MNI EUROPEAN OPEN: RBA Cautious On Further Cuts, AUD/NZD Up
EXECUTIVE SUMMARY
- FED’S COOK SAYS POLICY NOT ON PRESET COURSE - MNI BRIEF
- GOVERNMENT SHUTDOWN SHIFTS RISKS TO INFLATION, NOT JOBS, WHERE FED IS HALF-BLIND, CHICAGO FED PRESIDENT SAYS - SEMAFOR
- JAPAN Q3 GDP TO FALL 0.7% Q/Q; ANNUALIZED -2.7% - MNI BRIEF
- JAPAN’S TAKAICHI AIMS FOR GROWTH PLAN COMPILATION BY NEXT SUMMER - BBG
- RBA HOLDS CASH RATE AT 3.6% - MNI BRIEF
Fig 1: AUD/NZD Eyeing Upside 1.1500 Test
Source: Bloomberg Finance L.P./MNI
UK
BUDGET (TIMES): “On Tuesday Rachel Reeves will use a speech in the Treasury to set out her three priorities for the budget — cutting NHS waiting lists, reducing the national debt and improving the cost of living. However, she will highlight the scale of the challenge she faces.”
BUDGET (MNI): UK Chancellor of the Exchequer Rachel Reeves should double her fiscal headroom to GBP20 billion through GBP26 billion of tax rises in her Nov 26 budget, think tank the Resolution Foundation said on Tuesday.
EU
FRANCE (ECONOMIST): “On Tuesday the lower house will start to discuss social-security spending. Roland Lescure, the finance minister, wants to freeze pensions and social benefits, to help cut the deficit from 5.4% of GDP to 4.7% next year.”
PORTUGAL (MNI): Portugal plans to further diversify its investor base across geographies and investor types in 2026, the country's debt management agency (ICGP) told MNI, as foreign demand improves especially for long-dated bonds.
US
FED (MNI BRIEF): Federal Reserve policy is not on a preset course as the economy faces elevated risks of both higher inflation and elevated unemployment, Fed Governor Lisa Cook said Monday. “Looking ahead, policy is not on a predetermined path. We are at a moment when risks to both sides of the dual mandate are elevated,” she said in prepared remarks to the Brookings Institution.
FED (SEMAFOR): “Up until now, Chicago Federal Reserve President Austan Goolsbee has been more worried about a weakening jobs market than inflation. The government shutdown has changed his thinking. Goolsbee said in an interview that the lack of recent inflation data leaves the Fed with “one eye covered.”
MANUFACTURING (MNI INTERVIEW): U.S. manufacturing will remain in contraction territory so long as trade uncertainty continues to drag on businesses, Institute for Supply Management manufacturing chair Susan Spence told MNI.
US/CHINA (WSJ): “Shortly before President Trump met Chinese leader Xi Jinping in South Korea, an urgent issue emerged. Trump wanted to discuss a request by Nvidia Chief Executive Jensen Huang to allow sales of a new generation of artificial-intelligence chips to China, current and former administration officials said.”
POLITICS (RTRS): “U.S. President Donald Trump endorsed former New York Governor Andrew Cuomo for mayor of New York City on Monday and threatened to hold back federal funds to the city if Democratic candidate Zohran Mamdani wins the mayoral election on Tuesday.”
OTHER
CANADA (MNI INTERVIEW): Canada's central bank can avoid cutting interest rates further even if the U.S. trade war continues hitting growth with tariffs also disrupting supply and keeping inflation pressures balanced, a professor who has worked with former BOC advisers and did PhD research there told MNI.
JAPAN (MNI BRIEF): Japan’s economy is expected to have contracted for the first time in six quarters in the July-September period, as weaker private consumption and capital investment offset earlier front-loaded gains, according to private economists.
JAPAN (BBG): “Japanese Prime Minister Sanae Takaichi said she will put together the nation’s new growth strategy by next summer, while pledging to boost tax revenues without increasing taxation rates.”
AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia Board unanimously voted to leave the cash rate at 3.6% on Tuesday, citing inflation that remains materially higher than expected, with the trimmed mean rising 1% in the September quarter.
CHINA
DEBT (YICAI): “The Ministry of Finance has established a Department of Debt Management to manage central and local government debt, Yicai reports. Wen Laicheng, a professor at the Central University of Finance and Economics, said the new department can accelerate the creation of a long-term debt management mechanism aligned with high-quality development, a longstanding goal of the ministry.”
