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Approaching the main pivot before the FOMC decision -by Ecork

FTSE 100 Analysis and Talking Points

  • Press President Powell takes center stage as Fed expects to raise 75 points per second
  • FTSE 100 Nears Key Pivot

FTSE 100 Index:Today, traders will be firmly focused on the Fed rate decision and more specifically Fed Chair Powell’s press conference. As the meeting approaches, the Fed is expected to raise interest rates by 75 basis points in a row, bringing the Fed funds rate to the highest level of the previous session. However, President Powell’s comments on the interest rate outlook will be the main driver for the markets, and given the recent slowdown in economic activity, there is a growing sense that the Fed may tone down. In my view, I still see the Fed sticking to its aggressive hawk stance, especially since core CPI has yet to peak. As we saw previously as the Fed continued its quantitative easing in March, the Fed could be slow to pivot, so with Fed officials laser-focused on late inflation data, that will still be the case. As such, even if the Fed chair backs down from considering 100 basis points it could drive stock buying, as we’ve seen in the last two meetings, the gains have often been short-lived.

S&P 500 chart: daily time frame

Source: Refinitiv

However, I am still weak on bearish stocks, which leads me to the FTSE 100. The index has fared much better than its major peers thanks to a lack of tech stocks and greater exposure to the commodities sector. However, with economic activity slowing globally, the increased risk of a bigger recession is likely to be on commodities and thus the FTSE 100. From a technical point of view, the 200DMA (7360) has been a significant pivotal area for the index, capping the recent upside trend. Moreover, the index has also failed to close above the 200 DMA since the release of the shocking US CPI in June. As such, for those who are landing on the indicator, 200DMA can be a good area to lean on.

FTSE 100 chart: daily time frame

FTSE 100 Outlook: Approaching Major Pivot Ahead of FOMC Decision

Source: Refinitiv

in-depth reading

USD, EUR/USD and AUD/USD price action: Federal Reserve, Q2 GDP and CPI in focus

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