The FTSE 100 saw a strong surge in yesterday’s session and I suspect an important low is in place. However, I see it as too early to have a strong view on the FTSE 100, the reason being the fact that price is near last week’s breakdown level of 6250. We also note that the November 10 high of 6330 is acting as a resistance and this means that the FTSE 100 will probably give back some of last week’s gains over the next 1 to 2 days, or in the worst case slip below yesterday’s low of 6047. With this in mind, we prefer to be sidelined until we have a stronger opinion about the FTSE 100’s next move.
U.K CPI is on tap this morning, however, equity traders will most likely not care too much about this reading as the BoE is far from raising rates. We also note that the correlation between U.K. interest rates and the FTSE 100 is currently low. Instead, this afternoon’s U.S. CPI is more important as a strong reading may boost the Dollar and give more momentum to a hawkish Federal Reserve. U.S. industrial production is also on tap and is useful in gauging the health of the U.S. economy. A better than expected reading may boost equity markets worldwide, while a softer than expected reading may exaggerate a profit taking wave. Please see the DailyFX Calendar
Suggested reading: DAX 30 Is Slightly Overbought Ahead of Crucial ZEW Index
FTSE 100 At The Same Level The Market Turned Bearish Last Week
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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