• Fed Will Continue to Work to Tailor Oversight to Riskiness of Banks

• Calls for Regulatory Relief for Small Banks

• Fed Will Raise Big Bank Capital Requirements Through Stress Test Changes

• Largest, Most Complex U.S. Banks Will See 'Significant Aggregate Increase in Capital Requirements'

• 'Loan Growth is Picking Up, and Problem Loans' are Down

• For Rates to Rise, We Need More Investment, Economic Reforms

• Policymakers Need to Seize Opportunity to Deliver Reforms

• Not Seeing Overheating in Eurozone, German Economy As a Whole

• Low Rates For a Long Period Risk Overvaluation in Asset Markets

• German Unemployment Is At Its Lowest Since Reunification

• ECB Policy Isn't Main Factor For Low Profitability of Banks

ЕUR/USD: 1.1085-90 (EUR 630m) 1.1100 (832m) 1.1110 (769m) 1.1150 (571m) 1.1200 (779m) 1.1205 (1.4bln) 1.1225 (538m)

USD/JPY: 99.50 (500m) 100.00 (830m) 100.80 (USD 480m) 101.50 (390m)

GBP/USD 1.2930 (GBP 206m) 1.3000 (690m)

EUR/GBP 0.8700 (EUR 315m)

AUD/USD: 0.7650 (AUD 202m)

USD/CAD: 1.3150 (USD 300m) 1.3250 (206m) 1.3300 (1.8bln)

New orders for manufactured durable goods in August decreased $0.1 billion or virtually unchanged to $226.9 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 3.6 percent July increase. Excluding transportation, new orders decreased 0.4 percent. Excluding defense, new orders decreased 1.0 percent. Electrical equipment, appliances, and components, down following two consecutive monthly increases, drove the decrease, $0.2 billion or 2.5 percent to $9.6 billion. Shipments Shipments of manufactured durable goods in August, down following two consecutive monthly increases, decreased $0.8 billion or 0.4 percent to $231.7 billion. This followed a virtually unchanged July increase. Transportation equipment, down three of the last four months, drove the decrease, $0.9 billion or 1.1 percent to $79.9 billion.

Inventories of manufactured durable goods in August, up two consecutive months, increased $0.5 billion or 0.1 percent to $383.7 billion. This followed a 0.4 percent July increase. Machinery, up two of the last three months, led the increase, $0.3 billion or 0.5 percent to $65.7 billion. Capital Goods Nondefense new orders for capital goods in August decreased $3.1 billion or 4.4 percent to $66.9 billion. Shipments decreased $1.4 billion or 1.9 percent to $70.1 billion. Unfilled orders decreased $3.1 billion or 0.4 percent to $696.3 billion. Inventories increased $0.3 billion or 0.2 percent to $169.7 billion. Defense new orders for capital goods in August increased $2.3 billion or 23.6 percent to $11.9 billion. Shipments decreased $0.2 billion or 2.3 percent to $10.3 billion. Unfilled orders increased $1.5 billion or 1.1 percent to $137.2 billion. Inventories decreased $0.4 billion or 2.0 percent to $20.7 billion.

EUR/USD

Offers : 1.1200 1.1220-25 1.1250 1.1280 1.1300

Bids : 1.1180-85 1.1150 1.1130 1.1100 1.1080 1.1050

GBP/USD

Offers : 1.3030 1.3050-55 1.3080-851.3100 1.3120 1.3150

Bids : 1.3000 1.2985 1.2950 1.2935 1.2915 1.2900 1.2880 1.2865 1.2850

EUR/GBP

Offers : 0.8625 0.8650 0.8685 0.8700 0.8720-25 0.8750

Bids : 0.8580 0.8565 0.8550 0.8520-25 0.8500

EUR/JPY

Offers : 113.00 113.30 113.50 113.85 114.00 114.20 114.50

Bids : 112.50 112.35 112.00 111.80 111.50 111.30 111.00

USD/JPY

Offers : 100.85 101.00 101.25-30 101.50 101.80 102.00

Bids : 100.50 100.25 100.00 99.80 99.65 99.50-55 99.30 99.00

AUD/USD

Offers : 0.7685 0.7700 0.7725-30 0.7750 0.7765 0.7800

Bids : 0.7650 0.7630 0.7600 0.7585 0.7565 0.7550

UR/USD: 1.1085-90 (EUR 630m) 1.1100 (832m) 1.1110 (769m) 1.1150 (571m) 1.1200 (779m) 1.1205 (1.4bln) 1.1225 (538m)