POLICY (YICAI): “Policies outlined in the recent 15th Five-Year Plan indicate a stronger link between competition policy, the development of a unified national market and also fiscal and assessment systems, according to Liu Xu, a research fellow at the National Institute of Strategy at Tsinghua University, who has long studied market competition and antitrust policy.”
MNI: PBOC Net Drains CNY357.8 Bln via OMO Tuesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY117.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY357.8 billion after offsetting maturities of CNY475.3 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4043% at 09:29 am local time from the close of 1.4187% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Monday, the same as the close on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.0885 Tues; +0.95% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.0885 on Tuesday, compared with 7.0867 set on Monday. The fixing was estimated at 7.1248 by Bloomberg survey today.
MARKET DATA
JAPAN S&P GLOBAL OCT. MANUFACTURING PMI 48.2; PRE. 48.3; SEP. 48.5
SOUTH KOREA OCT. CONSUMER PRICES +0.3% M/M; EST. +0.1%; SEP. +0.5%
SOUTH KOREA OCT. CONSUMER PRICES +2.4% Y/Y; EST. +2.2%; SEP. +2.1%
SOUTH KOREA OCT. CPI EX FOOD & ENERGY +2.2% Y/Y; EST. +2.0%; SEP. +2.0%
MARKETS
US TSYS: Treasuries Look to QTRLY Borrowing Estimates for Next Catalyst
US bond futures didn't get out of bed today, with the 10-Yr where it started at 112-21+ to remain at the mid-point of the 50-day EMA and the 100-day EMA. With economic data releases still constrained by the government shutdown, bonds will look to the release this week of the maturity breakdown for funding going forward into 2026. Current expectations are for a significant increase in bill issuance that should create increased demand for longer bonds, thus bring yields down and lowering the interest cost for the government.
Cash was quiet from the open also inching lower in yield after last night's rise with all maturities around 0.5bps lower in yield.
- The 2-Yr is marginally lower at 3.60%.
- The 5-Yr is at 3.71%
- The 10-Yr is steady at 4.10%
- The 30-Yr is -0.5bps lower at 4.68%
Tonight's focus for issuance will continue to come from corporates, where the blockbuster start to the month is set to continue. For USTs the focus will be US$95bn 6-week bills
JGBS: Curve Steepens Ahead Of Tomorrow's 10Y Supply
JGB futures are weaker and at session lows, -20 compared to the settlement levels.
- “Japanese Prime Minister Sanae Takaichi will put together the nation’s new growth strategy by next summer, while pledging to boost tax revenues without increasing taxation rates." - BBG
- MNI Brief: Japan’s economy is expected to have contracted for the first time in six quarters in the July-September period, as weaker private consumption and capital investment offset earlier front-loaded gains, according to private economists. Preliminary estimates suggest GDP fell 0.7% quarter-on-quarter, or an annualised 2.7%, reversing from a 0.5% q/q (annualised 2.2%) expansion in the April-June quarter.
- Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's modest sell-off.
- Cash JGBs are flat to 3bps cheaper across benchmarks, with the 30-year underperforming. The benchmark 30-year yield is at 3.094% versus the cycle high of 3.35%. The near-term technical bias, however, appears lower. (see chart)
- Swap rates are 1-4bps higher, with a steepening bias.
- Following last week's policy decision, BoJ-dated OIS pricing is softer across late 2025/early 2026 meetings compared to early August levels, but slightly firmer for mid to late 2026 meetings.
- Tomorrow, the local calendar will see BOJ Minutes (Sep MPM) and Monetary base data alongside 10-year supply.
Source: Bloomberg Finance LP
AUSSIE BONDS: Market Cheapens As Gov Bullock Delivers A Hawkish Tone
ACGBs (YM -4.5 & XM -2.5) cheapen during RBA Gov Bullock’s presser.
- RBA Governor Michele Bullock said the labour market remains slightly tight relative to full employment and that the Board did not consider cutting or raising rates at its latest meeting, opting instead to hold and review its strategy. She noted that while both inflation and unemployment have risen, the Board is more concerned about inflation, with core inflation above 3% considered “not ideal.”
- Bullock added that the RBA may not need to cut rates much further.
- She dismissed concerns about stagflation.
- Overall, her comments carried a slightly hawkish tone.
- Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's modest sell-off
- Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at +25bps.
- The bills strip is -3 to -6 across contracts.
- RBA-dated OIS pricing had implied just a 3% probability of a move today. As it currently stands, the OIS market has a 75% chance of a 25bp cut by mid-2026.
