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CHINA KEEPS BENCHMARK RATES ON HOLD

China retained its benchmark rates for the fifth straight month as the economy continued to log robust recovery from the downturn caused by the coronavirus pandemic.

The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent. The one-year and five-year loan prime rates were last reduced in April.

The one-year loan prime rate was lowered by 20 basis points and five-year rate by 10 basis points in April.

The interest rates were expected to be retained today as the rate on its medium-term lending facility or MLF, which serves as a guide for the LPR, was maintained early this month.

The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced the central bank's traditional benchmark lending rate in August 2019.

With the economy now largely back to its pre-virus path and the People's Bank of China appearing reluctant to keep monetary policy loose for longer than needed, the next move in the LPR is likely to be an increase early next year, Julian Evans-Pritchard, an economist at Capital Economics said.

With fiscal policy to remain supportive for the remainder of the year, the PBOC appears to see little need for further rate declines and has instead shifted its focus back to containing financial risks, the economist noted.

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EUROPEAN ECONOMICS PREVIEW: SWEDEN CENTRAL BANK RATE DECISION DUE

The interest rate announcement from Sweden's central bank is due on Tuesday, headlining a light day for the European economic news.

At 1.00 am ET, Statistics Finland releases unemployment data for August. The jobless rate was 7 percent in July.

At 3.00 am ET, consumer confidence survey results are due from Turkey.

At 3.30 am ET, Riksbank is set to release its monetary policy report. The bank is expected to hold its key repo rate at zero percent and asset purchase programme at SEK 500 billion.

At 6.00 am ET, the Confederation of British Industry is scheduled to issue Industrial Trends survey data. The order book balance is forecast to rise to -41 percent in September from -44 percent in August.

At 8.00 am ET, Hungary's central bank is slated to announce the outcome of its monetary council meeting. The bank is set to hold its key rate at 0.60 percent.

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NEW ZEALAND CENTRAL BANK HOLDS RATE; SIGNALS FURTHER EASING

New Zealand central bank central bank left its key rate and asset purchase programme unchanged on Wednesday but agreed to provide additional stimulus as the outbreak of the coronavirus in August has dented confidence among firms and households.

The Monetary Policy Committee of the Reserve Bank of New Zealand decided to hold its key Official Cash Rate at 0.25 percent and to continue with the Large Scale Asset Purchase Programme up to NZ$100 billion.

Policymakers assessed that further monetary stimulus would be needed going forward. They affirmed that the Funding for Lending Programme, or FLP, a negative OCR, and purchases of foreign assets remain under consideration.

The Committee agreed that these instruments can be mutually supportive in bolstering economic activity. Members said that the alternative instruments can be deployed independently, and noted that the FLP would be ready before the end of this calendar year.

Further, members viewed that deploying an FLP before the forward guidance period for holding the OCR ends could provide additional stimulus to the economy sooner.

The bank is expected to cut the OCR into negative territory early next year, Ben Udy, an economist at Capital Economics, said.

But the economist observed that given that the market has almost fully priced on expectation of a further 50 basis points of easing, negative rates are unlikely to drive much of a weakening in the New Zealand dollar.

Although the outbreak of Covid-19 in New Zealand appeared to be contained, the coronavirus pandemic and associated travel restrictions could have a significant long-term negative impact on the economy.

House prices had advanced recently but some policymakers noted that low population growth and rising unemployment are expected to constrain further house price increases.

The committee said the monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability.

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EUROPEAN ECONOMICS PREVIEW: SWISS MONETARY POLICY DECISION DUE

The monetary policy announcement from the Swiss National Bank and business confidence from Germany are due on Thursday, headlining a busy day for the European economic news.

At 2.45 am ET, France's statistical office Insee is set to issue business confidence survey data. The sentiment index is forecast to rise to 95 in September from 93 in August.

At 3.00 am ET, manufacturing confidence data is due from Turkey.

Half an hour later, the Swiss National Bank is scheduled to announce its interest rate decision. The bank is expected to leave its key interest rate unchanged at -0.75 percent.

At 4.00 am ET, Germany's Ifo business confidence survey data is due. The business sentiment index is forecast to rise to 93.8 in September from 92.6 in August.

In the meantime, the European Central Bank releases economic bulletin and Norges Bank is set to announce its rate decision. The Norges Bank is expected to hold its rate at zero percent.

