FTSE 100 Support 6803 6746 6745 6737 6725
FTSE 100 Resistance 6850 6875 6884 6889 6915

Good morning. Some more of Fridays gains were given up yesterday, as the FTSE slowly declined, and broke though the 6860 support area after a lot of effort from the bears. The Dax and SP were not quite as bearish, hovering around 10700 and 2185 respectively. After that bearish break on the FTSE, coupled with most expecting 7000, I expect we are more likely to see 6750. Bulls will need to break 6876 to get momentum back for a rise.

US & Asia Overnight from Bloomberg

• Weak U.S. economic data slashes odds of a September rate hike
• Aussie weakens after GDP misses estimates; yen strengthens

Emerging-market stocks and currencies rallied for a fourth day after a slew of weak U.S. economic data quelled speculation the Federal Reserve will raise interest rates this month. Japanese equities retreated from a three-month high.

An MSCI gauge of shares in developing nations rose to its highest since July 2015 as South Korea’s won neared its strongest level in more than a year. Japan’s Topix index snapped a five-day winning streak and the yen strengthened after a media report cast doubt on the Bank of Japan’s willingness to boost stimulus. Australia’s dollar also fell for the first time in six days after economic growth missed estimates. Gold traded near a two-week high, while bonds rallied across most of Asia following gains in U.S. Treasuries.

The probability of the Fed hiking rates this month dropped by eight percentage points to 24 percent in the futures market on Tuesday as a report showed the Institute for Supply Management’s gauge of U.S. services activity slumped to a six-year low. The figures add to a picture of uneven growth in the world’s biggest economy after indicators in the past week showed a contraction in manufacturing and a slowdown in hiring.

“The recent string of weak economic data makes it difficult for the Fed to raise rates this month,” said Michael McCarthy, chief market strategist in Sydney at CMC Markets. “A hike in December remains a coin toss. If the data deteriorates further, we could be looking at rate hikes in 2017. The flood of easy money will continue to support this equity rally.”

Central banks in Canada, Malaysia and Sweden are forecast to leave interest rates unchanged at policy reviews on Wednesday, while Bank of England Governor Mark Carney testifies before lawmakers and the Fed is due to release its Beige Book survey of regional economic activity. China is scheduled to report its foreign-exchange reserves, while industrial output data are expected for the U.K. and Germany.

Stocks

The MSCI Emerging Markets Index gained 0.6 percent as of 12:07 p.m. Tokyo time, led by gains in raw-materials producers and technology stocks. Taiwan Semiconductor Manufacturing Co., a major Apple Inc. supplier, climbed to a record before the expected unveiling of the iPhone 7 in San Francisco on Wednesday.

Japan’s Topix index slid 0.7 percent as yen gains weighed on exporters, with Toyota Motor Corp. falling for a fourth day.

“We can’t really ignore the fact that the ISM numbers were fairly poor,” said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management Co. in Tokyo. “Stocks overseas are rising on the expectations of a delayed U.S. rate hike, but in Japan the effects of the stronger yen mean that stocks can’t avoid falling.”

Futures on the S&P 500 Index were steady, following a 0.3 percent increase in the underlying measure on Tuesday. Nasdaq 100 Index contracts added 0.1 percent after gains in Amazon.com Inc. and Facebook Inc. drove the Nasdaq Composite Index to an all-time high.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.2 percent to a two-week low. It tumbled 1 percent in the last session, the biggest loss since July. Fed Bank of San Francisco President John Williams painted an upbeat picture of the U.S. economy in a speech on Tuesday and reiterated his view that a gradual pace of interest-rate increases is warranted.

“The near-term dollar outlook is not good,” said Gareth Berry, a foreign-exchange and rates strategist at Macquarie Bank Ltd. in Singapore. “There is room for the market to further price out the risk of a September hike, which should add to downside pressure on the dollar.”

The yen appreciated 0.6 percent to 101.42 per dollar, after jumping more than 2 percent over the last two sessions. BOJ policy board members are divided between those who support negative interest rates, those who want to expand government bond purchases, and others who oppose additional easing measures, Sankei reported, without saying who provided the information.

South Korea’s won jumped as much as 1.2 percent to 1,092.43 per dollar, near an Aug. 10 level of 1,091.15 that was the strongest its been since May 2015. Taiwan’s dollar extended this week’s advance to 1.4 percent, the biggest three-day gain since 2009, after overseas investors pumped almost $600 million into the island’s shares over the last two days

Malaysia’s ringgit climbed 0.5 percent before trade figures and a central bank policy meeting. Three out of 17 economists surveyed by Bloomberg predict interest rates will be cut, while the remainder see no change.

Australia’s dollar weakened 0.2 percent in the wake of a five-day, 2.4 percent advance. Gross domestic product expanded 0.5 percent in the quarter ended June 30 from three months earlier, less than the 0.6 percent growth forecast in a Bloomberg survey.

Bonds

U.S. Treasuries due in a decade were little changed, after their yield slid seven basis points to 1.53 percent in the last session following the ISM services data. Ten-year bonds in Australia and New Zealand climbed for the first time in a week, pushing their yields down by at least five basis points to 1.85 percent and 2.27 percent, respectively.

Commodities

Crude oil rose 0.7 percent to $45.11 a barrel in New York, extending its rebound after the price sank to a three-week low of $43 on Sept. 1.

American stockpiles likely expanded by 705,000 barrels last week, according to a Bloomberg survey before official data on Thursday. A Monday meeting between the energy ministers of Saudi Arabia and Russia ended without any specific proposals for measures to support prices.“The markets will still be watching very closely any concrete action that comes out of what happened between the Saudis and Russia,” said David Lennox, a resources analyst at Fat Prophets in Sydney. Increasing U.S. stockpiles “will be a headwind for any rally,” he added.

Gold held near its highest level in almost three weeks after a 1.7 percent surge on Tuesday, its biggest gain since the results of the Brexit vote came out on June 24. Bullion is gaining as fading prospects for a Fed rate hike weigh on the dollar. [Bloomberg]

FTSE 100 Outlook and Prediction

For today I am not seeing a massively clear picture. However, I am favouring a slightly bearish scenario with a drop form the 100 Hull moving average on the 2 hour chart at 6876 where there appears to be fairly decent resistance. The bears won the battle yesterday, and the bulls have failed to build on Friday’s rise to break above 6950 so far. So for today I think we will see a brief rise up then a decline down to the S1 area at 6803. We do have the daily pivot at 6850 to start things off as resistance, and also the 20 day Bianca at 6889. This channel is heading down at the moment as well, while the 10 day channel is fairly level.

The bears will need to break 6826 where we have the daily coral line, to test the lower supports for today, with 6750 being fairly major (10 day Raff and Bianca channel area). If this were to be broken soon, then the momentum will be firmly with the bears for a move lower. Something to bear in mind is that gold is at the top of the daily Raff channels and just testing the daily coral which has gone red (bearish trend) at 1351. As such that could well have a drop back which may be bullish for equites, though they are not as closely coupled as they used to be.