Good morning. With the US closed on Friday we did have a fairly lacklustre Friday in the end. 6877 was the high, and that is also the top of the 20 day Bianca channel for today so a key level to break initially, with 6915 above that. Christine Lagarde has hinted that the International Monetary Fund may be preparing to cut its global growth forecasts as she warned that a pick-up in economic activity could prove “less robust than expected” amid “depressed” levels of investment.
Asia Overnight from Bloomberg
Asia’s benchmark equity gauge slipped from a six-year high, the dollar strengthened against major peers and Treasuries fell amid speculation a stronger U.S. labor market means theFederal Reserve may raise rates sooner than previously anticipated. Gold retreated with nickel.
MSCI Asia Pacific Index (MXAP) slipped 0.1 percent to 147.4 by 1:13 p.m. in Tokyo, asHong Kong’s Hang Seng Index dropped 0.2 percent. Futures on the Standard & Poor’s 500 Index retreated 0.1 percent. The Bloomberg Dollar Spot Index was higher for a fourth day, the longest streak since May, and the yield on 10-year Treasuries climbed two basis points. Gold dropped 0.3 percent. Nickel fell 0.8 percent and copper lost 0.5 percent.
Goldman Sachs Group Inc. brought forward its estimate for U.S. interest-rate increases to the third quarter of 2015, saying the economy is “accelerating to an above-trend pace.” The Fed releases minutes of its last Open Market Committee meeting this week, while American markets resume today from a three-day weekend after stronger-than-forecast jobs reports on July 3. China issues inflation and trade data this week, while companies including Alcoa Inc., Fast Retailing Co. and Samsung Electronics Co. are due to report earnings.
“The U.S. is beyond its crisis,” said Hans Kunnen, a senior economist at St. George Bank Ltd. in Sydney. “It has created lots of jobs. There are a lot of things happening in there that are positive, and that tends to come with higher interest rates.”
International Monetary Fund Managing Director Christine Lagarde signaled a cut in the institution’s global expansion forecasts, saying investment is still weak and that risks remain in the U.S. even as its rebound accelerates.
Asian shares last week posted an eighth weekly gain, the longest winning streak since 2012, as Japan’s Topix index climbed to a five-month high. In the U.S., the S&P 500 and the Dow Jones Industrial Average both rose 1.3 percent in a shortened trading week to close at all-time highs.
FTSE Outlook
There is quite a bit of resistance at 6875 to 6885 so I think any immediate strength this morning represents a good shorting opportunity. After Friday’s pretty flat session the pivot is only at 6865, pretty much where we are as I write this, and thus offering initial support,however the various moving averages are showing a possible initial dip. Above 6885 we have 6898 and 6943 as the next resistances, the latter being the top of the 10 day Raff.
Looking at the 30 minute chart we have a pretty clear channel in play, with resistance also at 6885 (this is the most recent high we have seen, short of the all time highs around 6930). Generally speaking across the various timeframes, the trend is still up, however a drop below 6780 would serious temper that trend, if not cancel it all together.