FTSE 100 Support 6665 6641 6628 6609 6600
FTSE 100 Resistance 6672 6675 6695 6700 6708 6771

Good morning. Bit of a choppy day yesterday and the FTSE felt like it was meandering a bit. Probably as we have the BOE announcement today, though I don’t think any surprises are in store as we only had a rate cut a month ago. We also have the oil slump continuing, and central bank meetings next week in the US and Japan. Unfortunately the FTSE 100 just tagged the stop at 6668 on the long before rising to 6715 first thing yesterday, though it then drifted down from there to a 6640 low overnight. Felt a bit robbed with that order not working out. So though meandering, the bears are still in control for the moment, with it looking like we might test the 6610 area – 10 day Bianca, August lows and July highs.

US & Asia Overnight from Bloomberg

The global equities selloff continued in Asian trading after a slide in oil prices added to reasons for investors to tread carefully ahead of next week’s central bank meetings in the U.S. and Japan.

The MSCI Asia Pacific Index declined for a sixth day, the longest losing streak in four months, after the S&P 500 Index closed at a two-month low. The yen strengthened versus all of its major peers, while the pound gained against the dollar ahead of a Bank of England policy meeting. New Zealand’s dollar slipped after economic growth missed estimates and Mexico’s peso dropped for a third day. Crude traded below $44 a barrel amid concern a glut will worsen.

About $2 trillion has been wiped off the value of global equities over the past week as ever-present anxiety over the oil market coincided with signs major central banks are questioning the case for loose monetary policies. While futures prices put the chance of a U.S. interest-rate hike on Sept. 21 at 20 percent, the probability is 55 percent for a move this year. Economists are divided over whether the Bank of Japan will add to unprecedented stimulus when it reviews policy on the same day as the Federal Reserve.

“Markets are under pressure,” said James Audiss, a senior wealth manager in Sydney at Shaw and Partners Ltd., which oversees about $7.5 billion. “Volatility is here to stay going into the back-end of the year with central bank meetings and the U.S. election coming up.”

Prospects for a U.S. rate hike may be swayed on Thursday as August figures for industrial output, producer prices and retail sales are released. The U.K. will also report on retail sales ahead of the BOE meeting at which policy makers are forecast to leave the key interest rate at a record-low 0.25 percent. Markets in mainland China, South Korea and Taiwan are shut Thursday for holidays.

Stocks

The MSCI Asia Pacific Index was down 0.3 percent as of 1:18 p.m. Tokyo time, retreating for a sixth day. Japan’s Topix index lost ground for the seventh day in a row, led by declines in real-estate shares, and benchmarks in the Philippines and Singapore fell to their lowest levels since June.

Hong Kong’s Hang Seng Index added 0.6 percent, trimming its weekly loss to 3.2 percent ahead of a holiday in the city on Friday. The Hang Seng China Enterprises Index sank 4.6 percent this week, the worst performance among global benchmarks. The gauge of Chinese companies’ shares in Hong Kong was the world’s biggest gainer in the month through Sept. 9 with an 8.1 percent surge.

“With investors trying to first gauge U.S. and Japanese monetary policy, purchases are being held back,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. “We’re in a pattern where even marginal selling can easily spark declines.”

Lawson Inc. jumped as much as 7 percent in Tokyo on news Mitsubishi Corp., the largest shareholder, is considering increasing its stake in the convenience store operator. Sumitomo Realty & Development Co. dropped more than 5 percent as Jefferies cut its rating on the Japanese real-estate sector to underweight.

Futures on the S&P 500 were little changed after the underlying benchmark retreated 0.1 percent Wednesday. Contracts on the U.K.’s FTSE 100 Index slid 0.5 percent.

Currencies

The yen strengthened 0.2 percent to 102.24 per dollar. Morgan Stanley said the BOJ will probably cut the rate on some bank reserves to minus 0.2 percent from minus 0.1 percent at next week’s meeting. Kyodo News reported late Wednesday that such a move will be considered by the BOJ, while a Nikkei newspaper article said that the central bank was exploring a deeper foray into negative rates to stoke inflation.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was steady after slipping 0.1 percent in the last session. New Zealand’s currency was down 0.2 percent after second-quarter gross domestic product increased 0.9 percent from the previous three months, less than the 1.1 percent expansion forecast by economists.

The British pound strengthened 0.2 percent. Investor attention will be on the BOE’s assessment of how the economy has performed since it cut interest rates at the last review on Aug. 4, comments that may offer clues on the likelihood of another reduction this year. Switzerland’s currency was little changed before the nation’s central bank gives its quarterly policy assessment.

Mexico’s peso was the worst performer among major currencies, falling 0.4 percent. It slid 1 percent or more in each of the last two sessions as pollsindicated growing support for Donald Trump ahead of a U.S. presidential election in November. Trump has said he may seek to dismantle the North American Free Trade Agreement and that he’d make Mexico pay for a wall along the U.S.’s southern border by withholding immigrant remittances.

Commodities

Crude oil rose 0.3 percent to $43.70 a barrel, following a two-day slide of almost 6 percent. Libya and Nigeria, two OPEC members whose supplies have been crushed by domestic conflicts, are preparing to add hundreds of thousands of barrels to world markets within weeks. U.S. data showed crude stockpiles fell 559,000 barrels last week, compared with a 4 million gain forecast in a Bloomberg survey.

“The market is getting a little more conservative about when the balance will return and prices are adjusting to that,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “We have moderating demand combined with the possibility of increased supplies from Libya and Nigeria. There is also the potential for non-OPEC output to start increasing.”

Copper held near its highest level in almost four weeks in London. It jumped 2.6 percent on Wednesday — the most in three months — after a report showed Chinese lending increased in August by more than economists estimated, brightening the outlook for demand in the world’s top user of industrial metals. Nickel advanced for the first time this week.

Bonds

The yield on U.S. Treasuries due in a decade rose one basis point to 1.71 percent, after falling three basis points in the last session.
Similar-maturity sovereign bonds in Australia declined for a sixth day, pushing their yield to this quarter’s high of 2.12 percent. The nation’s jobless rate unexpectedly fell to a three-year low of 5.6 percent in August, data showed Thursday, reinforcing traders’ expectations that the central bank is done cutting interest rates this year. [Bloomberg]

FTSE 100 Outlook and Prediction

At the moment the trend is still down ahead of the BOE later today. There is resistance on the 30min chart at 6674 where we have a red coral and the daily pivot so a short around here to start with could be a decent play, to target the 6610 10 day Bianca support area. With the daily support and 20 day Raff also at the 6600 area, as well as the August lows and July highs around this area, we may well see some support around here. How long that support holds for remains to be seen of course. Above 6675 then 6715 and 6771 are the main resistance areas of note. Support areas below the 6600 are 6550, and even lower at 6480. As per usual, if the short fails then it is worth going long on a break of 6880 as its likely to push higher.