FTSE 100 RETREATS AFTER MIXED BP, FLUTTER, STANCHART EARNINGS

The Australian dollar tumbled on Tuesday after the Reserve Bank of Australia (RBA) delivered its interest rate decision. The central bank decided to leave the interest rate unchanged at 0.10%. It hinted that the first-rate hike will happen in 2023, earlier than the previous estimate of 2024. It added that the first hike will happen when inflation rises comfortably above 2.0% and wage growth becomes sustainable. At the same time, the bank decided to end its yield curve control. It will also continue with its A$4 billion per week quantitative easing program.

The Swiss franc was little changed after the relatively strong Swiss inflation data. According to the country’s statistics office, the headline consumer price index rose from 0.25 in September to 0.3% in October. This increase was better than the median estimate of 0.25. Meanwhile, the CPI rose from 0.9% to 1.2% on a year-on-year basis. Still, these numbers show that Switzerland has defied the so-called Philips curve that argues that inflation rises when the unemployment rate falls. The country’s unemployment rate is at about 2.9%, making it one of the lowest. Therefore, the Swiss National Bank (SNB) will likely maintain a dovish stance in the coming months.

The FTSE 100 declined by more than 0.4% as investors waited for the upcoming Bank of England (BOE) interest rate decision. The bank is expected to deliver a relatively hawkish interest rate decision when it meets this week. A hawkish rate is often seen as being negative for non-financial stocks. The index declined after Flutter Entertainment, the parent of Paddy Power, lowered its forward guidance. The company expects that its full-year profit will be between 1.24 billion and 1.28 billion pounds. Other key movers in the index were Standard Chartered, whose earnings rebounded. BP also posted a profit of more than $3.3 billion as oil prices surged.

UK100

The FTSE 100 index declined sharply after mixed earnings. The index declined to a low of 7,250 pounds, which was lower than the year-to-date high of 7,300 pounds. On the four-hour chart, the index moved below the key support at 7,282 pounds. It still remained above the 23.6% Fibonacci retracement level. It is also above the 20-day and 50-day smoothed moving averages (SMMA). Therefore, despite the decline, the index will likely resume the bullish trend later this week.

EURUSD

The EURUSD recovery paused today as investors continued waiting for the coming Fed decision. The pair is trading at 1.1600, which is significantly higher than last week’s low of 1.1535. On the four-hour chart, the pair is along the middle line of the Bollinger Bands while the Chaikin Oscillator has moved slightly above the neutral level. While the recovery rally will likely continue, there is a likelihood that the pair will have a pullback ahead of the Fed decision.

ETHUSD

The ETHUSD pair has been in a strong bullish trend in the past few weeks. The pair has risen from a low of less than 1,800 in July to more than 4,350. On the four-hour chart, the pair is above the 25-day moving average. It is also above the ascending trendline. The Average Directional Index (ADX), which measures the strength of a trend, has been falling. Therefore, the pair will remain in a bullish trend as long as it is above the 25-day moving average and the ascending trendline.