OPTIONS: Expiries for Dec12 NY cut 1000ET (Source DTCC)

CNN reports that the UK has suspended its sharing of intelligence with the US in the Caribbean and eastern Pacific amid concerns about the legality of recent US strikes on vessels in the region that the US claims are involved in drug trafficking. The report states "the UK, which controls a number of territories in the Caribbean where it bases intelligence assets, has helped the US locate vessels suspected of carrying drugs so that the US Coast Guard could interdict them". However, "the UK grew concerned that the US might use intelligence provided by the British to select targets. British officials believe the US military strikes, which have killed 76 people, violate international law, the sources said. The intelligence pause began over a month ago, they said."

• The report claims that similar shifts have been made by Canadian forces in the region. The US, UK and Canada are part of the 'Five Eyes' intelligence sharing group alongside Australia and New Zealand.
• There have been instances of the US suspending some intelligence sharing with its Five Eyes partners, notably over Ukraine, while in February, the FT reported President Trump's trade advisor, Peter Navarro, recommended Canada's exclusion from the partnership. Back in 2021, tensions emerged as New Zealand faced pressure to take a harder line towards China.
• Nevertheless, the UK's actions represent a major shift in stance in what has been for decades one of the closest military/intel relationships on Earth. It remains to be seen whether the UK's decision being reported publicly results in a reprimand from the White House. 

Post-ADP data USD weakness continues to push the major pairs to new daily highs, helping cement the dollar as the worst performing currency in G10.

• The latest phase of USD sales has USDCNH breaking to a new weekly low. The 15-minute candle chart isolates 7.1144-68 as a notable intraday support zone, a break below which would mark a 50% retracement of the upleg posted off the double-bottom YTD lows of 7.0851-86.
• USD traded weaker on the pro-growth impulse (and allied equity strength) from progress made toward a shutdown resolution, and headlines today on China acknowledging the US' delay of the affiliate rule support this view - helping cement a more solid supply chain for the next 12 months.
• While this should be supportive of Chinese growth and exports in the near-term, the PBoC's commitment to "relatively loose" social financing conditions and to more effectively transmit monetary policy should limit losses for USDCNH beyond the year's lows - despite the implication of a less aggressive approach to rate cuts ahead.

The first known-ahead-of-time release of the weekly ADP data was marred by data dissemination issues but ultimately suggested a return of private sector job losses in data up to Oct 25. On its own it points to renewed sizeable deterioration in net job creation after some stabilization in the monthly October report (with its reference week including the 12th of the month), although ADP warns that these data are preliminary and can be revised. 

• In the second publication of weekly ADP data under the guise of its new NER Pulse, private employers on average cut 11,250 jobs on a week-on-week basis in the four weeks to Oct 25, i.e. worth about -45k on a monthly basis.
• ADP does however warn that “These numbers are preliminary and could change as new data is added”. Indeed, we can see there have been revisions this week from a chart image in today’s release but we aren’t able to confirm what they actually are.
• For now, it follows a 42k M/M increase in last week’s main monthly report for October, as usual built on a reference week that includes the 12th day of the month.
• As for how it compares with previous weeks, it follows the 14.25k to Oct 11 (~57k monthly basis) in the release from two weeks ago, a figure that looks broadly similar after today’s updated release but again, we can’t say for sure.  
• Nevertheless, taking latest data at face value, it points to a return to negative jobs growth after the -29k reported in September and -3k in August monthly ADP releases.
• That weakness chimes more closely with last week’s Revelio Labs estimate of nonfarm payrolls growth of -9k even if its implied private sector figure was a little stronger at +13k.
• For future reference, rather than the Main Street Macro webpage suggested ahead of time, ADP first released the details here: https://www.adpresearch.com/the-ner-pulse/.