European Open FTSE exits consolidation USDCAD means coming back

Asian indices:

• The Australian ASX 200 index fell -36.6 points (-0.49%) and is currently trading at 7,491.30
• The Japanese Nikkei 225 index fell -409.34 points (-1.47%) and is currently trading at 27,378.64
• Hong Kong’s Hang Seng Index fell -306.67 points (-1.36%) and is currently trading at 22,195.64
• The Chinese A50 index fell -28.9 points (-0.21%) and is currently trading at 13,980.69

UK and Europe:

• UK FTSE 100 futures are currently down -3.5 points (-0.05%), the spot market is currently estimated at 7,610.22
• Euro STOXX 50 futures are currently down -13 points (-0.34%), the spot market is currently estimated to open at 3,904.85
• German DAX futures are currently down -43 points (-0.3%), the spot market is currently estimated at 14,381.36

US Futures Contracts:

• DJI futures are currently up 16 points (0.05%)
• S&P 500 futures are currently down -10.75 points (-0.07%)
• Nasdaq 100 futures are currently up 2 points (0.04%)

Stock markets continued to feel the brunt of the Fed’s hawkish comments overnight as Asian indices traded broadly lower. The Nikkei was the worst performer and fell around -1.7%. Weak services PMI in China also added to the slight mood of risk, as it contracted at its fastest pace since February 2020 and new orders hit a 6-year low.

Futures markets are pointing lower for European stock markets, although the FTSE remains relatively flat and the index remains an outperformer of late.

FTSE: internal market elements

The FTSE 100 hit a 14-month high and closed above 6800 yesterday with above average volume. The four-hour chart remains in a strong uptrend and its 20-bar eMA has provided momentum support. It held above the weekly pivot point and broke out of a tight consolidation range, and it’s encouraging that it closed above the R1 weekly pivot and at the peak of the day.

Ideally, we’d like to see the FTSE hold above the previous consolidation high around 7575 if it comes back, otherwise a break of yesterday’s high would imply further bullishness with 7650 being the initial target ahead of the high. from February.

FTSE 100 Trading Guide

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FTSE 350: 4269.86 (0.72%) 05 April 2022

• 176 (50.14%) shares rose and 166 (47.29%) fell
• 22 stocks hit new 52-week high, 2 fell to new lows
• 37.32% of stocks closed above their 200-day average
• 12.82% of stocks closed above their 20-day average

Outperformers:

• + 5.73% – Baltic Classifieds Group PLC (BCG.L)
• +4.52% – Syncona SA (SYNCS.L)
• +4.33% – Hammerson PLC (HMSO.L)

Underperformers:

• -5.85% – Darktrace PLC (DARK.L)
• -5.31% – TI Fluid Systems PLC (TIFS.L)
• -5.18% – Moneysupermarket.Com Group PLC (MONY.L)

Today’s FOMC minutes may have been overshadowed

Belligerent comments from key Fed members yesterday likely overshadowed today’s FOMC minutes as they point to a 50 basis point hike at the next FOMC meeting and a faster-than-expected balance sheet reduction. . Daly thinks they can raise rates without triggering a recession or stagflation, and Brainard sees controlling inflation (by raising rates) as their most important task.

PMI data for Europe and Canada coming soon

Given the weakness in global PMIs since the war in Ukraine (and the fact that the February reports did not take this into account), it is likely that we will see further weakness today. The question is how much and if these readings will contract, with weak new orders.

But should we see another hawkish surprise in today’s FOMC minutes coupled with a weak PMI print for Canada, USD/CAD looks attractive for potential long setups.

The downtrend on the daily chart failed to close the day below 1.2453 January low. Two bullish hammers formed and a bullish buy signal and divergence formed on the stochastic oscillator. Additionally, the bass from the hammers respected the lower Keltner band. Ultimately, we now see the potential for a mean reversion and a break above 1.2500 on the charts and for it to head towards 1.2560, or near its eMA of 20 days. A daily close above these levels suggests it could be more than a mean reversion.

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