USD/JPY: 99.50 (500m) 100.00 (830m) 100.80 (USD 480m) 101.50 (390m)

GBP/USD 1.2930 (GBP 206m) 1.3000 (690m)

EUR/GBP 0.8700 (EUR 315m)

AUD/USD: 0.7650 (AUD 202m)

USD/CAD: 1.3150 (USD 300m) 1.3250 (206m) 1.3300 (1.8bln)

• lower equilibrium rate caused ECB to adopt negative rates

• we need more robust fiscal policy prescription

*via forexlive

According to rttnews, the U.K. economy is currently experiencing a period of uncertainty and adjustment following the Britons' surprise vote in June to leave the European Union, but the longer term prospects are positive, Bank of England Governor Mark Carney said in an interview published Wednesday.

"As all of the MPC said in our most recent decision in September, the broad contours of how the economy is performing [are] in line with what we had expected in August," Carney said in the interview to the Herald Scotland newspaper.

"We had expected in August that the economy would slow materially during the second half of this year, relative to relatively strong growth in the first half of this year. Broad brush, that is what we are seeing."

In the September policy session, a majority of BoE policymakers signaled that they would support a further cut in the key interest rate in November, if the economy evolved in line with the projections made in August.

Pointing out the softening in business investment and the real estate market, Carney said such "big lumpy decisions" were being affected by the "Brexit" uncertainty. Meanwhile, consumer spending is holding up and the housing market is giving mixed signals, he added.

"There are positive long-term prospects for the UK economy," Carney told the Scottish daily.

"It is a product of a period of uncertainty and adjustment that naturally is under way. It is a slowing from strong growth to something less than that."

"A week on from the announcement by the BoJ, there is a wide range of opinions among economists and market participants around what the central bank has actually done, and what it means for the domestic economy and markets.

We agree with the critics that the new policy framework is unlikely to reflate the economy to a greater extent relative to what was the case before. This would require inflation expectations to be 'forward-looking' and the commitment to overshoot the 2% inflation target to be credible. Neither of these two conditions appears to be in place. Governor Kuroda himself has stated that inflation expectations are "adaptive" and convincing people that the central bank will now allow inflation to overshoot 2% when even 1% inflation is difficult to achieve is quite a feat.

But we equally would push back on the idea that the BoJ is 'running out of options' or cutting back its stimulus, as some have also argued. On the contrary, we believe that the launch of the new policy framework shows that the central bank is trying to improve the way monetary stimulus is transmitted to the real economy.

The JPY remains tricky to trade. It trades close to its long-run 'fair value' against the Dollar (estimated with our GSDEER model), and on those grounds is more attractive as a short against the greenback than the EUR. But the decline in Japanese inflation expectations relative to those in the US has meant that throughout this year the ex ante real interest rate differentials have been in the JPY's favour (i.e., real rates are higher in Japan than in the US).

Our FX strategists continue to forecast USD/JPY at 108 in 3 months. This is based on the realization by the Fed that the build-up of inflation pressures requires higher nominal policy rates and a wider interest rate differential that is also driven by lower JPY rates and the BoJ's reinforcement of its commitment to meet its inflation target".

Copyright © 2016 Goldman Sachs, eFXnews™

EUR/USD

Resistance levels (open interest**, contracts)

$1.1370 (4425)

$1.1335 (2982)

$1.1278 (1073)

Price at time of writing this review: $1.1206

Support levels (open interest**, contracts):

$1.1134 (3223)

$1.1090 (7009)

$1.1044 (2851)

Comments:

- Overall open interest on the CALL options with the expiration date October, 7 is 38446 contracts, with the maximum number of contracts with strike price $1,1500 (5723);

- Overall open interest on the PUT options with the expiration date October, 7 is 39001 contracts, with the maximum number of contracts with strike price $1,1100 (7009);

- The ratio of PUT/CALL was 1.01 versus 1.05 from the previous trading day according to data from September, 27

GBP/USD

Resistance levels (open interest**, contracts)

$1.3301 (2603)

$1.3203 (1431)

$1.3106 (1071)

Price at time of writing this review: $1.3005

Support levels (open interest**, contracts):

$1.2896 (918)

$1.2798 (1801)

$1.2699 (1424)

Comments:

- Overall open interest on the CALL options with the expiration date October, 7 is 26839 contracts, with the maximum number of contracts with strike price $1,3500 (3374);

- Overall open interest on the PUT options with the expiration date October, 7 is 22539 contracts, with the maximum number of contracts with strike price $1,3000 (3560);

- The ratio of PUT/CALL was 0.84 versus 0.84 from the previous trading day according to data from September, 27

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

"Once again, USDJPY rebounded from the near 100 level, but this currency pair has to overcome 102.50 to free itself from the risk breaking lower.

