FTSE100 makes lower highs waiting BoE interest rate decision
Market Recap
|
Market Recap |
% |
Close Price |
|
UKOIL(Jan 2018) |
0.77% |
60.59 |
|
GBPUSD |
0.61% |
1.3208 |
|
USDMXN |
0.56% |
19.2397 |
|
USDZAR |
-0.33% |
14.0573 |
|
SP500(DEC 2017) |
-0.39% |
2568.30 |
|
USDJPY |
-0.43% |
113.18 |
Prices as of previous day instrument closing.
-
US indices closed in negative territory and the Nasdaq Composite slid 2.3 points or -0.03% to 6,698.96. DJIA dropped 85.04 points or -0.36% to 23,349.15 while the S&P500 closed at 2,572.82, down 8.24 points or -0.32%. 60.2% of AMEX, NASDAQ and NYSE issues slid and nearly 40% of stocks are trading below their 50 day moving average. Before the opening bell today Pfizer Inc. and Mastercard Incorporated will release their quarterly earnings. Tomorrow will be the turn of Facebook Inc. and the stock is trading on its all time high, and its RSI (14) indicator is now at 65.14, suggesting that soon the shares of the company founded by Mark Zuckerberg could be in overbought territory.
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In the FX market the greenback slid against the major group of currencies. EURUSD rose to an intraday high 1.1653, very close the support, now resistance, that was broken last Thursday after the ECB gave the impression that its monetary policy will continue to be considered dovish. The financial community is expecting a rate hike from the Bank of England on the second of November. GBPUSD is still below the 50% retracement after the selloff that followed Brexit. The pair technically has many factors that suggest an uptrend, and the inflation rate, now at 3%, is on its five year high. Bank of Japan Governor Haruhiko Kuroda and the board voted during the Asian session to keep the monetary stimulus unchanged. Inflation is still below its 2% target but the BoJ is confident that the target will be met by April 2019. Aussie, Loonie and Kiwi dollar made moderate gains as they were in oversold territory against USD. Before the FED meeting 10 year US Treasury Note yield are sinking from their 2.47% October high. Yesterday they closed at 2.36%.
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XAUUSD rose to 1,276.29 $/oz while XAGUSD closed almost unchanged at 16.85 $/oz. Crude Oil advanced to 54.15 $/barrel, up for the third consecutive session.
Charts of the day:
UK Inflation Rate
Uk inflation rate is exceeding the BoE inflation targeting rate, 2%. After June 2016 (Brexit) UK inflation rate rose sharply.
UK Gross Domestic Product (YoY)
UK GDP YoY growth rate is currently at +1.5% and has been decreasing since 2015. Brexit negotiations and the internal situation in the Conservative party could add turbulence in investments and consumer confidence as well. The FTSE100 could make a record high after a multiyear bullish trend as the BOE kept rates at record low even when inflation was above than current levels. After the Brexit selloff, UK stocks recovered as a weak GBP could improve their profitability thanks to their foreign activities. A stronger GBP in case of a rate hike could decrease risk appetite in the FTSE100. Then a more selective approach would be needed in stock picking as the buy&hold strategy could go out of fashion.
FTSE100
The FTSE100 has a P/E ratio of 23.21 and a Price/Book ratio of 1.90. HSBC Holdings Plc (7.66% weight), British American Tobacco Plc (5.82%) and Royal Dutch Shell Plc (5.44%) are the 3 biggest companies in the index. Recently the gauge made a record close (the intraday record high was made on June) and retraced almost the 38.2% of the bullish wave started in September. Only a consolidation above 7,600 would suggest that another rally will materialize.
|
Tuesday October 31, 2017 CET Time |
Forecast |
Previous | ||
|
ALL DAY |
GER |
Germany - Reformation Day | ||
|
10:00 |
IT |
Italian Monthly Unemployment Rate (Sep) |
11.1% |
11.2% |
|
11:00 |
EC |
Unemployment Rate (Sep) |
9.0% |
9.1% |
|
11:00 |
EC |
GDP (QoQ) (Q3) |
0.5% |
0.6% |
|
11:00 |
EC |
GDP (Yoy) (Q3) |
2.4% |
2.3% |
|
11:00 |
EC |
CPI (YoY) (Oct) |
1.5% |
1.5% |
|
11:00 |
EC |
Core CPI (YoY) (Oct) |
1.1% |
1.1% |
|
13:30 |
CA |
GDP (MoM) (Aug) |
0.1% |
0.0% |
|
13:30 |
US |
Employment Cost Index (QoQ) (Q3) |
0.7% |
0.5% |
|
14:45 |
US |
Chicago PMI (Oct) |
60.0 |
65.2 |
|
15:00 |
US |
CB Consumer Confidence (Oct) |
121.2 |
119.8 |
|
22:45 |
NZ |
Employment Change (QoQ) (Q3) |
0.8% |
-0.2% |
|
22:45 |
NZ |
Unemployment Rate (Q3) |
4.7% |
4.8% |
The European session could see an increase on trading volume as volatility could spike. Eurozone GDP is expected above the consensus while CPI should match the expectations. The US session will be poor of events and the financial community is waiting the FED Monetary Policy Statement that will be released tomorrow at 7 pm CET. US President Trump is expected to name Jerome Powell as next FED Chairman by Thursday. Powell was nominated by Barack Obama in 2012 as a member of the Federal Reserve Board of Governors and previously worked for the US Treasury and in the private sector as well (Banker Trust, Carlyle Group and Dillon, Read & Co.). The Canadian GDP and New Zealand Unemployment Rate data could test loonie and Kiwi dollar relative strengths seen yesterday against the Greenback.
Technical Analysis
EURUSD (Daily timeframe)
The rate made a pullback and in case it will rise above 1.1680 it could accelerate the test of 1.1830. Above this level EURUSD will be bullish again probably. Below last week low 1.1580 is expected a test of 1.430.
GBPUSD (Daily timeframe)
The pair could rise above 1.3320 and then test the higher side of the channel near 1.35. A breakout could lift GBPUSD above its 2017 top 1.3657. Below 1.3 the pair could slide to 1.28.
EURGBP (Daily timeframe)
The pair went below the demand line and is testing the 50% retracement of the bullish wave started in April. Next support could be the 200 day MA at 0.8765 and then the 61.8% Fibonacci retracement at 0.8692. Only above the supply line that links lower highs in area 0.8960 is expected bullish market sentiment.
US 10 Year Note Yield (Daily timeframe)
The yield dropped for 2 consecutive sessions after it reached a 7 month high. Below 2.31% it can test 2.25% and a 61.8% retracement of the recent uptrend is near 2.2%. Above 2.47% is expected a rally to 2.63%.
UK 10 Year Gilt Yield (Daily timeframe)
UK 10 year bond rate could not go higher than 1.4237% and could retest area 1.28%. Beneath this level it may reach 1.23%. A breakout of 1.4237% and a consolidation could lift the Gilt rate to its 2017 double top in area 1.53%
Author
ALB Team
ALB Forex Trading
ALB Research Department is the research department of ALB Forex Trading Ltd.
