Review Most U.S. stocks fell as 3M Co. drove industrial shares lower after cutting its profit forecast, helping erase an early gain triggered by Exxon Mobil’s better-than-estimated earnings report. 3M sank 5.9 percent, the most since February 2009, after saying full-year earnings will be 6 cents lower than previously forecast. Halliburton dropped 8 percent as a report cited unstable cement the company recommended to cap BP’s Gulf of Mexico oil well as a factor in the spill. The S&P 500 was little changed at 1,179.00 at 4:30 p.m. in New York after climbing as much as 0.6 percent. Strategy Looking ahead we are predicting a range bound market ahead of today’s U.S. GDP favouring the downside as speculation the Federal Reserve will buy less debt than initially estimated may continue to negatively impact the market sentiment. However, we are looking for a confirmation of last month’s GDP growth, after the recent more reassuring economic data. Also, earnings from Chevron should be closely watched as they may confirm the re-cent better than expected company financial health. On the economic calendar, the final reading of the Michigan’s consumer sentiment and Chicago PMI may show that the U.S. economy is stabilising, after the recent soft data releases. Alternative Scenario Renewed risk appetite for Equities may lead to a break-out of yesterday’s high at 1,187.00 opening a way for a more aggressive move to Monday’s high at 1,193.00. Review The dollar fell against all of its most-traded counterparts on renewed demand for higher-returning assets as traders speculated the Federal Reserve will debase the currency by buying government debt. The U.S. currency dropped for the first time in three days against the euro as Treasury notes rose after policy makers asked dealers for projections of asset purchases over the next six months. The dollar is on the “strong side” relative to U.S. economic performance, the International Monetary Fund said in a report to Group of 20 nations. The dollar depreciated 1.2 percent to $1.3930 per euro at 5 p.m. in New York, from $1.3769 on Wednesday. Strategy Looking ahead, we are expecting a further consolidation of the recent range, favouring the downside as the recent concerns that the Federal Reserve may buy less debt than initially estimated may continue to positively impact the dollar against the euro. Our view is that the Fed may announce further quantitative easing at the next meeting on Nov 3rd. We are expecting the Fed to start with a program of about $600 billion of buying over the next six months that could be extended to $1.5 trillion of assets by the end of the next year. Also, this morning’s worse than expected German retail sales may add some pressure to the euro for today’s session. Alternative Scenario Positive market sentiment about the Eurozone may push the EUR/USD back above overnight’s resistance at $1.3952 opening the way for a move to R1 at $1.4004. Review German bonds declined as a report showed European confidence in the economic outlook improved more than economists forecast in October. Bonds retraced some of the earlier losses after a group of Anglo Irish Bank Corp.’s creditors said they won’t take part in a debt swap proposed by the lender. Portugal’s biggest opposition party, which ended budget talks with the ruling Socialist Party on Wednesday, led the government by a wider margin in a survey of voter intentions. The yield on the 10-year bund, Europe’s benchmark security, rose one basis point to 2.56 percent. German bonds have gained 7.7 percent this year, compared with an 8.1 percent advance by U.S. Treasuries. Strategy Looking ahead, we are predicting a consolidation of the recent sell-off in German Bunds as we are expecting some profit taking on speculation the Federal Reserve will resume buying bonds to safeguard the recovery. Also, this morning’s worse than expected German retail sales in conjunction with an increase of the Greek/German yield spread above 800bps may provide some sup-port for the 10-year government bonds. However, our longer term view still remains bearish on Bunds, who’s prices, we believe, still reflect heightened risk of European financial default.' Alternative Scenario Positive European sentiment may push the Bund back towards 128.30 with S3 at 128.07 being the next target. Review Crude oil rose as the dollar tumbled against most major currencies on speculation the Federal Reserve will curb the greenback’s value by buying government debt. Oil climbed 0.3 percent as the dollar fell against the euro for the first time in three days, bolstering the appeal of commodities. Initial U.S. jobless claims unexpectedly dropped 21,000 to a three-month low of 434,000 last week, signalling the labour market may be on the mend. Crude oil for December delivery rose 24 cents to settle at $82.18 a barrel on the New York Mercantile Exchange. Strategy Looking ahead, we are predicting a further consolidation of this month’s range favouring the downside as the recent bearish oil inventories maybe partially offset by better than expected gasoline inventories. Also, this morning’s dollar strength may continue to curb investor demand for commodities as we think the correlation between oil and the U.S. dollar is very strong at the moment. Our view is that oil will only continue last month's rally if the forthcoming U.S. economic data will continue to show a more reassuring economic scenario. This increases the importance of today’s U.S. GDP in order to get a better direction. Alternative Scenario Positive fundamental news flow could lead to a break-out of Monday’s High at $83.27 opening the way for a more aggressive move to last week’s high at $83.95.

Source