12th June 2019
The jobs market shrugged off the Brexit paralysis gripping the rest of the economy in April as the self-employment boom helped unemployment hold at a 44-year low. Wage growth accelerated to 3.4pc, just below a 10-year high, as record employment levels put upward pressure on pay. Although the labour market slowed after a bumper start to the year, some 32,000 jobs were added to the economy in the three months to April, well above economists’ expectations.
Analysts believe that a job creation surge in early 2019 was sparked by businesses opting to hire rather than invest amid mounting Brexit uncertainty. The latest rise was pinned on a 64,000 jump in the number of self-employed people, offsetting a decline in employed workers. Employment growth is likely to slow over the rest of the year. The continued strength of the jobs market helped the pound bounce back after sinking yesterday following the shock fall in GDP. It climbed back above $1.27 versus the dollar, gaining as much as 0.3pc.
Trump’s Hold Up
Donald Trump identified the main obstacle to a China trade accord: himself. “It’s me right now that’s holding up the deal,” the president said, accusing Beijing of backtracking on a potential agreement. “We had a deal with China and unless they go back to that deal I have no interest.” He still expects to meet with Xi Jinping at this month’s G-20 summit in Japan. China’s leader has a few good options after Trump’s ultimatum.
Winning Streak Ends
Asian equities opened mixed Wednesday and dropped after U.S. stocks halted a five-day winning streak. Treasuries drifted higher, with 10-year yields down one basis point. The dollar was mixed, losing ground against the pound and euro but rising against the kiwi. Oil was little changed ahead of inventory data and speculation on the outcome of a potential OPEC+ meeting in coming weeks.
Looking ahead, todays news highlights include US CPI, ECB’s Draghi, de Guindos & Coeure. Supply from Germany & US.
FTSE 100 Trading Signals, Forecast and Prediction
We may well see a retrace back towards the 30min coral resistance this morning which is sitting at 7400 as I write this, however, with the drop yesterday the 2 hour chart has gone bearish with resistance on that at the 7420 level. Funnily enough around where we entered yesterday! Above this then I have some decent looking daily resistance at 7443 and feel that should we see this area then a short here is worth a go. Not sure that the bulls can get it that high today though but I have put an order there just in case. Above this there is daily resistance at 7529 for the moment.
The Volatility index seems to be bottoming out a bit which may well coincide with a drop in indices shortly. The Vix as its known is worth watching as it rises as volatility increases, typically during bearish periods on indices.
For support today I have 7360 initially where we have S1, and also the green 2 hour coral that we have been watching all week so far. As such, if this holds initially it may well be the catalyst for a bounce back to the 7400 area.
With the recent bullish run the daily chart is bullish, with moving average support at 7295 for the moment, so we may well see a retrace down to this area then back up towards that 7529 level.
If the bears were to break below 7360 then 7340 is next up with a key fib level and also the 200ema on the 30min chart. A break of this will get the bears quite excited and probably swing stronger momentum to them, as the recent rally fizzles out and we start some bearishness.
That said, I am watching 7360 for initial support today as the bulls might not want to give up quite so fast. We are still only 36/100 on the fear gauge at the moment as well so may not see a big sell off just yet. It was a bit annoying to short the S&P a bit too early yesterday as its hit the 2911 area and dropped off quite nicely. I am thinking still that we see a drop down towards the 2846 level on this one.
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