Brexit Headlines Intensify But Are They Important?

Okay, very good morning. It's Tuesday the 13th of August. I hope you are well. Just having a quick look around the markets this morning, uh, actually fairly quiet. Not really too much for me to talk about, but plenty I'm sure for Sam to go into the charts and his thoughts. Technically for the setup for today. Um, obviously the big headline that a lot of people are looking at is in Argentina. Um, some of the country's most traded stocks basically got chopped in half, uh, yesterday. The Argentine stock market and currency plunging after the conservative, uh, president suffered a shock defeat, uh, in a primary elections on Sunday. Uh, just looking at some of the stats, the peso fell 15% against the dollar on Monday after earlier plunging around 30% to a record low. But that's very much, uh, isolated to the Argentine peso. It's not really something that's, that's playing out in the assets certainly that we look at here at Amplify Trading. So just reverting back to really what is going on in, in the things that we look at. So a good cross-section of the charts as we see them at the moment. Currency markets this morning a little bit softer in both major pairs. Top left-hand corner, you've got EURUSD and cable. Comes amid some continuation of some dollar strength that we've seen overnight, the Asia-Pacific session. Uh, DXY up about a quarter of 1% and just imparting a little bit of downside pressure. Both futures, euro and sterling, sub their pivot this morning. And obviously cable still definitely on our radar just given the fact that we got down, uh, yesterday evening, uh, not last night, but down to around that 1.2033 level. So ever closer to that, that really quite symbolic and obviously technically relevant 1.20 level. Um, just looking elsewhere in terms of the equity markets, um, as far as stock futures are concerned, a little bit of a negative start to proceedings. Nothing really too drastic. I am keeping an eye while I'm delivering this briefing now on the DAX, on that previous low point that we had from yesterday evening in the futures space before the Eurex close and the bounce that we had. Otherwise, fixed income, T-notes up about 4.5 ticks, slow grind higher in the overnight Asia session. But, you know, check out gold, just another continuation on the push, managing to get above some of the area. Well, you can see really the, uh, technically, you know, especially when we start to get to these elevated levels, I think, I think Sam will obviously, um, probably cover this more, but you know, as soon as we get into uncharted territory, the technicals become ever more important in terms of any potential pullbacks and so on. And you can see here it's just worked quite nicely on around that $21 mark. Having accelerated now and really started to bounce through. We pulled back to 1500, of course, when we were delivering the briefing this time yesterday. And what a powerful recovery we've had. And since we've got our head above, you can see late US session, whether there is any news trigger there or not, not that I'm immediately aware of at that time. Just a quick scan of the headlines here. No, I can't really see anything. So presumably a technical breach, hence the extension, the wick on that, that candlestick in terms of its composition came back down, retest overnight Asia-Pacific session, fairly lighter volumes. The market's just taken it all the way back up to find some resistance at the R1 on the daily pivot. So gold still remaining, you know, a strong performing asset having rallied 4% last week. The show goes on. Presumably. So let's get into some of the headlines. As I said, it is very quiet and it's all a bit of a Brexit focus, uh, and it's the usual kind of state of play really. I can update you on the politics, but as far as a read across into direct, um, pound movement or sensitivity to these developments, it's pretty small. A lot of this is again political posturing, updates about just general what Boris is up to, and as he's very much seem to be gearing up for this election at some point in the near future. So not too much really is having a read across directly, I would say, if you are strategizing in the pound. For the pound, we do have some UK data of course coming later, which we'll get into in a second. Um, having a look then, US offers the UK a quick sector-by-sector post-Brexit trade deal. This of course was one of the things that You know, it's such a strong argument for those in the Leave campaign. You know, it's such a simple one. It's kind of like, you know, "We don't need Europe. We can cut better deals on our own." And as much as that, when you get into the technicalities of the political will of other nations, the legal things that need to fall into play for these things to actually materialize, in a more concrete fashion. It's definitely not as easy as that, but since when did that matter? That's the whole point about modern-day politics in this current Trump era. It doesn't matter. And then the National Security Advisor John Bolton said yesterday, again, they're ready to offer Britain these trade deals. He said that they'd speed up negotiations. The two countries could agree to bits and pieces at first, with a comprehensive agreement to follow. He did acknowledge though, Bolton, that he wasn't actually familiar with the details