Intense market worries lead to tech-sell off

USD losing ground

Despite some support being provided by the higher-than-expected September US CPI rates yesterday, the USD is taking a turn southwards during today’s Asian session. A sharp decline of US bond yields, statements of Fed policymakers, including Fed Board Governor Bowman, cautioning against a monetary policy tightening at an excessive speed, all tended to weigh on the USD. We highlight the release of the US PPI rates for September today as well as the Philly Fed Business index for October and the retail sales for September. Possibly higher-than-expected readings could provide renewed support for the greenback in the FX market and vice versa.  We also highlight that Fed Chair Warsh is scheduled to speak tomorrow and a possibly more hawkish tone could lift the USD, while any further “wait and see” hints could weigh on the greenback. 

Tech sell-off weighs on US equities

US equity markets tended to deepen their cautiousness yesterday as the spike of US inflation caused some worries for a possible faster tightening of the Fed’s monetary policy. Also, the worries for the heavy debt taken on by the tech sector for building data centres weighed substantially on the sector’s shares, dragging the market sentiment lower. Should the market’s cautiousness intensify given also the release of the PPI rates and Fed Chair Warsh’s speech tomorrow, we may see US equities losing more ground.

Oil prices correct lower

Oil prices edged lower in today’s Asian session. Despite vessels being hit at the Strait of Hormuz, enhancing market worries for the oil supply chains, the recent US decision to ease sanctions on shadow fleet oil vessels, tends to ease market worries. We still consider the situation as fragile and should tensions escalate in the Middle East, we may see oil prices  gaining again, while further easing of market worries may weigh.

Other highlights for today

Today we get UK’s GDP rates for August, France’s final HICP rates for September, Euro Zone’s industrial output for August, the US NY Fed manufacturing index for October, the US weekly initial jobless claims figure, Canada’s manufacturing sales for August and the weekly US EIA crude oil inventories figure. Ona monetary level we note that BoE’s Greene and Breeden speak while we highlight BoE Governor Bailey’s speech for pound traders as well as BoC Governor Tiff Macklem for Loonie traders as speakers. In tomorrow’s Asian session, BoE Governor Andrew Bailey are scheduled to speak.

Charts to keep an eye out

Nasdaq tumbled yesterday and during today’s Asian session, broke the 29675 (R1) support line, now turned to resistance. It all lines up for a bearish outlook for the index, as the downward motion was intense and the RSI indicator has dropped below 50, signalling the turning of the market sentiment for index into a bearish one. Yet we also note that the index’s price action has hit the lower Bollinger band, which may slow down the bears if not even cause a correction higher. Should the bears remain in charge, we may see Nasdaq aiming if not reaching the 28200 (S1) support line. For a bullish outlook to emerge, we would require Nasdaq to reverse yesterday’s losses and break clearly the 30770 (R2) resistance line.

WTI corrected lower after hitting a ceiling at the 94.30 (R1) resistance line. As the upward motion of the past few days was interrupted, we maintain a bias for the commodity’s price to maintain a sideways motion, between the R1 and the S1. For a bullish outlook to emerge, we would require WTI’s price to break the 94.30 (R1) resistance line and start actively aiming for the 101.00 (R2) resistance level. For a bearish outlook to emerge for the commodity’s price action, which we currently view as a remote scenario, it’s price action has to break the 87.55 (S1) support line and start aiming for the 82.00 (S2) support level.

US 100 cash daily chart

• Support: 28200 (S1), 26870 (S2), 25375 (S3).
• Resistance: 29675 (R1), 30770 (R2), 32500 (R3). 

WTI cash daily chart

• Support: 87.55 (S1), 82.00 (S2), 76.60 (S3).
• Resistance: 94.30 (R1), 101.00 (R2), 108.85 (R3).