Fed raises rate to 0.75% | Gold declines | FTSE Resistance 6964 Support 6921

FTSE 100 Support 6930 6922 6921 6915 6866
FTSE 100 Resistance 6954 6959 6964 6982 7030 7100

Good morning. In a slightly foregone conclusion the Fed raises borrowing costs with a rate rise to 0.75% as everyone expected. Initially markets didn’t know how to react, with the Dow rising to 19960, but stalling just short of the magic 20000 and then dropping back to 19750. A bit of a bounce then saw the Dow stabilise around 19850, the FTSE at 6950 and the S&P at 2260 where they have stayed overnight. It is widely expected that the UK would follow the US lead when it comes to interest rates, however, Mark Carney is still talking about reducing ours even further than the current 0.25%. Next year could be interesting!

US & Asia Overnight from Bloomberg

• Fed tips more 2017 rate hikes than was forecast in September
• Shares in Tokyo rally with yen at 10-month low; crude slips

The dollar was the chief beneficiary of the Federal Reserve’s first and only interest-rate hike of 2016, rallying to a 10-month high against the yen after officials signaled a steeper path for borrowing costs. Asian stocks outside Japan slipped with bonds.

The greenback extended its advance against major and emerging-market peers, except for Australia’s dollar, which rose after stronger-than-expected job gains. Japanese shares rose as the yen fell, while equities in Australia, China and Singapore slid and crude oil held losses. Government debt tracked a rout in Treasuries. The Korean won sank as much as 1.1 percent, even as the central bank held rates, and China’s yuan fell the most in a month.The second U.S. rate increase in a decade tied off a volatile 2016 for markets. The year opened with investors whipsawed by ructions in Chinese trading and Japanese monetary policy, followed by shock election wins for Brexit and Donald Trump. The Fed moving further into tightening territory helps shift the focus away from global central-bank policy and toward fiscal stimulus, with Trump expected to stoke U.S. growth through spending. After hiking by 25 basis points, U.S. policy makers expect three rate increases in 2017, up from the two seen in September. Still, Fed Chair Janet Yellen sought to downplay the significance of that shift at a presser after the decision.

“The fact that 11 of 17 voting members are calling for at least three rate hikes in 2017 reverberated around trading floors,” said Chris Weston, chief market strategist in Melbourne at IG Ltd. “Keep an eye on China as the strength of the dollar is not going to be welcomed by the Chinese corporates who have to borrow from debt markets to fund much of the recently announced acquisitions.”

Like Korea, Indonesia is projected to keep its key rate on hold in a policy review Thursday. Singapore updates on retail sales and Sri Lanka reports on gross domestic product, while the Philippines issues figures on remittances from overseas workers.

Currencies

The yen fell another 0.4 percent to 117.45 per dollar as of 1:52 p.m. Tokyo time, extending losses and touching its weakest level since Feb. 4.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was up 0.1 percent after Wednesday’s 1.1 percent jump. The euro fell 0.2 percent.
The Fed lifted its target for overnight borrowing costs by 25 basis points, or 0.25 percentage point, on Wednesday to a range of 0.5 percent to 0.75 percent.
“This is a very modest adjustment in the path of the federal funds rate,” Yellen said during the press conference. The decision to raise rates is “a vote of confidence in the economy,” she said, noting that some Fed officials, but not all, incorporated the assumption of a change in fiscal policies when making their forecasts.
The won slipped as much as 1.1 percent, while the onshore yuan was down 0.4 percent after China’s central bank weakened its fixing by the most since August.
Australia’s dollar gained 0.2 percent on better-than-expected jobs data.

Stocks

The MSCI Asia Pacific Index sank 1.4 percent, the most since Nov. 9, even as exporters allowed Japan’s Topix index to trade little changed.
Australia’s S&P/ASX 200 Index lost 1.1 percent as energy and mining stocks led declines, while the S&P/NZX 50 Index in Wellington was down 0.4 percent.
The Kospi index in Seoul rose 0.1 percent, rebounding from a 0.7 percent drop; China’s CSI 300 Index slipped 0.5 percent.
After the S&P 500 Index’s steepest drop since October on the back of the Fed’s decision, futures on the U.S. benchmark rose 0.2 percent Thursday.

Bonds

Yields on 10-year Treasury notes were little changed after rising for five sessions, capped by a 10 basis point jump on Wednesday that took them to their highest level since September 2014.
New Zealand bonds led declines in the region, with yields up 11 basis points to 3.38 percent, while those on similar maturity Australian debt increased nine basis points to 2.88 percent; Indonesian yields climbed 10 basis points to 7.94 percent.
Ten-year Japanese yields climbed 21/2 basis points to 0.08 percent.

Commodities

West Texas Intermediate crude held $51.01 a barrel, building on Wednesday’s 3.7 percent slide.
Gold for immediate delivery was down 0.1 percent to $1,141.71 an ounce, after sliding to its lowest price since February.
“The FOMC was upbeat and more hawkish than anticipated,” strategists at Australia & New Zealand Banking Group Ltd. said in a note, referring to the rate-setting Federal Open Market Committee.
Lead climbed 2.3 percent in London.
[Bloomberg]

FTSE 100 Outlook and Prediction

For today I am thinking that we get a bit of consolidation while the markets assess their next move. I have resistance on the 2 hour chart at 6964, coupled with a bearish looking 30min chart so can see a slow dip down to the 6921 area where we have the bottom of the 10 day Bianca and 10 day Raff channels. Below this for support there is 6865 where we have the 25ema on the daily, this could be an area thats worth a long if seen today. I don’t think the “Santa Rally” will appear till next week myself, as its usually been quite late the past few years. So, a dip down before that starts would make sense.

If the bulls were to break through 6965 then 7000 looks pretty likely with 7030 and 7100 above that. I have gone for a small initial rise today as the 10min chart is bullish to start with, showing support at the 6944 area, but pre market short times frames are not the most reliable. The ASX200 (Australia) had a slow drift down for most of their Thursday session. As such I am favouring the shorts for today, with 6960/6964 a decent looking short entry level.