Good morning. Bull monday again yesterday so if that follows the past few weeks we should now have bear Tuesday! The FTSE trended up for most of yesterday, blowing the 6722 resistance away but dropped a little bit from the 6746 area. It rose again and stalled at 6760 as it tried to peek above the Raff channels. As I write this the FTSE and Dax are both pushing the top of their 10 day Raffs, so we may see an initial dip, before resuming the upward movement again. Last weeks worries seem to have been forgotten about pretty easily, and we have Yellen addressing US lawmakers later regarding future interest rate clarity. Not much change in the FTSE futures overnight either, pretty much where it was at 9pm last night.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional index headed for a one-week high, as the Bank of Japan kept monetary policy stable before Federal Reserve Chair Janet Yellen addresses U.S. lawmakers. Corn resumed declines, while the currencies of South Korea and Indonesia weakened.
The MSCI Asia Pacific Index gained 0.4 percent by 12:59 p.m. in Tokyo. The Hang Seng Index added 0.5 percent in Hong Kong as Chinese lending and foreign-direct investment data beat estimates. Standard & Poor’s 500 Index (SPA) futures were little changed following a 0.5 percent advance in the U.S. benchmark. Corn futures fell after rebounding from a four-year low yesterday. The won slipped to a five-week low versus the dollar and the rupiah weakened a third day.
Yellen addresses senators amid speculation over the outlook for interest rates. BOJ officials held stimulus at current levels. The Reserve Bank of Australia reiterated that it expects a period of interest-rate stability, while reports are due on U.K. inflation and German investor confidence. Citigroup Inc. (C) posted better-than expected trading revenue in the U.S. amid a week of bank earnings.
“Markets are expecting Chair Yellen to maintain her cautious stance, but some acknowledgment of the progress in employment and inflation toward Fed goals will be required,” Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a client note today. “Markets believe the BOJ will be forced to act later this year.”
Monetary Base
Japan’s central bank stuck with its goal of an annual increase in the monetary base of between 60 trillion yen and 70 trillion yen ($690 billion), it said in a statement today in Tokyo, as forecast by all 34 economists surveyed by Bloomberg News. The BOJ will expand monetary stimulus Oct. 31, according to 32 percent of economists surveyed July 3-9. That was down from 33 percent in a survey completed last month.
Japan’s Topix index climbed 0.6 percent and was headed for its highest close since July 8 as the yen traded little changed at 101.58 per dollar after dropping 0.2 percent yesterday.
A gauge of Chinese shares in Hong Kong advanced 0.4 percent, while the Shanghai Composite Index fluctuated. New yuan loans topped 1 trillion yuan ($161 billion) for the third time this year, beating the 955 billion-yuan median estimate of economists surveyed by Bloomberg. Foreign-direct investment grew by 0.2 percent in June from a year earlier versus a forecast for a 7 percent decline.
Australia’s S&P/ASX 200 Index (AS51) erased a gain to fall 0.3 percent after the RBA minutes, and the local dollar traded at 93.95 U.S. cents from 93.85 cents before the release.
The Kospi index in South Korea jumped 0.8 percent, set for the highest close since July 3. Markets in Malaysia are closed for a holiday.
FTSE Outlook
Today I am watching for support at the daily pivot at 6732, and resistance at the top of the 10 day Bianca channel at 6774. We also have a ProTrend line with resistance at around 6766 based on yesterdays high. I am expecting the dip from 6760 that started yesterday to continue first thing this morning, probably to the pivot at 6732. If that level breaks then in theory we have the potential to drop to 6700, though I think it might stall around the 200EMA on the 30minute chart at 6720.