FTSE 100 Support 6734 6723 6717 6711
FTSE 100 Resistance 6772 6796 6798 6810 6822 6831
Good morning. Well we got the new monthly money rise to start with yesterday taking the FTSE up to 6827 before the bears appeared and we experienced a 100 point drop. Unfortunately both the FTSE and Dax short orders missed by mere points which was rather annoying. The long at 6770 managed to get a few points on the way down as we did get a 20 point bounce there. Of course, its NFP* Friday today, with the estimate being 180k, slightly below last months 255k.
*Non-farm payrolls is the most closely watched indicator in the Employment Situation, considered the most comprehensive measure of job creation in the US. Such a distinction makes the NFP figure highly significant, given the importance of labor to the US economy. Specifically, political pressures come into play, as the Fed is responsible for keeping employment in a healthy range and utilizes interest rate changes to do so. A surge in new Non-farm Payrolls suggests rising employment and potential inflation pressures, which the Fed often counters with rate increases. On the other hand, a consistent decline in Non-farm Employment suggests a slowing economy, which makes a decline in rates more likely.
US & Asia Overnight from Bloomberg
Moves in financial markets were mostly modest amid the countdown to key American jobs data that’s seen shaping expectations for the timing of the next U.S. interest-rate hike. South Korea’s won strengthened and oil pared this week’s slide.
The MSCI Asia Pacific Index was little changed on Friday, extending a three-week period of stability in which price swings have been the most muted in at least a decade. The won led gains among major currencies as South Korea’s central bank raised its estimate of second-quarter economic growth. Crude traded below $44 a barrel and was set for its biggest weekly drop since January, having tumbled after U.S. stockpiles data reinforced concern about a glut. Gold declined this week and U.S. Treasuries advanced.
Asian equities are stuck in a rut as the specter of the jobs data deters investors from making bold bets. Federal Reserve Vice Chairman Stanley Fischer said this week that upcoming economic reports would determine the trajectory of interest-rate increases, having previously highlighted Friday’s nonfarm payrolls update as being of importance. The figures will come out ahead of this weekend’s Group of 20 summit, with leaders of the world’s biggest economies set to meet in China.
“All eyes are clearly focusing on the non-farm payrolls data,” said James Woods, a strategist at Rivkin Securities in Sydney. “Even if we do see a strong reading in the payrolls, I don’t really expect that the Fed would act in September. The recent data have been improving and its certainly a good sign but it’s not enough yet to suggest that they have to hike imminently.”
Bets on a September rate increase were reined in on Thursday as a U.S. manufacturing gauge signaled a contraction for the first time in six months. Futures prices indicate a 34 percent chance of a hike this month, down from 42 percent at the end of last week.
Stocks
The MSCI Asia Pacific Index was down less than 0.1 percent as of 1:15 p.m. Tokyo time as gains in consumer staple providers countered losses in raw-materials producers. Australia’s S&P/ASX 200 Index was the biggest loser among regional benchmarks with a 0.9 percent decline and Hong Kong’s Hang Seng China Enterprises Index led gains with a 0.8 percent advance.
CK Hutchison Holdings Ltd. jumped as much as 4.3 percent in Hong Kong after receiving European Union approval for a merger involving its Italian assets that will create Italy’s largest wireless provider. Alumina Ltd. shares climbed the most in seven months after settling a dispute with its joint-venture partner Alcoa Inc., a move that may spur takeover interest in the Australian company.
Futures on the S&P 500 Index were little changed, while contracts on the U.K.’s FTSE 100 Index were up 0.2 percent.
Currencies
The Bloomberg Dollar Spot Index was steady after slipping 0.4 percent on Thursday, its first loss in a week. U.S. jobs growth slowed to 180,000 last month from 255,000 in July, according to a Bloomberg survey of economists.
“There is potential for markets to whipsaw should we see robust U.S. jobs data tonight,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “A stronger U.S. labor market isn’t new news for the Fed or its watchers, rather, it is areas such as manufacturing and retail that are currently causing concern, not to mention a generalized lack of inflation. But nonetheless, payrolls data is traditionally a big market mover, so buckle up.”The won strengthened 0.5 percent, trimming its weekly loss versus the greenback. Bank of Korea said gross domestic product increased 3.3 percent from a year earlier in the three months through June, more than its previous estimate of a 3.2 percent expansion.
Commodities
Crude oil climbed 0.5 percent in New York, after tumbling 9.4 percent over the last four days. U.S. inventories climbed last week, keeping supplies at the highest seasonal level in at least three decades, official data showed Wednesday. OPEC members plan to meet this month in Algiers to discuss action to stabilize the market and Saudi Arabia has saida cap on production would be positive.
Gold was headed for a 0.5 percent weekly loss, having touched a two-month low in the last session. The metal retreated since mid-August as hawkish comments by Fed officials spurred speculation a U.S. rate hike is coming, eroding the appeal of assets such as bullion that don’t bear interest.
Industrial metals rose on Friday in London, led by a 1.1 percent advance in nickel. Lead, tin and zinc all climbed to levels last seen in the first half of 2015, having been buoyed by data on Thursday that indicated manufacturing is picking up in China, the world’s second-biggest economy.
Bonds
U.S. Treasuries were set for a weekly gain, with the two-year yield having fallen six basis points to 0.79 percent. The rate increased by 14 basis points over the prior two weeks.
“The Fed has kept open the possibility of raising rates in September, but it’s also said that it’s data dependent — so the risk of something disappointing is high,” said Janu Chan, a senior economist at St. George Bank Ltd. in Sydney. “It’s about jobs and inflation. Payrolls is the most important piece of data that will guide the Fed.”
Japan’s 10-year bonds declined this week and their yield rose by three basis points to minus 0.045 percent, set for the highest close since March. [Bloomberg]
FTSE 100 Outlook and Prediction
As mentioned its NFP Friday today so could be fairly choppy. Lots are watching this NFP result to give an indication of a September US interest rate rise. We might see a buy the rumour, sell the news sort of day, though its a good day to lower the stakes or avoid trading if you don’t fancy a gamble! Its been fairly flat overnight so there are not a lot of clues, mainly as we are waiting for NFP. That said, we have the bottom of the two Bianca channels at 6734 and 6723 so if we dip down to this area we may well see a bit of a bounce from here – this area also held fairly well yesterday.
Generally I am still feeling bearish with the bigger picture and shorting the rallies still feels the safest bet – for a decline down toward 6570. The bulls will be keen to rise above 6800 and 6810 where we have the 10 day Bianca, whilst 6855 is still the main area of resistance. Above this opens 6900 up for a test, though it looks more bearish at the moment.