Asian equities open lower as the rebound in US stocks lost momentum. DJIA closed slightly lower by -49.97 pts, or -0.29%, at 17081.89. S&P 500 closed down -13.77 pts, or -0.68%, at 2003.69. Nikkei is is trading down -363 pts, or -2% at the time of writing. Slowdown in China remains a concern in investors' mind. China CPI slowed more than expected to 1.6% yoy in September, versus expectation of 1.8% yoy and down from August's 2.00%. PPI was unchanged at -5.9% yoy, inline with expectation. Also released in Asian session, JPY domestic CGPI dropped -3.9% yoy in September. M2+CD rose 3.8% yoy in September. Australia Westpac consumer confidence rose 4.2% in October.
The loss of momentum in US indices is starting to raise the risk in near term reversal. DJIA is starting to feel some resistance from 61.8% retracement of 18351.36 to 15370.33 at 17212.60. Rise from 15370.33 is viewed as a correction and break of 55 days EMA (now at 16834.18) will turn bias back to the downside and bring retest of 15370.33 low.
Similar picture is seen in S&P 500. The index is facing come resistance from 61.8% retracement of 2134.71 to 1867.01 at 2032.44. Price actions from 1867.01 are viewed as a consolidation/correction pattern. Break of 55 days EMA (now at 1994.98) will bring retest of 1867.01 low. Such developments would likely put some pressure on commodity currencies.
Fed Governor Daniel Tarullo said that "right now, my expectation is, given where I think the economy would go, I wouldn't expect it would be appropriate to raise rates." And, "I want to hasten to add that that is an outlook that changes based on developments in the economy." He also emphasized that "a premature rise might be harder to deal with than waiting a little bit longer."
ECB executive board member said that "it will take somewhat longer than previously anticipated for inflation to return to a rate that we consider sufficiently close to 2.0 per cent and stabilise at that rate." But it is too early to judge whether slowdown in emerging markets, strong Euro and fall in oil prices would "cause lasting changes to the trajectory that the ECB expected inflation to follow". And he said ECB won't hesitate to use all available instruments to achieve the price target if necessary.
Looking ahead, UK job data is a main focus in European session. Sterling has been pressured since yesterday on negative inflation reading. And it's vulnerable to downside surprises in economic data. Eurozone will release industrial production while Swiss will release ZEW. From US, retail sales, PPI, business inventories will be featured. Fed will also release Beige Book economic report.