Yesterday's BoJ quarterly Flow of Funds report suggesting corporate cash levels reaching a record USD2.2trn is a symptom of declining monetary velocity. The decline of monetary velocity explains why the increase of the BoJ's base money has not yet filtered through into broader money supply growth and therefore JPY weakness. Authorities will have to work on increasing monetary velocity to turn around the JPY.

There are three important topics when it comes to JPY valuation, namely global deflation/inflation dynamics, the performance of the CNY and, last but not least, Japan's domestic price expectation.

Over the past 10 months these three factors helped to create a perfect storm for the JPY to appreciate. Worse, the combination of JPY strength, import price weakness and declining bank profitability has created a bearish Japan feedback loop which will be difficult to break.

Should the current USDJPY rebound fail to move above 102.50, the risk of breaking below 100.00 will increase, opening downside potential to near 95.00.

Due to the existing bearish feedback loop, risks over the next couple of weeks are on the downside, but the medium term outlook is expected to turn around from here".

Copyright © 2016 Morgan Stanley, eFXnews

• arguments from Rosengren, who dissented on Fed decision, are 'compelling'

• It is getting harder and harder to justify incredibly low interest rates

• worries about getting too 'greedy' on reducing unemployment rate

• significant difference of view inside Fed

• An easy way to convince markets Fed will raise rates is by raising rates

• Yellen fully understands both sides, is right person to find way forward

• expects Yellen to stay until term ends in 2018, no matter who becomes president

The UBS Consumption Indicator rose to 1.53 points in August from 1.45. Tourism accounted for much: The 1.6 % increase in overnight hotel stays compared with the previous year indicates that summer tourism took off after all. Meanwhile, the Swiss car market has maintained a pleasantly high level. New vehicle registrations in August were above the corresponding monthly average since the start of the millennium.

In spite of this positive trend, however, there is still no reason for euphoria, because the situation on the labor market is rather ambivalent. Second-quarter employment figures did indeed record a slight rise over the previous quarter, but they fell compared with the previous year. The uncertainty on the labor market could restrain a more dynamic trend in consumer sentiment in the coming months. The Swiss economy can in fact look back on a respectable growth figure of 1% in the first half of the year. But until this growth is reflected on the labor market, private consumption will probably show no great improvement either.

Overall, consumer sentiment in Germany weakened slightly in September. The overall consumer climate index is forecasting 10.0 points for October, following 10.2 points in September. Both economic and income expectations, as well as propensity to buy suffer losses.

It would seem that German citizens believe that their country's economy is set to develop more weakly over the next few months. This is signaled by the third successive drop in economic expectations. Although the income expectations and propensity to buy indicators also recorded losses this month, they remain at an extremely high level.

Economic expectations suffer third consecutive decline

It appears that consumers feel the German economy will develop somewhat more moderately in the coming months. The indicator fell by 1.8 points in September to 6.8 points. This marks the third decline in a row. Despite these losses, economic expectations remain clearly above zero, in other words, above their long-term average of 0 points.

It looks as if the Brexit decision from June has now started to have an impact. In the three months since the referendum, economic expectations have continuously fallen. The announcement that Great Britain will leave the EU has caused uncertainty to rise. This has also led to the Ifo Business Climate Index falling in July and August.

(pare/closed(GMT +3)/change, %)

EUR/USD $1,1218 -0,29%

GBP/USD $1,3019 +0,36%

USD/CHF Chf0,9706 +0,16%

USD/JPY Y100,40 +0,10%

EUR/JPY Y112,62 -0,20%

GBP/JPY Y130,69 +0,45%

AUD/USD $0,7664 +0,38%

NZD/USD $0,7296 +0,37%

USD/CAD C$1,3198 -0,18%

06:00 Germany Gfk Consumer Confidence Survey October 10.2 10.2

06:00 Switzerland UBS Consumption Indicator August 1.32

12:30 U.S. Durable Goods Orders August 4.4% -1.4%

12:30 U.S. Durable Goods Orders ex Transportation August 1.5% -0.4%

12:30 U.S. Durable goods orders ex defense August 3.8% -1.1%

14:10 U.S. FOMC Member James Bullard Speaks

14:30 U.S. Crude Oil Inventories September -6.2

23:15 U.S. FOMC Member Esther George Speaks

23:50 Japan Retail sales, y/y August -0.2% -1.8%