FTSE 100 Support 6751 6737 6731 6724 6710 6677
FTSE 100 Resistance 6770 6774 6784 6791 6820 6862

Good morning. I hope you had a good weekend. Futures prices have started the week strongly, with the FTSE testing the 6774 area that I mentioned on Friday, as its the 25ema on the daily. What will it do here? Usually this level is worth a trade, a short in this case. Its quite a big week this week with the central bank meetings in Japan and US. Oil rebounded again, and is an indicator of risk appetite at the moment. This week is going to be driven by those central bank meetings and what the Fed might do still – rate rise in December is the latest vibe. With the overnight rise we have just popped above the 10 day Raff and Bianca channels – both around the 6740/50 area, so the bounce from 6650 is growing in size.

US & Asia Overnight from Bloomberg

Asian stocks rose with U.S. equity index futures as a rebound in oil bolstered risk appetite ahead of heavily-anticipated central bank policy meetings this week. A gauge of the dollar retreated from a seven-week high, while yuan borrowing costs surged in Hong Kong.

An MSCI index of regional stocks advanced following its biggest weekly drop in three months. Australia’s dollar and Mexico’s peso were among the biggest gainers against the greenback, with crude climbing from a one-month low as fighting disrupted supplies from Libya amid prospects major producers will act to stabilize prices. Overnight yuan borrowing costs in Hong Kong soared the most since January amid speculation China’s central bank is intervening to fend off bearish currency bets. Futures signaled rallies for U.S. and U.K. shares.

Volatility has picked up in financial markets over the past two weeks amid concern central banks in Europe and Japan are becoming reluctant to loosen monetary policy further at a time when the Federal Reserve is deciding on the timing of the next U.S. interest-rate increase. Economists are split over what, if any, action the Bank of Japan will undertake in a review on Wednesday. While the chance of a Fed hike the same day remains around 20 percent, a steeper-than-projected increase in U.S. consumer prices boosted the dollar on Friday and spurred bets that borrowing costs will be raised in December.

“Sentiment is being boosted by a rebound in oil,” said Vasu Menon, vice president for wealth management research at Oversea-Chinese Banking Corp. in Singapore. “Oil has become somewhat of an indicator of risk appetite in the market. Investors are also hoping the BOJ will do something more dramatic though I don’t think that’s going to make a lot of difference. With inflation numbers picking up a little bit in the U.S., the market will start worrying about the Fed again at some stage down the road.”

Japan’s markets are closed Monday for a holiday. South Korea returned after a three-day break, while markets in mainland China and Taiwan were shut on Thursday and Friday. Hong Kong and Malaysia were closed on Friday.

Stocks

The MSCI Asia Pacific excluding Japan Index climbed 1.1 percent as of 12:48 p.m. in Hong Kong, after sinking 2.4 percent last week. Australian equities were halted for a second time after trading started more than an hour late because of a technical glitch. ASX Ltd., which operates the nation’s main stock exchange, said it was working to fix the problem.

Taiwan’s Taiex index surged 2.6 percent from Wednesday’s close, the biggest jump since May, as suppliers of Apple Inc. rallied amid booming demand for iPhone 7 handsets. A gauge of Chinese companies’ shares listed in Hong Kong headed for the steepest gain since July following a pickup in mainland demand for shares in the city.

“Mainland buying will probably continue in following months as concerns about a weaker yuan is rising,” said Chen Hao, a strategist at KGI Securities Co. in Shanghai. “Low valuations of Hong Kong stocks also make them a preferred target.”

Futures on the S&P 500 Index rose 0.3 percent after the underlying benchmark slipped 0.4 percent last session. Contracts on the U.K.’s FTSE 100 Index climbed 0.9 percent.

Currencies

Australia’s dollar and the Mexican peso jumped at least 0.6 percent versus the greenback. Among other oil-exporting nations, the Canadian dollar rose 0.4 percent and the Norwegian krone was up 0.2 percent.

The Bloomberg Dollar Spot Index fell 0.3 percent following a 0.7 percent advance on Friday, when data showed the U.S. consumer-price index climbed 0.2 percent after being little changed in July. Economists predicted a 0.1 percent increase, a Bloomberg survey showed.

The yuan’s overnight interbank rate in Hong Kong jumped 15.7 percentage points to 23.7 percent, its second-biggest gain on record. One- and three-month funding costs also rose, though by smaller increments. The moves make it more expensive to bet against China’s currency.

“The result is to support the currency at a time when 6.70 suddenly seems a very important line in the sand,” said Michael Every, Hong Kong-based head of financial markets research for Asia-Pacific at Rabobank Group. “You’d almost think it was a pegged currency.”

The yuan weakened 0.2 percent in offshore trading to 6.6674 per dollar and the Japanese yen added 0.2 percent. Taiwan’s dollar rose 0.8 percent from where it finished on Wednesday.

Commodities

West Texas Intermediate crude added 1.8 percent to $43.81 a barrel, following a 6.2 percent slide last week. Clashes at Libya’s Ras Lanuf port are supporting prices, after they halted what would have been the first overseas crude shipment from that site since 2014. The head of OPEC said the group may call an extraordinary meeting if major producers reach consensus on an accord to stabilize prices at informal talks next week in Algiers.Copper dropped from a four-week high in London as Anglo American Plc restarted operations after a strike at its Los Bronces mine in central Chile, bolstering supply from the world’s largest producer. Nickel gained 1.9 percent, after a 6.2 percent weekly slide that marked its biggest loss since November.

Gold rose 0.4 percent, after sliding 1.3 percent last week. Speculators cut their bets on a bullion rally by the most in more than three months during the week ended Sept. 13 and holdings in global exchange-traded funds backed by the metal are heading for the biggest monthly decline this year. [Bloomberg]

FTSE 100 Outlook and Prediction

We are just hitting the 25ema on the daily chart at 6774 as I write this, and it has stopped the rise on the futures so far. Ideally we would be testing this level in hours to get a better reaction, however, I am thinking that we will get an initial drop from this area to test the pivot and a back test of the 10 day Bianca channel at 6737 to start with. There are a few bullish signals on the charts at the moment, so if the bulls can break the 6775 area then a rise to the top of the 20 day Bianca channel at 6820 is likely. If the bulls are going to try for it, and we do dip to the pivot area then its worth a long around there at 6731. The 2 hour chart is still bullish, so its really up to the bulls today to break that 6775 area, which is resistance on the daily. The 20 day Raff is slightly higher at 6862. Don’t think we will get that high today. So, basically for today I am thinking dip and rise. We might have a week of treading water a bit while we await to see the central bank output later this week. The Australian index didn’t have a good day with multiple “technical issues”.