Overall, the financial markets are rather directionless this week.DJIA stayed in tight range around 17800 handle and closed down 0.02% overnight at 17814.94. S&P 500 reached new record high of 2074.21 but closed down -0.12% at 2067.03. The dollar index dipped mildly and is back below 88 handle for the moment after hitting 88.44 earlier this week. Gold is struggling to get through 1200 handle firmly as recent rebound lost some momentum. Meanwhile, crude oil dropped sharply yesterday and is breached 74 level briefly, comparing to this week's high of 77.83 but stayed above recent low at 73.25. The more meaningful move, though, could be find in US treasury yields.
Yields seemed to be finally taking up some downside momentum as 30 year yield closed below 3.000 level at 2.966. Similar picture is also seen in 10 year yield which dipped to close at 2.260. Taking a look at the daily chart, we can see that the rebound from 1.868 spike low faced strong resistance from 55 days EMA and was rejected. Also, daily MACD failed to sustain above 0 level and is back below signal line now. The developments suggest that rebound from 1.868 is possibly finished and we might see TNX head back to lower channel support (now at around 2.10).
The dollar Index continued to lose upside momentum despite edging higher to 88.44 earlier this week. Bearish divergence condition remains in daily MACD. And again, the index is close to long term resistance zone of 88.70/89.62. We'd stay cautious on topping in dollar index soon. And near term focus will be at 87.18 support. Break there should at least bring pull back to 55 days EMA (now at 86.08).
Looking ahead, the economic calendar is rather busy ahead of tomorrow's holiday in US. Swiss UBS consumption indicator will be released. Main focus will be in UK GDP revision. UK will also release index of services and CBI reported sales. From US, durable goods, jobless claims, personal income and spending, Chicago PMI, U of Michigan confidence, pending home sales and new home sales will be released.