PLN: Zloty Edges Lower, Q3 GDP On Tap Tomorrow

• EUR/USD: Oct15 $1.1600(E1.2bln); Oct16 $1.1580-00(E3.4bln)
• USD/JPY: Oct15 Y143.00($1.8bln)
• AUD/USD: Oct14 $0.6500(A$1.0bln), $0.6580-00(A$1.2bln)

• In the equity space, a sharp sell-off in S&P E-Minis on Friday is - for now - considered corrective. The contract has found support below the 50-day EMA, currently at 6598.55. Friday’s low of 6940.25 has been defined as a key short-term support. Note that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Sep 9 high. A breach of this hurdle would confirm a resumption of the uptrend.
• The trend condition in EUROSTOXX 50 futures is unchanged, the direction is up and the latest pullback is - for now - considered corrective. The key support zone to monitor is 5549.76 - 5474.21, the area between the 20- and 50-day EMAs. A clear break of the 50-day average would highlight a stronger reversal. On the upside, the bull trigger has been defined at 5689.00, the Oct 2 high. Clearance of this hurdle would confirm a resumption of the uptrend.

{GB} GILTS: Gilts have rallied a little after trading either side of unchanged around the open, futures last +14 at 91.30, piercing resistance at 91.28.

• A fresh extension higher would expose more meaningful resistance at 91.82
• Yields 1-2bp lower, curve bull steepens.
• The impact of hope surrounding the potential for a moderation in Sino-U.S. trade tensions has worn off in recent trade, with gilts outperforming vs. Bunds by ~1bp.
• Fiscal headlines remain front and centre domestically.
• The IFS has noted that “It would be difficult, but not impossible, for the Chancellor to raise tens of billions of pounds more revenue without breaking Labour’s manifesto promise”:
• We have covered the remainder of the major fiscal stories from the weekend in another bullet.
• SONIA futures flat to +4.0, BoE-dated OIS prices ~6bp of easing through year-end, which we believe underestimates the odds of a Q4 cut.
• BoE’s Greene & Mann will speak later today.
• More focus will be placed on the labour market data & comments from BoE Governor Bailey (both due Tuesday).