Fed rate decision 0.75% | FTSE resistance 7005 7030 | Support 6865

FTSE 100 Support 6968 6951 6943 6917 6889 6860
FTSE 100 Resistance 6972 7005 7015 7053 7067 7075

Good morning. A reversal of Mondays down trending day saw a steady climb yesterday as we approach Fed day and the possibility of further interest rate rise news in the US today. The price stalled at the 6975 resistance level but didn’t really drop much, holding around 6960 overnight, off the back of a subdued Asian session. All awaiting the Fed! The general consensus is for another Interest Rate rise, while after today, traders see a two-in-three chance of additional rate increases from the Fed by June, futures show.

US & Asia Overnight from Bloomberg

Markets were subdued during the Asian day as investors held fire before the Federal Reserve’s expected interest-rate hike later Wednesday. Crude and Japanese government bonds were outliers, with oil retreating on industry data showing U.S. stockpiles rose and debt rallying as the central bank stepped up purchases.

About five stocks fell for every four that rose on a gauge of Asian equities. Australia’s benchmark index rallied toward a 16-month high as Tatts Group Ltd. surged after a consortium bid for the betting and lottery company, while Japan’s Topix index halted a six-day advance. A gauge of the greenback’s strength was little changed. The yield on Japanese 30-year bonds slid five basis points. Oil declined 1.1 percent in New York.

The Fed’s path to tighter monetary policy has been delayed throughout 2016, as first instability in Chinese markets, then the shock votes for Brexit and Donald Trump, put policy makers on the back foot. The U.S. central bank is expected to boost borrowing costs just as the focus shifts back to governments, with fiscal easing at the hands of incoming U.S. President Trump speculated to drive economic growth going forward. After Wednesday, traders see a two-in-three chance of additional rate increases from the Fed by June, futures show.

“We go into the New Year with the market and the Fed on the same page in terms of where rates are going,” said Chris Weston, chief markets strategist in Melbourne at IG Ltd. “The recent upbeat sentiment — specifically in global equities — has not just been about what ‘Trumponomics’ could bring to inflation and growth, but we are genuinely seeing an improvement in the economic data flow in many developed markets.”

Japan’s Tankan gauge of sentiment among large manufacturers came in as economists expected for the fourth quarter, rising to 10 from six in the previous period. India also reports on wholesale prices Wednesday.

Stocks

The MSCI Asia Pacific Index added 0.2 percent as of 12:53 p.m. Tokyo time, with telecom shares rising most and material producers falling.
Australia’s S&P/ASX 200 Index climbed 0.8 percent; Tatts surged 8.9 percent after a consortium including Macquarie Group Ltd. and KKR & Co. offered as much as A$7.3 billion ($5.5 billion) for the company.
Hong Kong’s Hang Seng Index gained 0.6 percent as oil companies rallied.
Topix little changed; Shanghai Composite Index rose less than 0.1 percent and South Korea’s Kospi fell 0.2 percent.
U.S. index futures were little changed after the S&P 500 rose 0.7 percent to an all-time high and the Dow Average neared 20,000 points.

Currencies

The yen was little changed at 115.17 per dollar after pulling back by 0.2 percent last session. The euro was steady at $1.0636.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fluctuated after rising 0.1 percent on Tuesday and sinking 0.6 percent in the session before that.
Traders say the dollar should have a muted reaction to the Fed’s expected 25 basis-point hike, but may see more volatile price action in reaction to Chair Janet Yellen’s subsequent press conference.

Bonds

Japan’s 30-year government bond yield dropped to 0.75 percent.
Yields on 10-year Australian notes fell three basis points to 2.79 percent, while similar maturity New Zealand bonds yielded 3.30 percent, down one basis point from Tuesday.
Treasuries due in a decade yielded 2.46 percent, down two basis points.

Commodities

West Texas Intermediate crude fell to $52.29 a barrel, following a four-day surge of more than 6 percent.
U.S. inventories rose by 4.68 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show supplies fell.
Oil markets will swing into deficit in the first half of 2017 as producers curb supply, according to the International Energy Agency, earlier than its previous forecast.
Copper futures rose 0.4 percent, rising for the first time in three days.
Gold rose 0.2 percent to $1,160.53 an ounce in the spot market.
[Bloomberg]

FTSE 100 Outlook and Prediction

Can see a bit of a buy the rumour, sell the news type day, with the rate rise already priced in for the most part now. The Dow is nearly at 20,000, FTSE nearly back at 7000, and there is only so long markets keep record highs before they turn. I wouldn’t like to guess the high and where it might turn, but at the moment the longer time frame charts are still bullish, with support on the daily at 6890 and 6860. Resistance wise today we have 7005 for the top of the 20 day Bianca, then R1 at 7015.

With a fairly static overnight session, the 10 min chart has gone bearish with resistance at 6972, though we may well see the bulls take charge again initially, today as the 30min chart has support at 6955. The resistance level at 6975 wasn’t particularly strong yesterday, netting a few points only, but the bulls have managed to make the 2 hour chart bullish again, with support at 6868. So whilst its not overly clear I am thinking an initial rise to 7005 and possibly 7015 before a dip back, probably on or after the news later (19:00 the rate news comes out), though it wont be a big surprise if rates increase by 0.25%. What might well move the market more is the Fed Summary of Economic Projections also released at 7pm.

So, thats the plan for today really, rise and then dip, watching 7005, 7015, then 7032 for a dip back from those sort of areas. Above 7032 then 7130 is possibly, the most recent high.