At 5.00 am ET, Italy's non-EU foreign trade data is due for August.

At 6.00 am ET, the Confederation of British Industry releases Distributive Trades survey data. The order book balance is forecast to rise to -35 percent in August from -46 percent in July.

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DOLLAR TURNS SUBDUED AFTER EARLY STRENGTH

After staying positive for much of the session till noon, the U.S. dollar turned weak and posted losses against some of its peers on Thursday.

Data released by the Labor Department this morning showed an unexpected uptick in first-time claims for U.S. unemployment benefits in the week ended September 19th.

The data said initial jobless claims inched up to 870,000, an increase of 4,000 from the previous week's revised level of 866,000. Economists had expected jobless claims to drop to 843,000 from the 860,000 originally reported for the previous week.

A separate report released by the Commerce Department showed new home sales jumped by 4.8% to an annual rate of 1.011 million in August after skyrocketing by 14.7% to an upwardly revised rate of 965,000 in July. Economists had expected new home sales to pull back by 1.2%.

The dollar index, which rose to 94.59 in late morning trades, fell to a low of 94.20 around mid afternoon and was last seen at 94.37, down slightly from previous close.

Against the Euro, the dollar firmed up to 1.627 before losing ground and slipping to 1.1689. It subsequently regained some lost ground and was hovering around 1.1670 a little while ago, netting a small loss.

The Pound Sterling was slightly firmer, fetching $1.2741, compared to $1.2726 on Wednesday afternoon.

The Yen was slightly weak at 105.42 a dollar, after recovering from 105.54.

The Aussie was stronger with the AUD-USD pair trading at 0.7045, up nearly 0.4%.

The Swiss franc was weaker against the greenback at 0.9629, down more than 0.3% from Wednesday's close, while the Loonie was firmer against the dollar at C$1.3359, gaining about 0.2%.

During their latest speeches some Fed officials' called for more fiscal stimulus. The call for fiscal stimulus and rising worries about the pace of global economic recovery amid surging coronavirus cases lifted demand for the safe-haven currency.

Fed Chair Jerome Powell said on Wednesday that the economy had a long way to go before recovery and further fiscal support is required to limit damage caused by the coronavirus pandemic.

Fed Vice Chair Richard Clarida said that the economy was still in a deep hole and policymakers "are not even going to begin thinking" about raising interest rates for now.

Switzerland's central bank retained its negative interest rates and said the expansionary monetary policy stance is needed to cushion the impact of the coronavirus pandemic on economic activity and inflation.

About high valuation of Swiss franc, the bank said it is willing to 'intervene more strongly' in the foreign exchange market, while taking the overall exchange rate situation into consideration.

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JAPAN LEADING INDEX DATA DUE ON MONDAY

Japan will on Monday release final July numbers for its leading and coincident economic indexes, highlighting a light day for Asia-Pacific economic activity.

The leading index is tipped to see a score of 86.9, up from 83.8 previously - while the coincident is pegged at 76.2, up from 74.4.

Singapore will release August numbers for import and export prices and producer prices. In July, import prices were up 7.5 percent on year and export prices tumbled an annual 7.0 percent. Producer prices were down 8.5 percent on year.

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SINGAPORE PRODUCER PRICES DECLINE AT FASTER PACE

Singapore producer prices declined at a faster pace in August on a sharp fall in oil cost, data from the Department of Statistics showed Tuesday.

Producer prices decreased 9.3 percent on a yearly basis in August, following a 6.4 percent drop in July. Oil and non-oil indices were down 35.6 percent and 5.4 percent, respectively.

Month-on-month, producer prices dropped 1.2 percent versus a 0.1 percent fall in July.

Another report from the statistical office showed that import prices slid 6.8 percent annually, extending the 7.3 percent fall in July. The oil index dropped 25.3 percent and non-oil prices slid 1.1 percent.

On a monthly basis, import prices fell 0.1 percent, in contrast to the 1.9 percent rise in July.

Data showed that export prices decreased 0.6 percent on month taking the annual fall to 8.2 percent in August.

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UK SHOP PRICES CONTINUE TO FALL IN SEPTEMBER:

UK shop prices continued to decrease in September on falling non-food prices, data from the British Retail Consortium, or BRC, revealed Wednesday.