- The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond on Wednesday and A$800mn of the 3.00% 21 November 2033 bond on Friday.
- Tomorrow, the local calendar will see S&P Global Composite & Services PMIs.
BONDS: NZGBS: Steady Ahead Of Labour Mkt & Wages Data
NZGBs closed little changed across benchmarks after a subdued session.
- Tomorrow sees the key event of the week’s calendar with the release of Q3 labour market and wages data.
- Filled jobs for the quarter signal a stabilisation, but employment is likely to have remained weak, with consensus forecasting it to rise only 0.1% q/q to be still down 0.2% y/y. The unemployment rate is expected to rise 0.1pp to 5.3%, in line with the RBNZ's August projections. Soft labour demand is likely to weigh on private wage growth, which is forecast to rise around 0.4% q/q after 0.6%.
- Swap rates are little changed. The 2-year rate is holding its recent rise, bouncing off channel support, after reaching extreme overbought conditions. (see chart)
- RBNZ dated OIS pricing is little changed across meetings. 24bps of easing is priced for November, with a cumulative 31bps by February 2026.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.50% May-35 bond and NZ$50mn of the 5.00% May-54 bond.
Bloomberg Finance LP
FOREX: Asia-Pac FX: The USD Continues To Grind Higher, Testing Resistance
The BBDXY has had a range today of 1221.38 - 1223.25 in the Asia-Pac session; it is currently trading around 1222, +0.10%. The USD continues to build on its recent gains eking out new highs every day. The 1220-30 area remains tough resistance, only a sustained close back above 1230 would start to challenge the conviction of the longer-term USD shorts. Risk/Reward does still favour fading this moving initially but the price action is starting to look more constructive as higher lows are being made on the Daily chart through October. A sustained move back above 1230 would potentially signal a medium term low is in place and a deeper pullback is on the cards.
- EUR/USD - Asian range 1.1498 - 1.1523, Asia is currently trading 1.1515. The pair has moved back toward its support just above 1.1500. A break under this support could signal a deeper correction, first target 1.1400 and then the 1.1100/1.1200 area.
- GBP/USD - Asian range 1.3118 - 1.3162, Asia is currently dealing around 1.3125. The pair looks to be building some downward momentum. This 1.3100/1.3150 area has proved to be supportive on more than 1 occasion this year so some work around this level could be expected. I continue to favor fading rallies though as GBP attempts to put in a medium term top.
- Cross asset : SPX -0.45%, Gold $3988, US 10-Year 4.1050%, BBDXY 1222, Crude Oil $60.90
- Data/Events : Italy New Car Registrations YoY, France Budget Balance YTD, Spain Unemployment Change
Fig 1: GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia-Pac - AUD/USD Drifts Lower After RBA
The AUD/USD has had a range today of 0.6518 - 0.6541 in the Asia- Pac session, it is currently trading around 0.6525, -0.20%. The RBA held rates and the AUD/USD slipped a few spreads lower with the market perhaps looking for a more hawkish RBA. The AUD/USD is firmly back within its recent 0.6400-0.6650 range with the pivot between 0.6500-0.6550 finding some demand first up.
- The RBA is clearly still concerned with inflation and the data going forward now will be critical as this line in the statement suggests. "Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve."
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6625(AUD 944m). Upcoming Close Strikes : 0.6500(AUD822m Nov 7), 0.6600(AUD682m Nov 7) - BBG
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
JPY: Asia-Pac: USD/JPY - Official Jaw-Boning Sees It Pull Back To 154.00
The USD/JPY range today has been 154.06 - 154.48 in the Asia-Pac session, it is currently trading around 154.10, +0.05%. The pair remains well supported thanks to a combination of a hawkish FED and a BOJ that is still unsure about when it will raise rates. We are testing some resistance around the 154/155 area and I would expect we might to do some work around here initially. A sustained break back above 155 could see the move begin to accelerate and with that the potential for a new round of intervention, though personally I think they will wait for levels closer to 160 to get involved. Look for dips to continue to be supported while above 149-150, the first buy zone is back toward the 152.00 area.
- Yen comments by the FinMin today show FX remains a close watch point for the authorities. Still, based on historical remarks, the comments suggest concern, but not yet suggesting intervention is imminent.
- Options : Close significant option expiries for NY cut, based on DTCC data: 152.50($1.42b). Upcoming Close Strikes : 150.00($1.13b Nov 3) - BBG.
