FX Overnight Markets:

Price action across the G10 FX space was very limited, with little of note on the wires. JPY marginally outperformed its peers from the G10 basket amid second houghts on China-U.S. trade matters, as China's Global Times circulated talk of Beijing demanding the removal of some U.S. tariffs before the finalization of a phase-one trade pact can go ahead. NOK brings up the rear among the G10 currencies as crude prices are slightly weaker.

A downbeat NZ Q3 jobs report clipped the kiwi's wings just ahead of Tuesday's close. NZD strength seen at the start to the AsiaPac session represented a slight corrective pullback, but the currency shed those gains.

The yuan gained traction after the PBoC set its central USD/CNY midpoint below estimates. USD/CNH dropped below the key CNH 7.0000 level and failed to recoup the round figure thereafter, despite testing it to the topside.

FX Relevant Economic Releases:

The data calendar has several data releases of note Wednesday including the publication of German industrial orders at 0700GMT and EZ retail sales at 1000GMT. In the US the release of figures on preliminary non-farm productivity at 1330GMT will be closely watched.

FX Relative Volatility:

Interesting Stories of Today:

Stocks Drift Amid Mixed Earnings; Treasuries Gain: Markets Wrap (Bloomberg)

Stocks in Europe drifted along with U.S. equity-index futures as a raft corporate earnings and economic data presented a mixed picture of the outlook for the global economy. U.S. Treasuries edged higher after dropping for three days.

Japan’s benchmark bond yield climbed to its highest in more than five months as an auction was met with weaker-than-expected demand amid a global debt sell-off. The yuan traded stronger than 7 per dollar for a second day, while the dollar was little changed as investors awaited fresh developments on the U.S.-China trade front. Bloomberg’s gauge of raw-material spot prices climbed to its highest level since April.

German Manufacturing Shows Signs of Life (Bloomberg)

A rebound in German factory orders is adding to signs that the euro-area economy has passed the worst of its recent troubles.

Demand rose 1.3% in September, far exceeding estimates of a 0.1% gain. The first increase in three months was driven by a solid pickup in investment and consumer goods, with demand from outside the euro area providing a particular boost.

China Risks Overplaying Its Hand on Trade (Bloomberg)

The U.S.-China trade war has been driven by successive rounds of misunderstanding and overconfidence.

Until the collapse of an initial hoped-for agreement in May, the Pollyannas were mainly in Washington. U.S. Trade Representative Robert Lighthizer and his allies in the Trump administration were gunning for a wholesale remaking of the Chinese state’s relationship with the economy which was never likely to happen. Now it’s Beijing’s turn to come to the table with unrealistic expectations.

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