The shop price index dropped 1.6 percent year-on-year, the same pace of decrease as seen in August. Non-food prices decreased 3.2 percent in September compared to a decline of 3.4 percent in August. At the same time, food inflation eased to 1.2 percent from 1.3 percent in August. Fresh food inflation held steady at 0.2 percent.

Retailers are cutting prices in order to encourage further spending where sales are yet to pick up, Helen Dickinson, chief executive at BRC, said. In addition, September saw the lowest rate of fresh food inflation since 2017, which has been mostly driven by the continued availability of fresh, local food produce.

Mike Watkins, Head of Retailer and Business Insight, Nielsen, said "Looking ahead we can expect shop price inflation to remain at current low levels for the next quarter."

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PHILIPPINES MANUFACTURING PMI MOVES TO 50.1 IN SEPTEMBER - IHS MARKIT

The manufacturing sector in the Philippines moved into expansion in September, the latest survey from IHS Markit showed on Thursday with a manufacturing PMI score of 50.1.

That's up from 47.3 in August, and it moves above the boom-or-bust line of 50 that separates from expansion.

Individually, new orders expanded for the first time since February, while production declined only marginally. Business sentiment improved to a seven-month high.

Production volumes fell for the third month running in September, with firms often indicating that ongoing COVID-19 restrictions continued to hamper activity.

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EUROPEAN ECONOMICS PREVIEW: EUROZONE CONSUMER PRICE DATA DUE

Flash consumer price data from euro area is due on Friday, headlining a light day for the European economic news. At 3.00 am ET, Spain's unemployment data for September is due from the Ministry of Labor, Migration and Social Security. The number of unemployed rose by 29,780, or 0.79 percent, in August.

At 4.00 am ET, Norway's unemployment data is due. The jobless rate is expected to fall to 4 percent in September from 4.3 percent in August.

At 5.00 am ET, Eurostat is slated to release euro area consumer prices for September. Economists forecast consumer prices to fall 0.2 percent annually, the same pace of fall as seen in August.

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EUROPEAN ECONOMICS PREVIEW: EUROZONE FINAL PMI, INVESTOR CONFIDENCE DATA DUE

Final Purchasing Managers' survey results, investor confidence and retail sales from euro area are due on Monday, headlining a busy day for the European economic news.

At 3.00 am ET, consumer and producer prices from Turkey and retail sales from Hungary are due. Turkish inflation is forecast to rise to 12.13 percent in September from 11.77 percent in August.

At 3.15 am ET, Spain's services PMI data is due. The index is expected to fall to 46.3 in September from 47.7 in August.

At 3.45 am ET, composite PMI figures from Italy are due. Economists forecast the services indicator to drop to 46.6 from 47.1 in August.

Thereafter, final PMI reports are due from France and Germany at 3.50 and 3.55 am ET, respectively.

At 4.00 am ET, IHS Markit releases euro area composite PMI survey data. The score is seen at 50.1 in September, unchanged from the flash estimate.

Half an hour later, UK IHS Markit/CIPS composite PMI data is due. The UK composite output index is forecast to fall to 55.7 in September, as initially estimated, from 59.1 in August.

In the meantime, Eurozone Sentix investor confidence survey results are due. Economists expect the index to fall to -9.5 in October from -8.0 in September. At 5.00 am ET, Eurostat is scheduled to issue euro area retail sales data for August. Sales are forecast to climb 2.4 percent on month, in contrast to a 1.3 percent drop in July.

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EUROPEAN ECONOMICS PREVIEW: GERMANY FACTORY ORDERS DATA DUE

Factory orders and construction Purchasing mangers' survey data from Germany are due on Tuesday, headlining a light day for the European economic news.

At 2.00 am ET, Destatis is scheduled to issue Germany's factory orders data for August. Economists forecast orders to grow 2.6 percent on month, following a 2.8 percent rise in July.

At 3.00 am ET, industrial output figures are due from Hungary. Output is expected to fall 3.3 percent on year in August, after easing 8.1 percent in July.

At 3.30 am ET, Statistics Sweden releases industrial production and new orders for August. In the meantime, Germany's IHS Markit construction PMI data is due.

At 4.30 am ET, IHS Markit is set to issue UK construction PMI data for September. The index is seen at 54.0 versus 54.6 in August.

