 11 percent in 2015 and more than 8 percent the year before.

Equities Recap

Continental European stock markets fell on Friday, with vouchers company Edenred and airline easyJet among the worst performers, although a new slump in sterling propped up Britain's FTSE 100.

UK's benchmark FTSE 100 closed up by 0.8 percent, the pan-European FTSEurofirst 300 ended the day down by 0.09 percent,Germany's Dax ended down by 0.7 percent, France’s CAC finished the day down by 0.6 percent.

U.S. stocks ended down slightly on Friday as a drop in the British pound injected volatility to markets, while a weaker-than-expected jobs report was not enough to derail expectations for a Federal Reserve rate hike before the end of the year.

Dow Jones closed down by 1.17 percent, S&P 500 ended down by 0.33 percent, Nasdaq finished the day down by 0.28 percent.

Treasuries Recap

U.S. Treasuries ended little changed on Friday after data showed that U.S. employment growth unexpectedly slowed in September but was stronger in August than initially reported, and traders kept bets that the Federal Reserve is likely to raise rates in December.

Benchmark 10-year notes rose 2/32 in price to yield 1.74 percent. Earlier the yield rose as high as 1.77 percent, the highest since June 3.

Commodities Recap

Oil fell about 1 percent on Friday as players took profits on a rally over the past week that propelled prices nearly 15 percent to four-month highs on hopes of OPEC crude output cuts.

Brent crude settled down 58 cents, or 1.1 percent, at $51.93 a barrel. Earlier in the day, it hit $52.84 cents, three cents short of a one-year high.

U.S. West Texas Intermediate (WTI) crude settled down 63 cents, or 1.3 percent, at $49.81.

Gold fell for the ninth straight session on Friday, briefly tapping a four-month low as computer-generated selling offset support from weak U.S. payrolls data, but bullion was on track for its biggest weekly drop in more than three years.

Spot gold was down 0.09 percent at $1,252.71 an ounce by 3:11 p.m. EDT (1911 GMT), after falling 1 percent to $1,241.20, the lowest since June 8. It was on track to close the week down 4.8 percent, its biggest drop since June 2013. U.S. gold futures for December delivery settled down 0.1 percent at $1,251.90.

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Fxwirepro: Usd/twd Rejects Key Resistance at 31.55, Good to Sell on Rallies

USD/TWD is currently trading around 31.44 marks.
It made intraday high at 31.53 and low at 31.38 marks.
Intraday bias remains bearish till the time pair holds key resistance at 31.55 marks.
A daily close above 31.55 will drag the parity up towards key resistances around 31.68, 31.82, 31.98, 32.12, 32.25, 32.43 and 32.63 marks respectively.
On the other side, key support levels are seen at 31.34, 31.26, 31.18, 30.99, 30.85 and 30.39 marks respectively.
Important to note here that 20D, 30D and 55D EMA heads down and confirms the bearish trend in a daily chart. We prefer to go short on USD/TWD around 31.45, stop loss 31.55 and target of 31.26/31.18.

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Iraq’s Minister Urges Country’s Producers Raise Output in 2017

Iraq oil minister Jabar al-Luaibi has called for oil and natural gas producers in the nation to keep on increasing output next year, the oil ministry communicated in a statement on Sunday.

The ministry's statement reiterated comments Luabi made to an assembly of Iraq oil industry executives in the city of Basra to assess the ministry's development plans for the oilfields.

The oil minister's comments came as OPEC members are attempting to put into action an agreement to reduce oil output in order to prop-up oil prices. The oil minister also did not refer to the cartel's decision on September 28 to curb oil output to a lower range.

According to the statement, Luaibi affirmed the need to continue increasing oil and gas yields by improving the effort of licensed firms operating in the nation for the rest of 2016 and through 2017.

The oil minister added that foreign firms' oil output targets should be attained within the given timetable and that the ministry is looking to raise associated gas output by adding 350 to 450 million cubic feet a day to the country's production next year.

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Japan Has Y2,000.8 Billion Current Account Surplus

Japan posted a current account surplus of 2,000.8 billion yen in August, the Ministry of Finance said on Tuesday - an increase of 23.1 percent on year.
The headline figure exceeded forecasts for a surplus of 1,502.7 billion yen following the 1,938.2 surplus in July.
Imports tumbled 18.3 percent on year to 5,058.7 billion yen following the 26.0 percent tumble in July. Exports slid an annual 9.6 percent to 5,301.9 billion yen after sliding 15.7 percent in the previous month.
The trade surplus was 243.2 billion yen, exceeding expectations for 116.5 billion yen although down from 613.9 billion yen in the previous month.
The capital account showed a deficit of 12.8 billion yen following the 46.6 billion yen shortfall a month earlier.
The financial account saw a surplus of 2,922.0 billion yen following the 3,673.7 billion yen surplus in July.
The adjusted current account surplus was 1,975.5 billion yen versus expectations for 1,570.3 billion yen and up from 1,447.8 billion in the previous month.

