INDIA: RBI Release December Edition of Financial Stability Report

Recent weakness in WTI futures highlights a bearish theme. A resumption of the bear leg would open the key support and the bear trigger at $55.99, the Oct 20 low. Clearance of this level would resume the downtrend. Note that it is still possible a bullish corrective cycle remains in play. The contract has recovered from its latest low, resistance to watch is $61.84, the Oct 24 high. A clear break of this hurdle would signal scope for a stronger correction. The trend condition in Gold remains bullish and the bear phase between Oct 20 and 28 appears to have been a correction. Note that the recovery since Oct 28 signals the end of the corrective cycle. Key support to watch lies at the 50-day EMA, at $3991.7. Clearance of this EMA would signal scope for a deeper retracement. Sights are on key resistance and the bull trigger at $4381.5, the Oct 20 high.

• WTI Crude up $1.2 or +2.05% at $59.75
• Natural Gas down $0.07 or -1.53% at $4.773
• Gold spot up $9.12 or +0.22% at $4247.49
• Copper up $1.6 or +0.3% at $528.8
• Silver up $0.82 or +1.45% at $57.299
• Platinum up $10.19 or +0.61% at $1680.77

The move higher in Eurostoxx 50 futures last week undermines a recent bearish theme and the contract is holding on to most of its gains. Price has traded above the 20- and 50-day EMAs, signalling scope for a stronger recovery near-term. A continuation would open 5691.30 and 5742.40, Fibonacci retracement points. For bears, a reversal lower would instead expose the key S/T support and bear trigger at 5475.00, the Nov 21 low. S&P E-Minis are holding on to the bulk of their latest gains following the recovery from the Nov 21 low. The climb has resulted in a breach of the 20- and 50- day EMAs. This highlights a bullish development and the likely end of the corrective cycle between Oct 30 and Nov 21. A continuation higher would signal scope for a move towards the key resistance and bull trigger at 6953.75, the Oct 30 high. Key support lies at 6525.00, the Nov 21 low.

• Japan's NIKKEI closed lower by 950.63 pts or -1.89% at 49303.28 and the TOPIX ended 40.11 pts lower or -1.19% at 3338.33.
• Elsewhere, in China the SHANGHAI closed higher by 25.41 pts or +0.65% at 3914.006 and the HANG SENG ended 174.37 pts higher or +0.67% at 26033.26.
• Across Europe, Germany's DAX trades lower by 203.95 pts or -0.86% at 23631.47, FTSE 100 lower by 7.46 pts or -0.08% at 9712.96, CAC 40 down 29.62 pts or -0.36% at 8093.09 and Euro Stoxx 50 down 14.44 pts or -0.25% at 5653.73.
• Dow Jones mini down 211 pts or -0.44% at 47532, S&P 500 mini down 41.25 pts or -0.6% at 6818.5, NASDAQ mini down 199.5 pts or -0.78% at 25282.75.

• So far, the recent troubles at property developer China Vanke have had little impact on the Chinese yuan, which continues to trade in a resilient fashion at fresh cycle highs against the dollar. However, the latest developments are a reminder of challenges in the property sector, which remains a concern to the medium-term macro outlook.
• As a reminder, China Vanke unexpectedly announced late last week that it would delay a bond payment for notes due Dec 15 amid a further slump in property sales this year. The sudden move has raised concerns about the government’s willingness to support even the largest property developers, sending the company’s bonds down sharply amid default fears.
• Despite these developments, spot USDCNH fell to fresh lows of 7.0645 in overnight trade, before some support kicked in. Currently, the pair is little changed on the session around 7.069.
• Recently, the USD/CNY fixing bias turn positive and the fix was set above market estimates again today, indicating a modest push back on yuan appreciation pressures. This may slow yuan gains ahead, even in the absence of further property woes, although moves in USD/CNH above 7.0800 have drawn selling interest so far.
• On the downside, focus will be around the 7.0500 region. We have noted that lower US-China yield differentials and the potential for fresh conversion of foreign currency into CNY as we approach year end is aiding yuan sentiment for now.