FTSE 100 hits 3-month high as GBP/USD rally loses momentum and US natural gas range trades

Macro update

Asian equities trade cautiously ahead of key AI earnings: Investors adopted a more defensive stance before a crucial technology earnings season, with South Korea's KOSPI falling 0.8%, Japan's Nikkei declining 0.4% and MSCI's Asia-Pacific index excluding Japan easing 0.2%.

Oil prices remain near four-month lows: Brent crude slipped 0.2% to $71.95 a barrel, while WTI held around $68.49, after OPEC+ agreed to increase production targets by a further 188,000 barrels per day from August as exports through the Strait of Hormuz continued to normalise.

Dollar strengthens ahead of key US economic releases: The dollar index steadied at 100.88 after weakening following the softer June payrolls report, while the greenback gained 0.3% against the yen to ¥161.96 as traders continued to test Japan's willingness to intervene in currency markets.

Gold eases as the dollar firms: Spot gold fell 0.4% to $4,160.33 an ounce as a stronger US dollar weighed on demand, although expectations of a less aggressive Federal Reserve helped limit losses after the metal posted a gain of more than 2% last week.

Samsung expected to report a sharp rise in chip profits: Analysts forecast the world's largest memory chipmaker will announce an 18-fold increase in operating profit to 86 trillion won for the April-to-June quarter, driven by strong AI-related demand and constrained semiconductor supply.

Markets pare expectations of near-term Fed tightening: Weaker-than-expected June employment data and lower energy prices prompted investors to reduce the likelihood of an imminent Federal Reserve rate increase, with futures implying a 78% probability that rates will remain unchanged at the 29 July meeting ahead of the release of the Fed minutes.

FTSE 100 probes key resistance

The FTSE 100 flirts with its April highs at 10,697-to-10,724 which represent good resistance. If this area and the 20 February high at 10,745 were to be overcome, the door would open for the February record high at 10,936 to be reached.

In case of the 10,697-to-10,745 region rejecting the current move higher, good support may be found between the May-to-June highs at 10,612-to-10,568.

Short-term outlook: bullish while above the 1 July low at 10,429

Medium-term outlook: bullish while above the 18 May low at 10,113. 

FTSE 100 daily candlestick chart

GBP/USD loses upside momentum

GBP/USD's recent surge higher is beginning to lose upside momentum below its 200-day simple moving average (SMA) at $1.3397. Support between the mid-May to early June lows at $1.3306-to-$1.3303 may thus be revisited. Further potential support sits at the 22 June high at $1.3273.

Above the 200-day SMA at $1.3397 sit the 11-to-15 June highs at $1.3433-to-$1.3461 which may act as resistance, if reached.

Short-term outlook: neutral with a bearish undertone while below $1.3461 but a move above this level would turn the forecast bullish

Medium-term outlook: neutral with a bearish undertone while trading within its $1.3140-to-$1.3658 March-to-May boundaries; failure at $1.3140 would be bearish and target the $1.3300 region

GBP/USD daily candlestick chart

US natural gas futures range trade

US natural gas futures continue to range trade in ever smaller volatility with last week's low at 300.0 acting as support and the late June high at 319.4 as resistance. Below this level lies Friday's high at 312.0 and meanders the 200-day simple moving average (SMA) at 316.0 which may act as minor resistance.

Immediate resistance is to be found between the 10-to-17 June highs at 310.4-to-311.7. While the 24 June low at 297.2 underpins, slightly bullish pressure retains the upper hand.

A rise above the late June 319.4 high would likely trigger a move to the recent highs, above which lies the early February high at 332.4.

Short-term outlook: neutral with a slightly bullish slant while above the 24 June low at 297.2

Medium-term outlook: bullish while above the 15 Jun low at 286.2

US natural gas daily candlestick chart