Good morning. Not quite such a good day yesterday from a prediction point of view but the general gist was right with the dip and then the rise, however the dip went a bit further than expected, seeing 6510, as opposed to the pivot level at 6536. To be honest its not surprising it’s a little skitty though as the Syria situation is still ongoing and seems to be more about Russia versus America now. Pretty positive news from the UK yesterday though reinforced by Osborne’s speech, though obviously still a way to go. The fact that we are still nudging the top of the daily channels means I wouldn’t be rushing to load massive long positions just yet.
Asia Overnight from Bloomberg
Asian stocks rose, extending the longest rally in the benchmark equity gauge this year, and the Indian rupee and Malaysian ringgit climbed before Chinese factory output and retail sales data expected to show growth in August. Crude oil slipped for a second day and credit risk fell.
The MSCI Asia Pacific Index rose 1.1 percent at 2:28 p.m. in Tokyo, advancing for a ninth day in its longest winning streak since December. Standard & Poor’s 500 Index (SPX) futures increased 0.1 percent.
Chinese industrial production and retail sales reports today will probably add to signs the world’s second-largest economy is rebounding, with factory output projected to have grown at the fastest pace this year last month, according to a Bloomberg survey. Policy makers in the nine-member Bank of Japan expect the government to push measures aimed at boosting fiscal health, minutes of the last meeting released today showed. Oil fell on speculation Russia’s plan to get Syria to surrender its chemical weapons will help avert a U.S. strike.
“The market should be pretty positive that industrial production in China is picking up,” said Evan Lucas, a Melbourne-based markets strategist at IG Ltd. “Positive indicators from China coupled with what’s going on in Japan really puts Asia back on track, making the region a very good investment case.”
Treasury Yields
Ten-year Treasury yields rose 1 basis point, or 0.01 percentage point, to 2.921 percent today, after losing three basis points in New York. Australian government bonds due in a decade yielded 4.108 percent, up 4 basis points after falling for the first time in six days yesterday. The Federal Reserve will cut Treasury purchases that have fueled global asset gains to $35 billion from $45 billion, while maintaining mortgage-bond buying at $40 billion, according to the median of 34 responses in a Bloomberg survey released Sept. 6. The FOMC is scheduled to meet Sept. 17-18.
Syria
U.S. President Barack Obama said in an interview with NBC News he isn’t confident that he’ll get congressional approval for a military strike against Syria. Obama, who will address the nation on the matter tonight, said a Russian proposal to convince Syria to give up its chemical weapons is a “potentially positive development,” while expressing skepticism on whether President Bashar al-Assad’s government will follow through. Syria should give up its stockpile if doing so would help avoid a U.S.-led strike, Russian Foreign Minister Sergei Lavrov said after meeting with his Syrian counterpart in Moscow yesterday. Syria “welcomes the Russia proposal,” Walid al-Muallem, the nation’s foreign minister, told reporters.
Outlook
The FTSE still looks like it might test the 6615 area and I am expecting a positive day today, with the rising 30 minute channel and bullish EMAs currently. With today’s pivot at 6531 and also the bottom of the 30 minute channel at that level as well, any dip to that area looks like it will set up a decent long entry for a rise to 6568 and hopefully more. We still have the Bianca channels in play, with channel tops at 6582 (20 day) and 6596 (10 day) so I am expecting a bit of resistance around these areas if 6568 is broken. The 30 minute chart is looking fairly bullish at the moment and I think we will see a test of the 6568 level first thing. If we do get above the Bianca channels at 6615 then I expect we will get a dip back tomorrow – maybe when the US Senate vote over Syria which is scheduled for tomorrow (Wednesday).