OUTLOOK: Price Signal Summary - USDJPY Trend Set-Up Remains Bullish

• US Data/Speaker Calendar (prior, estimate)
• 11/17 0830 Empire Manufacturing (10.7, 5.8)
• 11/17 0900 NY Fed Williams welcome remarks (no Q&A)
• 11/17 0930 Fed VC Jefferson moderated discussion outlook/policy (text, Q&A)
• 11/17 1000 Construction Spending (-0.1%, -0.1%)
• 11/17 1130 US Tsy $86B 13W & $77B 26W bill auctions
• 11/17 1300 MN Fed Kashkari moderates discussion
• 11/17 1535 Fed Gov Waller economic outlook, SPE annual dinner
• Source: Bloomberg Finance L.P. / MNI

Headlines crossing from Irish Central Bank Governor Makhlouf via Bloomberg:

• "*MAKHLOUF: EXAGGERATION TO SAY HE’S WORRIED ON PRICE TRAJECTORY"
• "*ECB IS IN A GOOD PLACE AT THE MOMENT, MAKHLOUF SAYS"
• "*ECB'S MAKHLOUF: NO NEED TO GET `TOO OBSESSED' WITH ETS2 DELAY"

Note that on October 15, Makhlouf somewhat surprisingly said that he was "more worried that we’re going to be over than under 2%.” Comments today suggest he is more aligned with the median Governing Council member view than those mid-October remarks implied.

Following Friday’s market swings UBS note that the “first signs of turbulence are emerging in equities, but so far, CTAs have held on to their position. That resilience may not last long, as we are getting closer to the inflection points where we see them selling in size”.

• They note that “over the next two weeks, we expect CTAs to start reducing risk, cutting 20% of their current equity exposure ($20/30bln). That amount could easily triple in a scenario where global indices go down by 5% or more”.
• Meanwhile, in rates, they suggest that CTAs have halved their duration exposure over the past couple of weeks. UBS “anticipate more selling ($60/70mln Dv01), but noticed that their reaction function has become more balanced. Price actions in equities, and 'risk-off' indicators in general, will be important to monitor, as they will likely impact CTAs’ next course of action in bonds”.
• Finally for FX, UBS think that “CTAs continued to buy USD in the last two weeks (~$50bln), mostly against G10 FX & CNH. Flows should stabilize from here or even reverse a little bit for some currencies (CNH, EUR & CHF). Overall positioning is neutral USD, positive on EMEA, CEE & Latam FX, negative on Asia FX”.