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Twitter Shares Sink as Potential Buyers Reportedly Lose Interest

Twitter Inc.'s shares slumped more than 14% after a Bloomberg report stated that all of its top potential suitors has lost interest in making a bid for the social media company.

The firm's shares, which jumped last month after rumors of a possible acquisition by companies including Google, lost $2.82 or 14% down to $17.03 during early trading following Bloomberg's report that was Twitter unlikely to receive any takeover offers.

Salesforce, Google owner Alphabet Inc., and Walt Disney which had been working with banks on a potential acquisition of the social media firm, had reportedly abandoned plans to proceed with a bid, according to Bloomberg.

Twitter's shares have already seen a steep decline at the end of the previous week after technology news website Recode reported that Google and Apple had no interest in buying the struggling company which put itself up for sale last month.

Sillicon Valley tech company Salesforce has been perceived as the top potential buyer after its chief executive Mark Benioff had publicly voiced his interest in the firm, but his investors raised their doubts regarding the deal. The speculation also caused Salesforce's shares to sink, but rose back to their former level after Bloomberg's report that it did not press ahead with a bid.

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Fxwirepro: Usd/krw Hits Fresh 4-Week High at 1,124, Faces Strong Resistance at 1,127

USD/KRW is currently trading around 1,123 levels.
It made intraday high at 1,124 and low at 1,123 marks.
Intraday bias remains bullish till the time pair holds key support at 1,117 levels.
A daily close above 1,127 will drag the parity higher towards key resistances at 1,142, 1,152, 1,162, 1,176, 1,182, 1,196, 1,201, 1,209 (20D EMA) and 1,220 (March 03, 2016 high) marks respectively.
On the other side, a sustained close below 1,117 will test key supports at 1,107/1,101/1,089/1,078/1,063/1,044 levels respectively.
In addition, South Korea’s Kospi was trading around 0.12 percent higher at 2,034.26 points.
South Korea’s September unemployment rate increase to 4.0 % vs previous 3.8 %.
We prefer to go long on USD/KRW only above 1,124, stop loss 1,111 and target 1,142.

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Samsung Announces Total Discontinuation of Galaxy Note 7 Production Over Safety Concerns

Crisis-hit Samsung Electronics Co. announced on Tuesday that it is permanently halting the production and sale of its flagship Note 7 smartphone, less than two months after its launch over persisting battery safety issues.

The tech giant stated in a filing with South Korean regulators that has decided to scrap the Note 7 after a new wave of reports of replacement devices overheating and catching fire, which were supposedly safe and free from battery defects. The move caused Samsung's share to tumble 8%, clearing almost $20 billion off the smartphone maker's market value and recording its biggest one-day decline since 2008.

The decision to stop Note 7 production comes after the South Korean conglomerate had halted sales and exchanged of the device earlier on Tuesday and called on customers to stop using the smartphone due to the reported safety issues.

Analysts state that permanently pulling note 7 off the shelves could cost the company up to $17 billion and could raise doubts about Samsung's quality control.

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New Zealand Consumer Confidence Spikes In October - ANZ

Consumer confidence in New Zealand jumped in October, the latest survey from ANZ showed on Thursday.

The bank's consumer confidence index jumped 1.6 percent on month to a score of 122.9. That follows the 2.8 percent spike in September to 121.0.

The index score is the highest reading since the middle of last year, ANZ said, adding that the increase was driven by optimism over the direction of the economy.

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U.S. Stocks Flat After Fed Minutes

The majority of the U.S. stocks were flat while the Federal Reserve minutes gave investors some indication as to when the next-rate increase would be. The minutes from the Fed's September meeting has shown that several of the policy makers called for the rate hike as “relatively soon”, however members disagreed on the timing of the move.

The Dow Jones Industrial Average was up 0.1 percent to 18144.20. The S&P inched up 0.1 percent to 2139.18 and the Nasdaq Composite fell 0.1 percent to 5239.02. Real-estate stocks in the S&P 500 climbed 1.3 percent as utility stocks advanced by one percent. Investors are currently turning their attention to the earnings.

Alcoa declined by 2.9 percent to $27.11 a day. Illumina was down two percent to 136.18. Health-care stocks in the S&P 500 drove declines for the second consecutive session as the Nasdaq Biotechnology Index retreated by 2.5 percent. The yield on the 10-year U.S. Treasury note increased to 1.778 percent after investors found meager hints in the Fed minutes to confirm expectations of a rate hike in December.

