FTSE 100 Support 7057 7026 6977 6970 6957 6874
FTSE 100 Resistance 7099 7106 7130 7138 7140

Good morning. Wow, what a day that was yesterday. We saw the FTSE climb from 6975 to 7130, while the Dax and SP stayed relatively flat to bearish. It was all helped by sterlings weakness which saw the pound drop below its 31 year low, and currently at 12730 versus the US $. The rise was pretty relentless sin the FTSE, and also a little odd to be honest, with pretty much every resistance level getting broken. Then just after the bell it decides to drop to 7030. Certainly throws a spanner int he works trying to do analysis on it when its behaving like that.

The IMF said that the UK was the fastest growing major economy. The IMF now expects the UK economy will grow by 1.8pc this year – that’s above its earlier forecast of 1.7pc (which it issued in July) and puts the UK on track to be the fastest growing G7 economy this year. It left its forecast for global growth unchanged at 3.1pc – which would represent the slowest rate of growth since the global financial crisis.

US & Asia Overnight from Bloomberg

Emerging-market stocks and currencies fell in Asia, while regional bonds dropped as the prospect of monetary policies in Europe and the U.S. turning less accommodative dented investor confidence.

The MSCI Emerging Markets Index declined for the first time this week after Bloomberg News reported that an informal consensus was building in the European Central Bank to rein in quantitative easing and Federal Reserve officials talked up the chance of a U.S. interest-rate increase in 2016. Exporters led gains in Japanese stocks following the yen’s biggest drop since August. New Zealand’s dollar sank to a seven-week low after global dairy prices fell, while its benchmark bonds lost ground for a third day. Crude rallied as data indicated American oil stockpiles shrank last week.

Assets in developing nations got a boost this year as loose monetary policies in the world’s biggest economies spurred demand for higher-yielding assets elsewhere. That’s left emerging markets vulnerable to a selloff as central banks in Europe and Japan show signs of wanting to dial back their unprecedented stimulus and the case for a U.S. interest-rate increase builds. Fed Bank of Chicago President Charles Evans saidWednesday that borrowing costs could be raised as early as the next review in November and his counterparts for Richmond and Cleveland spoke over the last two days in favor of a hike.

“Equity markets are retreating following hawkish comments from Fed officials and talks the ECB may curb stimulus,” said Margaret Yang, an analyst at CMC Markets in Singapore. “There are uncertainties remaining. We will see a pickup in volatility ahead of the U.S. elections.”

The ECB will probably wind down bond purchases in steps of 10 billion euros a month once a decision is taken to end quantitative easing, according to euro-zone central-bank officials, who asked not to be identified. They didn’t rule out an extension of the program past the current end-date of March 2017 at the full pace of 80 billion euros ($90 billion) a month.

Stocks

The MSCI Emerging Markets Index was down 0.3 percent as of 2:07 p.m. Tokyo time, retreating from a one-week high. Japanese exporters helped drive a third day of gains in the Topix index, while oil companies led an advance in Hong Kong’s Hang Seng Index.

“Prolonged stimulus from global central banks has allowed Hong Kong stocks to recoup lost ground,” said Ronald Wan, chief executive of Partners Capital International Ltd. in Hong Kong. “Once the central banks start to taper, it means liquidity will dry up and interest rates will go higher.

Hitachi Koki Co. surged the most in more than seven years in Tokyo after Hitachi Ltd. was said to be exploring a sale of its stake in the maker of power tools. Hitachi jumped 5.7 percent, set for its biggest gain in seven months. China Oilfield Services Ltd. climbed to a 10-month high in Hong Kong after Nomura Holdings Inc. raised its rating on the stock to buy. Newcrest Mining Ltd., Australia’s biggest gold producer, fell as much as 7.6 percent in Sydney after bullion dropped by the most in a year on Tuesday.

Futures on the S&P 500 Index were little changed after the underlying benchmark slipped to a one-week low in the last session. Contracts on the U.K.’s FTSE 100 Index sank 0.8 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.1 percent, after gaining 0.6 percent in the last session. The yen rose 0.1 percent versus the dollar following a 1.2 percent drop on Tuesday.

“The dollar is being supported by improved economic data releases, such as manufacturing and higher consumer confidence ahead of an expected Fed hike in December,” said Jason Wong, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We think the dollar has more upside potential over the next 6-12 months with higher interest rates and inflation the key drivers and the elections the main risk factor.”

The kiwi weakened for a third straight day, declining 0.3 percent. Average prices for whole milk powder, New Zealand’s chief farm export, fell 3.8 percent at the GlobalDairyTrade auction on Tuesday.

The pound was little changed near a three-decade low of $1.2720. It’s tumbled against all of its major counterparts this week after British Prime Minister Theresa May signaled the U.K. is prepared to surrender membership of the European single market in its planned exit from the European Union. May is due to speak again on Wednesday at the conclusion of her Conservative Party’s annual conference.

Bonds

New Zealand government debt led declines in Asia, with yields on notes due in a decade rising seven basis points to 2.48 percent. Rates on similar-maturity bonds in Australia and South Korea increased by six basis points.

The yield on 10-year U.S. Treasuries was little changed at 1.68 percent, after climbing six basis points on Tuesday. Richmond Fed chief Jeffrey Lacker may argue for the second time this week in favor of an interest-rate rise when he speaks Wednesday, though futures indicate only a 21 percent chance of a move coming when the next meeting concludes on Nov. 2, less than a week before a U.S. presidential election.

“One thing they would want to avoid is seeming political by hiking so close ahead of the U.S. election,” said Michael Pond, head of global inflation market strategy in New York at Barclays Plc. The U.K. lender has pushed back its call for the next rate increase to December after its projection for a move in September proved wrong.

Commodities

Crude oil rose as much as 1.3 percent to $49.30 a barrel in New York. Inventories dropped by 7.6 million barrels last week, the American Petroleum Institute was said to report, ahead of official data on Wednesday that’s forecast to show stockpiles increased. A deal between major producers could trim output by 1.2 million barrels a day and boost prices by as much as $15 a barrel, according to Venezuela’s oil minister.“While the surplus is declining, high inventories will probably keep prices from climbing too far,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “The market will be looking forward to the November OPEC meeting and waiting for any details on quotas.”

Gold for immediate delivery rose 0.5 percent, after a 3.3 percent plunge in the last session took it below $1,300 an ounce for the first time since June. [Bloomberg]

FTSE 100 Outlook and Prediction

Its ironic that the pound plunging, which shows worries about the UK economy, makes the FTSE 100 climb to new highs. Its due of course to the companies in the index generating most of their revenues outside the UK, but its still kind of perverse I find! Anyway, for today, I am wondering if the bullishness continues, after a brief dip down to the Hull moving average at 7026. The momentum is certainly with the bulls at the moment. Below that 7026 level then 6956 is the next support of note. Upside, there is Raff channel resistance at 7140. With these strong rises the daily RSI has risen to 72.6, so I am not convinced we keep rising indefinitely; I am still expecting a pull back (and maybe even a sharp decline) though guessing the top is nigh on impossible. Gold is interesting to watch – thats dropped down to a fairly decent support area between 1250 and 1275 and could be set for a rise to 1500 if that 1250 area holds. Might of course tally with a decline in indices. The Dax and S&P were certainly not as bullish yesterday. So really for today, I am watching 7026 and 7140 for reactions, even though the FTSE 100 has really been all over the place the past few sessions.