Fig 1 : USD/JPY Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
NZD: Asia-Pac: NZD/USD Trades Heavy Breaking Below Overnight Lows
The NZD/USD had a range of 0.5686 - 0.5710 in the Asia-Pac session, going into the London open trading around 0.5695, -0.25%. The NZD has slipped lower and remained under pressure for most of our session. While price remains below the 0.5800/50 area I suspect rallies continue to be faded looking for a potential move back towards the 0.5500/0.5600 area. NZD continues to stand out as a short against a resurgent USD but it is worth noting that because of the size of the market the market can very quickly become all positioned the same way, so I think the USD will need to break above its pivotal resistance for the NZD to test those lows. That being said, a poor unemployment print tomorrow in New Zealand would certainly give it another nudge.
- MNI AU - Significantly Weaker Jobs Data Could Increase Easing Expectations: Q3 jobs and wages data are released Wednesday and with spare capacity an important driver of monetary easing, will be monitored closely as there has been excess supply in the labour market. Monthly data in the quarter signal there was a stabilization but employment is likely to have remained soft. The unemployment rate is expected to rise 0.1pp to 5.3%, in line with the RBNZ’s August projections. A 25bp cut on 26 November is generally expected but if the labour data print significantly weaker, then expectations of 50bp may increase.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5650(NZD1.1b Nov 5), 0.5675(NZD1.05b Nov 5), 0.5750(NZD604m Nov 5) - BBG
Fig 1: NZD/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA STOCKS: Nikkei / KOSPI in Rare Down Day as CSI Approaches Key Tech Level
In a day where stock specific news was muted, a pull back occurred for major bourses which for some was the first in several days. Whilst tech stocks are still underwriting the positive momentum in Asia, a minor pullback was due. The DOW finished modestly down and with futures pointing down also, most major bourses opened on the back foot. The KOSPI's fall can also be attributed to the unusual occurrence that occurred overnight with the Korea Exchange issuing an 'investment caution' over SK Hynix shares. SK Hynix are up over 280% from their lows this year. The warning sees the company's shares down 6% today, with Samsung down -3.5%.
- The KOSPI was the biggest faller today, with losses of -1.90%, the biggest one day fall since September. It does little to change the technical backdrop with the KOSPI remaining above all major moving averages, and overbought on the 14-day Relative Strength Index.
- The NIKKEI's fall of -0.50% does little to impact the technical backdrop for the index. All major moving averages are steep in their upward slope, an indicator that the positive momentum remains.
- China's major bourses are again inversely correlated with the Hang Seng up modestly by +0.20%, whilst the CSI 300 is down -0.40%, Shanghai down -0.19% and Shenzhen down -1.09%. Shenzhen's technical pullback mirrors that of the CSI 300 as they both near their 20-day EMA.
- SE Asia's major bourses are mixed with the JCI up +0.27%, FTSE Malay up +0.15% whilst the SE Thai is down -0.38% for its fourth day of falls as it nears its 20-day EMA.
OIL: Crude In Narrow Range As Looks For Direction, US Stock Data Out Tuesday
Oil prices have trended lower during today’s session consistent with their recent tendency to range trade. Geopolitical factors, such as sanctions & Ukrainian strikes, have supported them, while reports of elevated levels of oil at sea are fuelling excess supply concerns. OPEC’s decision to pause output increases in Q1 was welcome as a result. However, the EIA is forecasting a 4mbd surplus in 2026.
- WTI is off its intraday low of $60.78/bbl to be down 0.3% to $60.85. It breached $61.00 at the start of Tuesday’s session. Brent is 0.3% lower at $64.70/bbl after falling to $64.61. Both benchmarks are holding above initial support levels.
- With attention firmly on supply/demand fundamentals, US inventory data will continue to be monitored. Industry-based figures are released Tuesday followed by the official EIA’s on Wednesday. November monthly reports from the EIA, IEA and OPEC are scheduled for next week.
- Later the Fed’s Bowman speaks on supervision and monetary policy, ECB President Lagarde and BoE’s Breeden also appear. US data releases scheduled for today are likely to be delayed by the ongoing government shutdown.
GOLD: Bullion Lower On Stronger US$ & Uncertainty Over December Fed Cut
Gold prices have trended lower through today’s APAC trading pressured by the continued uptrend in the US dollar (BBDXY +0.1%). They are down 0.3% to $3988.5/oz, off the intraday low of $3976.01, having spent most of the session below $4000. While Monday’s Fed speakers reiterated that policy is “not on a predetermined path”, they didn’t say that a December rate cut was a likely outcome, which has made bullion more cautious. Chair Powell said last week that further easing in December was not a given.