of the trade issues. So it was one of those really where it's definitely a political commitment with zero detail. But again, the point being is I don't really think that's you know, we've, we've gone beyond the realm of reason, I think, when it comes to Brexit now, when it comes to trying to ascertain public perception. I think, you know, I think what I find fascinating is Dominic Cummings being behind the scenes pulling the strings for Boris. I think he's absolutely going down the route of which has been highly successful in America, and it's really putting in focus not just the taking back of the sovereignty, but the NHS. And then also this idea about crime. The third biggest kind of gripe of a national citizen in Britain at the moment is crime. And definitely with this idea of, you know, fastly increasing knife crime that's been happening, hence the reason why Boris has come out and done all the things that he's done in the last 24, 48 hours, particularly around that area. So it's all very much just, you know, queuing this up for the, for the election season. One thing I thought was quite interesting about the Bolton comment, despite apparently getting a friend to explain Britain's concerns about what it would mean about including the NHS, because there's this whole thing about drug prices because of the, the fact that it works differently in America, to what it would be in a state-run NHS here. And Bolton said, I don't really get it, I don't really understand the NHS. But again, it's by the by, I think, at this point. So yeah, this will definitely be, of course, grabbed by the, uh, the Boris cabinet as a sign that, look, we told you so, uh, there's nothing to fear, uh, at this point. What does that mean then? Well, according to a latest poll, ComRes opinion poll showed that 54% of respondents said they agreed with the statement that Boris Johnson needs to deliver Brexit by any means, including suspending Parliament if necessary. So actually, on the balance, more rather than less would actually support him just pursuing this idea of a no deal. Now, the one thing I'd say with polls is really two factors. One, the way of which a question is worded can be incredibly misleading. And actually, I have seen a snapshot of the actual YouGov, the ComRes survey, and it is a bit leading towards the fact that you'd probably, you know, you're more likely to say yes than no, essentially, that you would back him. Then the other thing is I've already seen quite a few people sharing again the actual ComRes data that actually the 54% doesn't actually exist, if you can believe that. The 54% actually is a number that falls within a certain catchment demographic of an age group. It doesn't encompass all adults, of which these press reports are intonating towards. So again, it's, you know, it's hard to really read too much into these things, or obviously there's a strong political agenda here of the government to deliver a certain, convey a message. Whether that is the case or not, I guess at the end of the day, there's me looking at the ComRes report with a fine-tooth comb. I would imagine I'm probably just one of only a handful of people who do that. The rest of Britain read The Sun. And so they're just going to believe what they read. So the point being is I've got to sympathize and understand their process, not mine, because they're the masses, not me. Um, the other headline of course was in The Sun again: Boris Johnson believes the EU will cave in at the last minute to save Ireland from a no-deal Brexit. Um, I did like one of the comments The Sun managed to grab here by an undisclosed, uh, one cabinet minister, a long-standing Boris ally, told The Sun 'The EU will give us a better deal because if they don't, Ireland is fucked.' That's from a cabinet official. Wow, it's just like, it's just beautiful. But look, all points aside, you know, this is becoming a bit of a circus affair now with tracking this type of news. The point being is that None of this is really moving the market right now. You know, if we look back at the pound, the pound is definitely priced at this point for these types of messaging. Certainly if we look where Boris, when that election— when I call it election— the elimination round for the Conservative leadership happened, I mean, we were trading up here around 132. We've come all the way back down to here and I think Now all of this stuff that we're hearing, I don't think is particularly new. The market hasn't reacted to that, that ComRes poll at all. Again, this is purely— I would approach this strategically of a technical element of can that level hold. We're definitely within range. We're only about 60 pips away from the 120 handle in the futures, at least at the moment. And so for sure, that's still the main thing I'm looking at, because if that does break, I really don't see any reason why in the coming weeks then— not that anything fundamentally changes, but with the technical breach, the market doesn't open up to then see a further extension and grind down towards 115 ultimately. Um, the other final thing on the Brexit side was obviously what's everyone else doing. This This just gives a bit of added detail around the timing. Obviously, we know that when recess is over, Jeremy Corbyn is going to call a vote of no confidence. And apparently then, as far as the timing is concerned, the British