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Japan M2 Money Stock Climbs 3.6% In September

The M2 money stock in Japan was up 3.6 percent on year in September, the Bank of Japan said on Friday - coming in at 943.2 trillion yen.

That followed the 3.3 percent gain in August. The M3 money stock advanced an annual 3.1 percent to 1,265.1 trillion yen after gaining 2.8 percent in the previous month.

The L money stock gained 1.8 percent to 1,653.7 trillion yen after picking up 1.6 percent a month earlier.


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Verizon Says Yahoo Email Data Breach Could Sink Deal

Verizon Communications Inc.'s attorney Craig Silliman told reporters that the U.S. wireless company has a rational basis to think Yahoo Inc.'s recent disclosure of a massive data breach of more than 500 million of its email accounts represented a material impact that could allow Verizon to pull out of its $4.38 billion deal to acquire the tech firm.

General Counsel Silliman told press people during a roundtable in Washington that the email breach could activate a clause within the agreement that would allow the Verizon to change the terms of the takeover or not press on with it. The counsel, who has been leading Verizon's review of the situation, refused to comment whether discussions are being held to renegotiate the acquisition price.

The takeover deal has a clause that states Verizon can withdraw from the agreement if a new development which could have a tangible and adverse effect on the business surfaces.

A Yahoo spokesperson expressed the company's confidence in Yahoo's value and that they will continue to make progress towards integration with Verizon.

Yahoo's shares closed down 1.75% at $41.62 while Verizon's shares were flat at $50.29, inching down 0.02%.


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UK House Prices Climb 0.9% In October - Rightmove

The average asking price for a house in the United Kingdom was up 0.9 percent on month in October, property tracking website Rightmove said on Monday - coming in at 309,122 pounds.

That follows the 0.7 percent increase in September.

On a yearly basis, house prices jumped 4.2 percent, up from 4.0 percent in the previous month.

The number of sales agreed jumped 6.0 percent on year.

By region, total available stock in the south jumped an annual 16 percent, while stock in the north dropped 11.0 percent.

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Oil Prices Decline on Rising U.S. Oil Drilling Activity

The increase in the number of rigs in the U.S. and a slowdown in global economic growth which could undermine fuel appetite pulled down oil prices on Monday.

U.S. WTI crude futures were down 32 cents from their last close and were trading at $50.03 per barrel. A report on Friday showed that U.S. drillers added four rigs last week, marking the 16th straight week that drillers did not cut back, suggesting more production to come. Traders state report weighed down on the WTI

Meanwhile, the international Brent crude oil futures also declined, losing 20 cents from their last settlement down to $51.75 per barrel, weighed by elevated supply from the OPEC, which hit a record high of 33.6 million barrels per day last month.

The record output from OPEC, weak global GDP forecasts and still elevated stocks caused Bernstein Energy to lower and flatten their oil price outlook in a note to their clientele on Monday. It lowered its Brent estimate to $60 per barrel next year from the initial projection of $70 per barrel, and revised its 2018 prediction to $70 per barrel from the original $80 per barrel estimate.

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Fxwirepro: Usd/krw Rejects Key Resistance at 1,142, Bias Remains Neutral

USD/KRW is currently trading around 1,131 levels.
It made intraday high at 1,133 and low at 1,130 marks. Intraday bias remains neutral till the time pair holds key resistance at 1,142 levels.
A daily close above 1,142 will drag the parity higher towards key resistances at 1,152, 1,162, 1,176, 1,182, 1,196, 1,201, 1,209 (20D EMA) and 1,220 (March 03, 2016 high) marks respectively.
On the other side, a sustained close below 1,128 will test key supports at 1,111/1,101/1,089/1,078/1,063/1,044 levels respectively.
In addition, South Korea’s Kospi was trading around 0.28 percent higher at 2,033.46 points. We prefer to go long on USD/KRW around 1,130, stop loss 1,117 and target 1,142/1,152.

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Oil Prices Fall as Market Awaits OPEC Intervention

Oil prices edged down on Monday amid growing indications of noncooperation among OPEC members after the group's deal to reduce supply and market speculation that any benefit the oil market has gained from the agreement has already been priced in.

U.S. crude futures lost 41 cents or 0.81%, settling down at $49.94 a barrel while Brent crude futures shed 43 cents or 0.83% down to $51.52 a barrel. Gasoline futures posted a smaller decline, inching down 0.08% at $1.4924 a gallon. Diesel futures also settled down 1.12 cents or 0.71% to $1.15561 a gallon.

