20th June 2019
Inflation fell back in May as lower prices for travel and cars contributed to the first decline in four months. The Consumer Prices Index came in at 2pc – the first time it has been exactly in line with the Bank of England’s target rate since December 2013 – after hitting a four-month high of 2.1pc in April, according to the Office for National Statistics. The decline, which was in line with forecasts, reduces the chance of the Bank of England making any change to interest rates at this week’s meeting of the Monetary Policy Committee.
UK stocks finished the day in the red with the FTSE 100 0.5pc down at 7,403.54. German shares were also down, shedding 0.2pc but France was on the up; its CAC 40 index was some 0.2pc higher.
U.S. Fed chief Jerome Powell is ready to lower rates, just not quite yet. The FOMC shrugged off President Trump’s demand for an immediate cut by leaving its benchmark unchanged while indicating a readiness to ease for the first time in more than a decade. Officials cited economic “uncertainties,” dropped their “patient” mantra and forecast a larger miss of their 2% inflation target this year. Powell said he intends to serve his full four-year term, despite Trump’s repeated criticism that he’s not doing enough to boost the economy.
Asian equities continued the upward momentum as U.S. stocks rallied for a third day and yields on shorter-term maturity Treasuries tumbled on the Fed’s dovish tone. The dollar weakened against every major currency. Oil slipped as record U.S. gasoline consumption and a steep drop in crude inventories failed to ease concerns about tepid demand.
FTSE 100 Trading Signals, Forecast and Prediction
We have climbed from the lower support area around 7410 yesterday and other markets have risen strongly overnight following the Fed last night. Cable is unfortunately weighing on the FTSE for the moment, which is suppressing the rises. However, if the lower support area today at 7400 holds then we may well see a retest of the 7470 recent high. I still have 7493 showing as decent daily resistance for the moment, with 7529 above this and feel that shorts off both these levels are still worth taking.
Longer term support is showing at 7151 for the moment so its possible that we see a bit more bearishness creeping in next week. The S&P500 is also showing resistance at 2954 as per yesterday and a short off this level still looks to be worth a go. The rise from 2910 level hasn’t managed to get that far as yet but is certainly getting closer.
Gold has climbed strongly since testing that 1342 support level yesterday. If it hadn’t been for the Fed I probably would have held that long for much longer but it felt like it was prudent to bank the profits prior to the announcement. Prudence didn’t pay off on this trade! Continuing to buy the dips on gold is the strategy for the moment.
For the FTSE, if the bears were to break below the 7400 level, and we have the 200ema on the 30min here, and it has held its first test yesterday evening at 7395, then we are looking at a drop down towards 7350. That said, the ASX200 was bullish today, and I am thinking that we will follow suit, as long as cable doesn’t continue to weigh the FTSE 100 down too much. We also tested the 2 hour coral yesterday evening which held as support (it was 7395 as well) and that is showing support at 7405 for the moment. The daily chart is showing support at 7337 from the moving average and we haven’t tested that line as yet so worth keeping a watch on that 25ema. General sentiment is still bullish. The Tory leadership voting continues, with Boris still looking the likely winner.
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