RBA surprises and UK PM holds onto power
FTSE => The pair falls below 7600
Oil => The commodity rises towards 120.00
EUR/AUD => The pair falls from 1.4900
FTSE rises as PM Boris Johnson clings to power
The FTSE closed over 1% higher in the previous session as investors shrugged off news that Prime Minister Boris Johnson would face a vote no confidence and instead pushed stocks higher amid an upbeat market mood.
The PM won the vote of confidence by 59%, a relatively modest margin, raising questions over how long he can stay in power. Johnson had been expected to survive the vote, which had been called after a rising number of Conservative MP’s lost faith in the leader following the party gate scandal. Today the market mood has soured as inflation and growth fears return.
UK service sector PMI data is expected to confirm the preliminary reading, falling steeply from April.
| UK services PMI | Expected: 51.8 (5.2) | Previous: 58.9 |
Where next for FTSE?
The FTSE has once again failed at a key level of resistance between 7645-7685. The price has eased lower.
The receding bullish bias on the MACD suggests that the price could come off further. Sellers will look for a move below 7540 the May 18 high to expose the 50 sma at 7460. Meanwhile, buyers will be watching for the 20 sma to cross above the 50 sna in a bullish signal. A move above the aforementioned resistance zone is needed to extend the bullish trend.
Oil rises ahead of API inventory data.
Oil prices remained resilient in the previous session after Saudi Arabia raised its oil prices for Asia to $6.50 above the benchmark its uses for July, up from $4.50 in June.
The move to raise prices was despite OPEC+ agreeing to raise production by more than expected in July and August. This shows just how tight the oil market is and the demand in Asia is expected to continue rising as China reopens. Today the price is edging lower as attention shifts to the API data due later today.
Aussie rises after RBA surprises the market
EUR/AUD edged lower in the previous session in quiet trade, as the AUD benefited from the upbeat market mood, lockdown restrictions easing in Beijing, and an unexpected rise in Australian job advertisements, highlighting strength in the jobs market.
Today the pair is falling further after the RBA caught the market by surprise and raised interest rates by 50 basis points to 0.85%, the largest hike in 22 years. The central bank is willing to keep hiking rates to tame inflation. Attention now will turn to wards German factory orders, which are expected to recover after tanking in March and Eurozone investor confidence which plunged in May.
| Ger. factory orders April
EZ investor sentiment |
Expected: 51.8 (5.2)
Expected: -20 (2.6) |
Previous: 58.9
Previous: -22.6 |
Support can be found at 1.4770 (weekly low) and 1.5220 (May 25 low).
Resistance for the pair can be seen at 1.50 (50 sna) and 33,750 (50 sna).