While OPEC's plan to cut production last month has lifted oil markets in the recent weeks, its lack of details on how much each participating nation will be required to cut and conflicts over how the cartel computes countries' production is seen to hamper the deal.

On Monday, Ali Kardor, managing director of National Iranian Oil Co. deemed output estimates compiled by OPEC to be unacceptable, adding that Iran has produced than what the cartel has reported in the previous month.

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Fxwirepro:nikkei Trades Higher on Weaker Yen, Good to Buy on Dips

Nikkei225 has made a steady gains after making a minor bottom at 16641 on 13th Oct 2016. Japanese index is rising sharply for the past two trading session on account of weaker Yen.It is currently trading around 16971.

Technically in the 4H chart the index takes support at 55- 4H EMA and slightly jumped from that level.Short term weakness can be seen only below 16731 (200- 4H MA).

On the higher side, resistance is around 17000 and any break above targets 17159 (Sep 2nd 2016 high)/17300/17500.Nikkei should break above 17159 for further bullishness.

The major support is around 16850 (55- 4H EMA) and any break below targets 16730 (200- 4H MA) /16532 (200-day MA).

It is good to buy on dips around 16800 with SL 16700 for the TP of 17000/17160.

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Dollar Stable as Focus on Fed Policy

The U.S. dollar was slightly weaker for the second consecutive day while investors profited from its recent strength and also assessed if the Federal Reserve will increase interest rates by year end. The greenback rallied by nearly three percent since the end of September.

The dollar index was last flat at 97.890. Weaker U.S. economic data, which includes unsatisfactory retail sales, has led investors to earn some profit. Recent data has shown that U.S. consumer prices reported their largest gain in five months in December. One of the best performers against the U.S dollar was the British pound, which last increased by 0.92 percent at $1.2294.

The market also directed their attention on the European Central Bank meeting which is expected to maintain the policy unchanged, according to several traders polled by Reuters.

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Moody's: China State Council Multi-pronged Guidelines Indicate Credit Positive Willingness to Address the Risks posed by High Corporate Debt


Moody's Investors Service says that guidelines issued by China's State Council earlier this month indicate a credit-positive willingness to address the risks posed by high corporate leverage. How the guidelines are implemented will determine their credit implications across sectors.

Moody's conclusions were contained in a just-released report, "China credit - State Council Guidelines Indicate Credit-Positive Willingness to Address Risks Posed by High Corporate Debt".

China's State Council published two guidelines on 10 October. The measures outlined in the guidelines include mergers and acquisitions, revitalization of stock assets, securitization of performing and nonperforming assets, optimization of debt structures, debt-equity swaps, developments of equity financing, regulation of the bankruptcy process, and strengthening of corporate governance.

Moody's sees two potential challenges to their implementation. First, in the near term, the deleveraging that these measures seek could lower GDP growth. However, Moody's expects that the current context of proactive fiscal policy and prudent monetary policy, which the guidelines re-assert, will mitigate this near-term effect.

The second set of challenges is related to the absence of a deep and liquid equity market, a pricing framework for equity in the debt swaps, or relevant legal framework (including a transparent and predictable bankruptcy process).

The market-oriented principles emphasized in the guidelines, if thoroughly implemented, will introduce safeguards to reduce the risk of banks swapping non-viable companies' debt for equity at a price that would leave them exposed to sharp falls in valuations. Meanwhile, the asset management companies may need new equity injections, particularly if book values are broadly retained.

The report says that it is likely that, through some of the measures envisaged, some of the leverage currently on corporate balance sheets is shifted to other parts of the economy, including the banks and asset management companies. Moreover, the government and the public sector in general would also take some of the costs, either directly or indirectly through the provision of policy support.

The credit implications for the sovereign will depend on whether the measures effectively reduce the economy-wide contingent liability risks for the government posed by state-owned enterprises, banks and asset management companies.

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Gold Prices Supported by the Weaker Dollar

Gold prices climbed to a two-week high which was bolstered by a weaker dollar. Gold for December delivery was up 0.6 percent at $1,269.90 per troy ounce on the Comex division of the New York Mercantile Exchange.

The precious metal has also increased due to stable U.S. inflation figures for September, which has reduced predictions of an interest-rate hike from the Federal Reserve by year-end, according to the Commerzbank. Expectations of an interest-rate hike are likely bearish for the precious metal, since it does not pay interest and also competes with other investments when rates are higher.

The World Gold Council claims that the demand for physical gold in China was spurred by the recent decline in prices, and has also estimated that it will reach between 900 and 1,000 tons of gold in 2016.

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