The impact of FOMC meeting earlier this week seems to be fading quickly. While US equities closed higher overnight, with DJIA gained 98.76 pts or 0.54% and S&P 500 up 14.06 pts, or 0.65%. Asian markets didn't follow with Nikkei losing -0.32%. Dollar is still on course to end the week as the weakest major currency, it's trading to recover some grounds today and is trading mildly higher. Meanwhile, Aussie is leading the way higher, followed by the Japanese yen. In other markets, WTI crude oil rebounded strongly this week but lost some momentum after hitting 46.52. Meanwhile, gold is extending recent rang trading between 1300 and 1380.
The strong rebound in US equities invalidated the bearish case of trend reversal. S&P 500 is back above 55 days EMA and the pull back from 2193.81 should be finished at 2119.12. The development suggests that rise fro 1810.10 is still in progress and break of 2193.81 resistance would be seen. Though, bearish divergence condition remains in daily MACD and rise from 1810.10 could be in form of a terminal triangle. Thus, break of 2193.81 should be brief medium term topping should still be around the corner.
The rebound in stocks was also accompanied by sharp dip in treasury yields. 10 year yield should have formed a short term top at 1.752 and some consolidations could be seen. But still, we're favoring case of medium term bottoming at 1.336 and will hold on to this view as long as 1.519 support holds. Break of 1.752 to 1.890 resistance is anticipated at a later stage. Both the developments of stocks and yield suggest that dollar would stay soft for a while in near term before regaining strength later in the year.
On the data front, Japan PMI manufacturing rose to 50.3 in September versus expectation of 49.3. All industry activity index rose 0.3% mom in July versus expectation of 0.2% mom. France PMI manufacturing rose to 49.5 in September versus expectation of 48.4. France PMI services rose to 54.1 versus expectation of 52.0. Eurozone PMIs will be the main focus in European session. Canada retail sales and CPI will be featured in US session.