Two trades to watch: FTSE with earnings in focus, DXY ahead of inflation
Fiona Cincotta January 13, 2021 3:51 PM
FTSE lacks firm direction following range bound session on Wall Street - Earnings and covid developments in focus DXY edges below 90.00 ahead of CPI
FTSE steady ahead of a slew of corporate update
The FTSE futures are lacking direction ahead of the open taking cues from a range bound session on Wall Street.
Today is a busy day for corporate releases, mainly FTSE250. Just Eat, Persimmon, ASOS, William and Page Group are all due to update the market.
Banks such as NatWest, Lloyds and Barclays could also be in focus following BoE Andrew Bailey’s comments, appearing to talk down the prospect of negative interest rates.
Covid & vaccine developments could drive sentiment
FTSE technical analysis
The FTSE trades within an ascending channel. The price bounced lower off the upper band of the channel around 6910 last Friday and has headed back below the 20 sma in the early part of this week.
The 50 sma appears to be offering support and the FTSE picked up of 6720 yesterday’s low at 6720.
Bulls should look for a move over20 sma at 6800 to eye a move back towards the upper band of the ascending trendline at 6950 and high 6th January before target the psychological level of 7000.
DXY slips ahead of inflation data
The US Dollar Index reversed from Monday’s high of 90.70 on Tuesday slipping through the key 90.00 level
Dovish Fed commentary on Tuesday, with speakers reassuring that the Fed was not about to start tapering asset purchases anytime soon dragged the greenback lower back through 90.00
The US Dollar had been on the rise in recent sessions following the Democratic sweep. Investors considered that with huge fiscal stimulus coming from the Democrats as the US economy starts to pick up on vaccine progress would boost the economy, spurring more hawkish Fed and lifting the USD.
Inflation data is due later today. CPI is expected +0.4% MoM in December vs 0.2% November.
DXY technical analysis
The DXY saw modest losses on Tuesday, failing to break above 90.70 suggesting weakness in the price at this level.
DXY dropped through 90.20 taking out the weekly low and bringing a test of 90.00 the key psychological level and 100 sma into the picture. DXY currently trades –0.1% at 89.97, finding support from 50 sma at 89.89.
A break through this level could see horizontal support at 89.50 tested prior to 89.2 the multi-year low hit last week.
On the upside look for a break over 90.00 to open the door back to 90.20 before a retest of 90.70.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.