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HONG KONG PRIVATE SECTOR PMI CLIMBS TO 47.7 IN SEPTEMBER - IHS MARKIT

The private sector in Hong Kong continued to contract in September, albeit at a slower pace, the latest survey from IHS Markit showed on Wednesday with a PMI score of 47.7.

That's up from 44.0, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

Individually, output and new orders fell at slower rates, while the was job growth for the first time in three months. Business sentiment was at its least negative since June 2019.

Supply chains remained under pressure as limited freight capacity reportedly contributed to delivery delays.

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JAPAN HAS Y2,102.8 BILLION CURRENT ACCOUNT SURPLUS IN AUGUST

Japan posted a current account surplus of 2,102.8 billion yen in August, the Ministry of Finance said on Thursday - down 1.5 percent on year.

That exceeded expectations for a surplus of 1,983.7 billion yen following the 1,468.3 billion yen surplus in July.

Exports were down 15.5 percent on year at 5.124 trillion yen, while imports sank an annual 22.0 percent to 4.711 trillion yen.

The trade surplus was 413 billion yen, up from 137.3 billion yen in the previous month.

The capital account saw a deficit of 9.3 billion yen and the financial account had a surplus of 560.0 billion yen.

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EUROPEAN ECONOMICS PREVIEW: UK GDP DATA DUE

Monthly GDP estimate, industrial production and foreign trade figures are due from the UK on Friday, headlining a light day for the European economic news.

At 2.00 am ET, the Office for National Statistics is scheduled to issue UK monthly GDP data. The economy is forecast to grow 4.6 percent on month in August, slower than the 6.6 percent increase in July. Industrial production and foreign trade figures are also due from the UK.

Industrial output is expected to climb 2.5 percent on month in August. The visible trade deficit is seen widening to GBP 9 billion from GBP 8.65 billion in July.

In the meantime, consumer prices from Norway and foreign trade from Denmark are due. At 2.45 am ET, the French statistical office Insee releases industrial production data for August. Economists forecast production to advance 1.7 percent on month, slower than the 3.8 percent increase posted in July.

At 3.00 am ET, foreign trade figures from Hungary and Austria are due.

At 4.00 am ET, Italy's Istat publishes industrial production for August. Economists forecast output to grow 1.3 percent on month, following a 7.4 percent rise in July. At 5.00 am ET, consumer prices and industrial production reports are due from Greece.

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JAPAN AUGUST CORE MACHINE ORDERS RISE 0.2%

The value of core machine orders in Japan gained a seasonally adjusted 0.2 percent on month in August, the Cabinet Office said on Monday - standing at 752.5 billion yen.

That beat forecasts for a decline of 1.0 percent following the 6.3 percent increase in July.

On a yearly basis, core machine orders sank 15.2 percent - beating expectations for a loss of 15.6 percent following the 16.2 percent drop in the previous month.

The total value of overall machinery orders received by 280 manufacturers operating in Japan increased by 19.8 percent on month in August and fell 16.5 percent on year.

Government orders were up 28.3 percent on month and down 19.4 percent on year at 267.7 billion yen, while overseas orders surged 49.6 percent on month and fell 7.4 percent on year at 919.0 billion yen and agency orders rose 0.5 percent on month and lost 18.1 percent on year at 99.9 billion yen.

For the third quarter of 2020, core machine orders are forecast to have fallen 1.9 percent on quarter and 15.5 percent on year.

Also on Monday: . The Bank of Japan said that producer prices in Japan were down 0.2 percent on month in September, missing expectations for a flat reading following the downwardly revised 0.1 percent increase in August (originally 0.2 percent).

On a yearly basis, producer prices sank 0.8 percent - again shy of expectations for a loss of 0.5 percent, which would have been unchanged from the August reading.

Export prices were up 0.1 percent on month and down 1.5 percent on year, the central bank said, while import prices rose 0.2 percent on month and tumbled 10.1 percent on year.

The BOJ also said that the value of overall bank lending in Japan was up 6.4 percent on year in September, coming in at 573.737 trillion yen. That was in line with expectations and down from the 6.7 percent gain in August. Excluding trusts, bank lending was up an annual 6.2 percent to 498.718 trillion yen, slowing from the 6.6 percent increase in the previous month. '

For the third quarter of 2020, overall bank lending was up 6.5 percent on year; excluding trusts, it was up 6.4 percent on year.

