Good morning, well that was bullish all day yesterday, even breaking the 6775 support with relative ease. Unfortunately prices didn’t dip to the ideal buy area around 6700 but I know some of you held from that level on Monday. It will be all eyes on the Fed later as their 2 day meeting concludes, and its widely expected that tapering won’t be considered till next year, hence the bullishness this week. on the news front we have some German jobs data out just before 9am whilst in the US at 12:30 we have consumer price index data – which should move prices around a bit. The real fireworks will be at 6pm when the Fed release the outcome of their meeting on rates and tapering.
Asia Overnight from Bloomberg
Asian stocks rose, with the benchmark index heading for a monthly gain, and bond risk fell before the conclusion of the Federal Reserve’s two-day policy meeting. Emerging currencies weakened and oil dropped.
The MSCI Asia Pacific Index advanced 0.5 percent at 2:15 p.m. in Tokyo. Japan’s Topix index climbed 0.7 percent as the yen held a three-day drop. Standard & Poor’s 500 Index (SPX) futures were little changed. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan headed for its biggest monthly drop since June 2012. Yields on 10-year Japanese government bonds slid to the lowest since May. Indonesia’s rupiah slumped the most in two months, crude slid 0.5 percent in New York and copper advanced.
Economists expect the Fed will maintain its $85 billion in monthly bond purchases at a meeting ending today. Bank of Japan policy makers gather tomorrow. Japanese factory production returned to growth in September, while South Korean industrial output shrank, data today showed. Toshiba Corp., Agricultural Bank of China Ltd., Aluminum Corp. of China Ltd. and Honda Motor Co. are among companies reporting earnings today.
“There is consensus that the timing of tapering will be delayed, and I don’t think there will be any surprises from this meeting to alter that view,” Kikuko Takeda, a senior analyst in London at the Bank of Tokyo-Mitsubishi UFJ Ltd. said about the Fed meeting. “The dollar has been consolidating.”
Data yesterday showed consumer confidence in the U.S. fell and an Oct. 22 report revealed growth in American jobs slowed in September. The Fed will decide today to keep purchases of mortgage-backed securities at $40 billion and Treasury buying at $45 billion, according to a Bloomberg News survey of economists.
The U.S. also releases inflation data for September today, with consumer price growth estimated to have slowed to 1.2 percent from a year earlier, after rising 1.5 percent in August, a Bloomberg survey shows.
Earnings and Fed stimulus have helped extend the S&P 500’s advance to 24 percent in 2013, which would mark its best yearly rally in a decade.
To start with we are just above the 6791 resistance area as I write this and the EMAs are still bullish, so we may see a little rise to the top of the Bianca 10 day channel at 6811, however, to start with I don’t think it will be particularly bullish and a dip to the pivot/10 day Bianca channel bottom is the most likely initial play, either from 6791 or 6810. Prices stayed pretty bullish after the close yesterday though a break of the 6750 area could be the bulls undoing for the moment. I am still expecting the bullish theme to continue for the moment and a possible dip likely to start next week.