FTSE Declines on Poor Jobs Data – Fed & BoJ Meetings in the Background

UK Employment fell by 139k compared to a forecast of 100k, although it’s still an improvement on the previous figure of -178k.

The stock market doesn’t take a weak economic data badly always. The reason being that investors are looking for evidence that the BoE may cut interest rates sooner rather than later. And weak jobs data validates that perception, as the central bank sees less price pressure.

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However, yesterday the ECB president Lagarde commented that there may be consecutive months before another rate cut. Which has added to the sentiment that rates globally will come down slower than thought.

The Fed will start its 2-day meeting tomorrow and issue a post FOMC meeting statement on Wednesday. The market will be seeking forward guidance on just how soon to expect the first rate cut.

While the BoJ will meet Friday, the market expects to hear what was discussed regarding reducing the JGB balance sheet and whether to expect a rate hike. Most analysts expect the central bank to push yields higher to protect the yen before taking action on interest rates.

Technical View

The day chart below for the FTSE shows a bullish trend undergoing a correction. The market reached an all-time high on May 15 of 8,480 and retraced to the Fibonacci level of 0.382 of 8,143.

Today’s candle will find support on the Fibo retracement level of 0.786 at 8,189 and further support on the Fibo level of 0.382 at 8,143 from the main rally that reached the ATH. The market is also getting close to the Ichimoku cloud which is an area of support.

Should the market breach the support, we can consider the current bullish trend on hold. However, for a bearish trend to trigger, we would need to see the market below the cloud and lower than 8, 080.

While for the bullish trend to gain steam again, we would need to see the market close above its ATH of 8,480.

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Gino Bruno D'Alessio
Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.
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