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EUROPEAN ECONOMICS PREVIEW: UK UNEMPLOYMENT DATA DUE

Labor market statistics from the UK and economic confidence from Germany are due on Tuesday, headlining a light day for the European economic news.

At 2.00 am ET, the Office for National Statistics releases UK unemployment data for August. The jobless rate is forecast to rise to 4.3 percent in three months to August from 4.1 percent in the preceding period.

In the meantime, final consumer price data is due from Germany. According to preliminary estimate, consumer prices decreased 0.2 percent on year in September after staying flat in August.

At 3.00 am ET, industrial production from Turkey and Hungary are due. Turkey's industrial output is seen rising 3 percent in August after climbing 4.4 percent in July.

Half an hour later, Statistics Sweden publishes consumer price figures for September. Inflation is seen at 0.6 percent versus 0.8 percent in August.

At 5.00 am ET, Germany's ZEW economic confidence survey results are due. Economists forecast the economic sentiment index to fall to 73.0 in October from 77.4 in September.

At 8.30 am ET, the International Monetary Fund is set to publish the World Economic Outlook report.

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EUROPEAN ECONOMICS PREVIEW: EUROZONE INDUSTRIAL OUTPUT DATA DUE

Industrial production from euro area is due on Wednesday, headlining a light day for the European economic news.

At 1.00 am ET, consumer price data is due from Statistics Finland. Prices had increased 0.2 percent on year in August.

At 3.00 am ET, Spain's INE is scheduled to release final consumer prices for September. Prices are expected to fall 0.4 percent on year, the same rate as initially estimated.

At 4.00 am ET, European Central Bank President Christine Lagarde is set to speak via videoconference at the 16th Global Roundtable organized by the United Nations Environment Programme Finance Initiative.

At 5.00 am ET, Eurostat is slated to issue area area industrial output data for August. Economists forecast production to grow 0.8 percent on month, slower than the 4.1 percent increase seen in July.

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CHINA'S INFLATION SLOWS IN SEPTEMBER; PPI CONTINUES TO FALL

China's consumer price growth slowed in September on easing food price inflation and producer prices continued to ease, data from the National Bureau of Statistics showed Thursday.

Consumer prices advanced 1.7 percent on a yearly basis in September, slower than the 2.4 percent increase seen in August. This was also slower than the economists' forecast of 1.8 percent.

At the same time, core inflation, which excludes food and energy prices, held steady at 0.5 percent in September.

Driven by a slowdown in pork price inflation, food prices grew 7.9 percent following 11.2 percent rise in August. Pork prices grew 25.5 percent but much slower than the 52.6 percent increase logged in the previous month.

On a monthly basis, consumer prices gained 0.2 percent versus a 0.4 percent rise a month ago. Another report from NBS showed that producer prices were down 2.1 percent annually after easing 2 percent in August. Economists had forecast an annual decrease of 1.8 percent.

With infrastructure-led stimulus still being ramped up and consumption rebounding, demand-side pressures on prices will probably strengthen in the coming months, pushing up underlying inflation, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.

However, the economists noted that the rebound in core consumer price inflation will still leave it relatively subdued and food price inflation looks set to drop back further in the near-term as pork supply continues to recover from last year's African swine fever outbreak.

The benign outlook for inflation means it is unlikely to be a major driver of policy decisions in the coming quarters, the economists added.

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EUROPEAN ECONOMICS PREVIEW: EUROZONE CONSUMER PRICES, FOREIGN TRADE DATA DUE

Final consumer prices and foreign trade figures from euro area are due on Friday, headlining a light day for the European economic news.

At 2.00 am ET, the European Automobile Manufacturers Association is set to issue Europe's new car registrations data. Sales had declined 18.9 percent annually in August.

At 3.00 am ET, the Czech Statistical Office releases producer prices for September. Prices are forecast to drop 0.7 percent annually after falling 0.5 percent in August.

At 4.00 am ET, Italy's final consumer price data is due. Prices are forecast to fall 0.5 percent annually, as initially estimated in September.

At 5.00 am ET, Eurostat is scheduled to publish euro area final consumer prices and foreign trade data. According to flash estimate, consumer prices dropped 0.3 percent on year in September, following a 0.2 percent decrease in August.

The euro area trade surplus is forecast to fall to EUR 15.1 billion in August from EUR 27.9 billion in July.

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