- Fed Governor Cook said that she supported the October cut as she believed the risks to the labour market outweighed inflation. She also said that “every meeting, including December’s, is a live meeting”. Monetary easing is supportive of non-interest bearing gold and the market has about a 70% chance of a December cut.
- SF Fed President Daly noted that the FOMC should “keep an open mind” about easing next month and that 50bp of cumulative easing would leave the Fed “better positioned”.
- Silver is 0.5% lower at $47.86, after an intraday low at $47.64 but well above the 50-day EMA at $45.963. It reached $48.181 earlier.
- Equities are mixed with the S&P e-mini down 0.3% but Hang Seng up 0.2%. Oil prices are lower with WTI -0.4% to $60.82/bbl. Copper is down 1%.
- Later the Fed’s Bowman speaks on supervision and monetary policy, ECB President Lagarde and BoE’s Breeden also appear. US data releases scheduled for today are likely to be delayed by the ongoing government shutdown.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 04/11/2025 | 0740/0840 |  EU | ECB Lagarde Keynote Speech At Bulgarian National Bank | |
| 04/11/2025 | 0745/0845 |  FR | Budget Balance | |
| 04/11/2025 | 0945/1045 | EU | ECB Lagarde At Bulgarian National Bank Press Conference | |
| 04/11/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 04/11/2025 | 1130/1130 | GB | Chancellor Reeves at House of Commons | |
| 04/11/2025 | 1135/0635 |  US | Fed Vice Chair Michelle Bowman | |
| 04/11/2025 | 1140/1140 | GB | BOE Breeden at International Banking Conference | |
| 04/11/2025 | 1330/0830 | ** | US | Trade Balance |
| 04/11/2025 | 1330/0830 | ** | US | Trade Balance |
| 04/11/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 04/11/2025 | 1500/1000 | ** | US | Factory New Orders |
| 04/11/2025 | 1500/1000 | *** | US | JOLTS jobs opening level |
| 04/11/2025 | 1500/1000 | *** | US | JOLTS quits Rate |
| 04/11/2025 | 1500/1000 | ** | US | Factory New Orders |
| 04/11/2025 | 2100/1600 |  CA | Canada federal budget, release expected just after 4pm EST | |
| 05/11/2025 | 2200/0900 | * |  AU | S&P Global Final Australia Services PMI |
| 05/11/2025 | 2200/0900 | ** | AU | S&P Global Final Australia Composite PMI |
| 05/11/2025 | - |  SE | Riksbank Meeting | |
| 05/11/2025 | 0145/0945 | ** |  CN | S&P Global Final China Services PMI |
| 05/11/2025 | 0145/0945 | ** | CN | S&P Global Final China Composite PMI |
| 05/11/2025 | 0700/0800 | ** |  DE | Manufacturing Orders |
| 05/11/2025 | 0745/0845 | * | FR | Industrial Production |
| 05/11/2025 | 0815/0915 | ** |  ES | S&P Global Services PMI (f) |
| 05/11/2025 | 0815/0915 | ** | ES | S&P Global Composite PMI (final) |
| 05/11/2025 | 0830/0930 | *** | SE | Riksbank Interest Rate Decison |
| 05/11/2025 | 0845/0945 | ** |  IT | S&P Global Services PMI (f) |
| 05/11/2025 | 0845/0945 | ** | IT | S&P Global Composite PMI (final) |
| 05/11/2025 | 0850/0950 | ** | FR | S&P Global Services PMI (f) |
| 05/11/2025 | 0850/0950 | ** | FR | S&P Global Composite PMI (final) |
| 05/11/2025 | 0855/0955 | ** | DE | S&P Global Services PMI (f) |
| 05/11/2025 | 0855/0955 | ** | DE | S&P Global Composite PMI (final) |
| 05/11/2025 | 0900/1000 | * | IT | Retail Sales |
| 05/11/2025 | 0900/1000 | ** | EU | S&P Global Services PMI (f) |
| 05/11/2025 | 0900/1000 | ** | EU | S&P Global Composite PMI (final) |
| 05/11/2025 | 0930/0930 | ** | GB | S&P Global Services PMI (Final) |
| 05/11/2025 | 0930/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 05/11/2025 | 1000/1100 | ** | EU | EZ PPI |
| 05/11/2025 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 05/11/2025 | 1315/0815 | *** | US | ADP Employment Report |
| 05/11/2025 | 1330/0830 | *** | US | Treasury Quarterly Refunding |
