European FX Open - Month-end & German, Italian CPIs

USD/CNH stays orderly just below 7.0000, but SHCOMP Chinese stocks soared over +5% after three of the country’s largest cities eased rules for homebuyers, following through on the central government’s latest efforts to prop up the embattled real estate sector.

On Sunday, the PBOC stated Chinese homeowners will be able to renegotiate terms with their current lenders effective November 1, helping to lower borrowing costs on over Usd 5tln of mortgages for millions of families.

The USD stays on the relative back foot in the wake of September's -50BPs start to the Fed's easing cycle, but the likes of EUR/USD stays off its recent new range highs of 1.1203 and 1.1214, as the latter has concerns/weights of its own.

Last week, material slowdowns in Spanish and French CPIs reinvigorated ECB interest rates cut speculation for October and today German states and Italian versions will garner plenty of interest.

Also scheduled is final UK Q2 GDP (0.6% q/q forecast) and the Nationwide HPI for September as well as Swedish retail sales, all scheduled for the top of the hour.

These are followed by the likes the Swiss KOF leading indicator and UK mortgage approvals and in the second half the Chicago PMI leads.

Overnight, there were a batch of public and private Chinese PMIs released. The official composite improved to 50.4 vs 50.1 last, while the Caixin slowed to 50.3 vs 51.2 in September. However, the official manufacturing PMI gain and firmer than expected 49.8 vs 49.1 the month previous likely attracted most market attention. The improvement was much needed, but also marked a fifth straight month of contraction and showed just why China stimulus is so necessary currently.

Meanwhile, Japan IP badly missed expectations in early August, at -3.3% m/m vs a -0.5% consensus and 3.1% the month previous. The data is a concern for Q3 and of course the new PM, with Bbg reporting Ishiba set to name party veterans to senior posts in his first cabinet as he broadly pursues continuity in economic, monetary and foreign policy, and prepares for an expected early general election.

On the central bank front and looking out for clues as to the timing of next easings, we hear from Fed's Bowman and ECB's Lagarde, with Fed chair Powell and BOE's Greene scheduled tonight.

Elsewhere, US stock futures are largely little changed at the time of writing even as BBC News reports Iran’s supreme leader has said the death of Hezbollah leader Hassan Nasrallah 'will not go unavenged', a day after he was killed in an Israeli air strike in Lebanon. Also, Israeli jets bombed a seaport and several power stations in Yemen, targeting oil infrastructure, after attacks by Iran-backed Houthi rebels and US Secretary of Defence Lloyd Austin warned Tehran against targeting Americans in the Middle East, while Joe Biden said an all-out war must be avoided.

Oil is a touch firmer on the Usd 72/brl handle, while iron ore spiked on Chinese economic support.

And, get ready for MONTH-END flows!

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