I. Yesterday's News
1. The Federal Reserve is "very close" to its U.S. employment and inflation targets, Fed Vice Chair Stanley Fischer said on Monday, as he warned against making rash changes to the policy framework in an effort to boost economic growth. Fischer mapped out a world where low growth hamstrings central banks from effective recession-fighting, and said the U.S. economy may face longer and deeper recessions in the future if interest rates remain stuck at current low levels. Asked about the notion of raising the Fed's inflation goal to 3 percent from the current 2 percent, the No. 2 U.S. central banker said he was "not enthusiastic" about such tinkering. The dollar and stocks fell slightly while U.S. Treasury yields added to earlier declines after Fischer's speech, in which he also said the Fed should not aim to overshoot its employment target with too much stimulus.

2. Japan Inc has little faith in the central bank's latest shift in monetary policy, with companies saying it won't generate long-desired inflation, spur further business investment or have an impact on the economy. More than 80 percent of firms said last month's overhaul in policy - one that targets the bond market's yield curve instead of the amount of money pumped into the financial system - will not have an impact on prices or change their capital spending plans. But even so nearly half of firms in the survey saw the Bank of Japan's inflation target of 2 percent as taking more than three years to attain while a quarter said the goal was impossible. None thought the target was attainable within a year.

3. Australia's central bank is watching the health of the labour market and of household finances when deciding on future monetary policy, while coming data on consumer prices will be important for setting inflation expectations. Reserve Bank of Australia (RBA) Governor Philip Lowe noted core inflation of 1.5 percent was well below the target band of 2 to 3 percent and looked set to remain low for some time.

4. Iranian oil minister Bijan Zanganeh said on Monday that he hoped OPEC would reach a deal to restrain oil production in November. Asked by reporters on the sidelines of an oil conference whether he was optimistic about a deal next month, Zanganeh replied: “I hope so.” Asked if current Iranian oil output had risen high enough for Iran to join an OPEC deal, he said: “We should decide in November how much each country should produce.”

5. U.S. industrial production barely rose in September as a rebound in manufacturing and mining output was offset by surprisingly weak demand for utilities, pointing to a moderate acceleration in economic growth in the third quarter. Still, the mixed report from the Federal Reserve on Monday suggested that the industrial sector downturn has probably run its course. Gains in output are likely to be muted as the sector remains constrained by the lingering effects of the dollar's past rally, a collapse in oil prices and weak global demand. The dollar was little changed against a basket of currencies, while prices for U.S. Treasuries rose. Stocks on Wall Street were trading lower.

II. Market Overview
FX
The U.S. dollar retreated from seven-month highs on Monday as investors evaluated whether the Federal Reserve will let inflation run above target before raising interest rates, and as investors took some profits from the recent dollar rally. It was last down 0.16 percent at 97.862, after rising to 98.169 in overnight trading, the highest since March 10. The euro gained 0.28 percent to $1.10.

Precious Metals
The price of gold rose on Monday, partly lifted by steady flows into exchange-traded funds (ETFs) and a dip in the dollar after touching seven-month highs. Spot gold was up 0.4 percent at $1,255.60 an ounce. U.S. gold futures settled up 0.1 percent at $1,256.6 per ounce.

Commodities
1.Crude Oil
Oil prices settled down on Monday, weighed by oversupply concerns, with a spike in trade volume driving U.S prices below $50, but losses were limited amid a projected drop in American shale output. International benchmark Brent crude fell 43 cents, or 0.8 percent, from the last settlement to close at $51.52 per barrel, after hitting a session low of $51.16 a barrel. U.S. West Texas Intermediate (WTI) closed at $49.94 per barrel, down 41 cents, or 0.8 percent, after hitting a session low of $49.47.

2. Base Metals
Aluminium prices fell to two-week lows on Monday due to worries about Chinese producers ramping up output and adding to the surplus being created by semi-finished products being remelted. Benchmark aluminium on the London Metal ended down 0.9 percent at $1,660.5 a tonne from an earlier $1,647, its lowest since Sept 28. Copper ended unchanged at $4,675 a tonne, near a one-month low of $4,623.25 hit on Friday.

U.S. Treasuries
U.S. Treasury yields declined after hitting four-month highs on Monday, as investors sought bargains in bonds whose prices had dropped on Federal Reserve Chair Janet Yellen's remarks last week which suggested that the central bank might tolerate higher inflation. Losses on Wall Street stocks and a surprise drop in a New York Federal Reserve gauge on regional business activity in October also supported demand for bonds. U.S. benchmark 10-year Treasury notes rose 8/32 in price for a yield of 1.762 percent, down 3 basis points from Friday. Earlier on Monday the 10-year yield reached 1.814 percent, the highest since June 2, according to Reuters data.

Stock Market
1. U.S. Equities
Wall Street ended modestly lower on Monday as energy stocks retreated along with oil prices, while Amazon and Netflix weighed on the consumer discretionary sector. The Dow Jones industrial average fell 51.98 points, or 0.29 percent, to 18,086.4, the S&P 500 lost 6.48 points, or 0.3 percent, to 2,126.50 and the Nasdaq Composite dropped 14.34 points, or 0.27 percent, to 5,199.823.

2. Hong Kong Equities
Hong Kong shares drifted near 1-1/2-month lows on Monday, as a cautious mood prevailed ahead of a slew of China data this week that investors hope will paint a clearer picture of how the world's second largest economy is faring. The Hang Seng index fell 0.8 percent, to 23,037.54, while the China Enterprises Index lost 0.6 percent, to 9,541.08 points.