US equities closed mixed overnight as this week's strong rebound is starting to lose momentum. DJIA closed 13.76 pts, or 0.08%, higher at 16790.19. S&P 500 dropped -7.13 pts or -0.36% to close at 1979.92. Note that both are starting to face some resistance 55 days EMA, at 16790 and 1992.1 respectively. And there is risk of a deeper pull back today. Asian equities are trading flat at the time of writing. Crude oil surges to as high as 49.38 so far today and is breaking out from recent sideway consolidations. Further strength in crude oil would likely drag USD/CAD down through 1.3011 support to indicate trend reversal. In the currency markets, dollar and yen remain the weakest major currencies this week, overwhelmed by the strength in commodity currencies. BoJ left monetary policies unchanged as widely expected.
The International Monetary Fund lower global growth forecast and warned of rising risk of global recession. Global growth for this year is lowered to 3.1%, comparing to July forecast of 3.3%. For 2016, growth is projected to be 3.6%, also less than July forecast of 3.8%. IMF noted that "a return to robust and synchronized global expansion remains elusive." Meanwhile, the “downside risks to the world economy appear more pronounced than they did just a few months ago." The fund warned that there's a 50% change of sub-3% growth next year and that was a level "equivalent to a global recession".
IMF outlined some "important shifts" that could stall global recovery. These include lower oil and commodity prices, sharper than expected slow down in China, further increase in financial market volatility, appreciation of US dollar and increased geopolitical tensions. Meanwhile it urged advanced economies to maintain accommodative monetary policies "alongside macroprudential tools to contain financial sector risks". IMF also urged emerging economies that "exchange rate policy should not lose sight of financial stability considerations" and urged them to diversify the economies with targeted structural reforms.
IMF projected US growth to be 2.6% in 2015 and 2.8% in 2016, comparing to prior projection of 2.5% and 3.0% respectively. Eurozone growth is projected to be 1.5% in 2015 and 1.6% in 206, comparing to prior projection of 1.5% and 1.7% respectively. Japan growth is projected to be 0.6% in 2015 and 1.0% in 2016, comparing to prior projection of 0.8% and 1.2%. UK growth is projected to be 2.5% in 2015 and 2.2% in 2016, comparing to prior projection of 2.5% and 2.2%. Overall, growth in advanced economies are projected to be 2.0% in 2015 and 2.2% in 2016, comparing with prior 2.1% and 2.4%.
For emerging markets, growth is projected to be 4.0% in 2015, 4.5% in 2016, down from prior 4.2% and 4.7%. Russia's economy is projected to contract -3.8% in 2015 and -0.6% in 2016, much worse than prior -3.4% and 0.2%. China growth projections were unchanged at 6.8% in 2015 and 6.3% in 2016. Brazil is projected to contract -3.0% in 2015, -1.0% in 2016, sharply worse than prior -1.5% and 0.7%.
On the data front, UK BRC shop prices dropped -1.9% yoy in September. Production data will be the main focus today. German industrial production is expected to rise 0.3% mom in August. UK industrial production is expected to rise 0.2% mom in August while manufacturing production is expected to rise 0.3% mom. Swiss will release foreign currency reserves while Canada will release building permits.