government is preparing for a showdown over Brexit on September 9th. So the detail here that one senior government official said that parliamentarians opposed to Boris Johnson's approach to Brussels could use a motion to restoring the Northern Ireland Executive due on September 4th to seize control of the House of Commons agenda. Um, this goes into some kind of nuances around Northern Ireland and, and how that can be a bit of a stumbling block for Boris then, for the, um, those of the opposition to take hold of the situation. So yeah, next couple of weeks, um, not expecting too much on this. And as I say, the more interesting thing perhaps is going to come today from the UK, from potential economic data from the UK. You've got average weekly earnings and then the unemployment change and unemployment rate. And then from the US, you've got CPI data. So two metrics here which could potentially influence in the short term the currency valuation, particularly if we were to get a situation where CPI was to be surprisingly strong, that would be what you'd be looking for to see those downside levels in cable get retested. Italy, we spoke about this at length yesterday because we were talking about Salvini and this idea about snap election. Well, this is generally the headline: the Senate has delayed a no-confidence vote, so it's on ice for the moment. Prime Minister Conte expected to address parliament on August 20th, so no further kind of updates on this. So this will probably put the kind of focus on that, those Italian assets, as a kind of barometer of sentiment just on hold for the time being at least. Calendar-wise, apart from the UK data, we do have some German numbers. We've got the German ZEW Economic Sentiment Index. So this is the one that is a soft indicator surveying economists and analysts. So that's its difference to then 7,000-odd companies across Germany in the form of IFO. But as you can see, economic sentiment in Germany has been deteriorating rapidly. The continued negative trend in incoming orders in German industry is likely to be reinforced the financial market experts' pessimistic sentiment. While the previous reading, the Iran conflict and ongoing trade dispute between the US and China been weighing on the global economic outlook, is what was the detail that came out of their surveyed report. So last time this data came out, we printed at -24.5. The headline today is for -28.5. So it's for things to actually get more pessimistic So if we change this graph over to a 10-year, that does put us down at the most pessimistic that the Germans have been essentially since really 2012. The low-end estimate though, so always important is the range. The median estimate is -28.5. The low is -40. Uh, -40. Would put us kind of down to this era here. So this was right when we were going through the episode of the European sovereign crisis. So yeah, I'd keep an eye out for that data for sure. So that's gonna be coming out at 10 AM this morning, and then later on this afternoon, uh, rolls around again the return of CPI from the US. So at 1:30, this is looking at the year-on-year number. We are expected as a 0.1 uptick to 1.7%. Got a range on the street of 1.6% to 1.8%. But just having a look here on the, on a 5-year to get a sense of where inflation is at the moment. And obviously the Fed target of 2% inflation has been, you know, after it moved considerably higher, has been just weakening through the course of 2018 and then also recently showing that trend, as we can see in the last 12 months, really since the summer of last year, uh, slowing down. Hence the reason why the Fed have been able to action that rate cut more recently, and potentially more to come in the future. Otherwise, API crude oil inventories later on this evening as per normal, but other than that, that is about it. Um, no, or nothing else really major for me to, to comment on I do have some other analysis about Salvini and the Senate showdown, so I will put that into the chat room after this briefing is done. So feel free to take a read when you get time. All right, well, let's get Sam on, see what he's got to say. Have a good day. Thanks, guys.

Thanks, and I hope everyone is doing well. A quick look over the markets here. We'll start off with the euro, which just over the last 20 minutes or so we've just seen a bit of a recovery after a morning push lower, similar to yesterday. Uh, yesterday morning around the similar sort of time was the, the point where we just started to turn back around. Whether that's gonna happen again or not, and I have a quick quick look over at the daily chart here again for the euro, which you can see is every time we come back up to— what's— let me just remove the pivots there— any of these previous levels of support that we had before that breakdown on the 23rd, we just can't close above there. Yes, those highs, if you like, are just getting squeezed in both directions, and you could argue It's worth having on there as well. And certainly you can see if you— depending where you have the, uh, the trend lines on that break as well, it'd be worth having on. Certainly to the, to the downside, that 112 handle with those previous highs from the back end of July have helped hold things yesterday as well, just failing to get on. But getting into another relatively small range here, and so something's got to give, you feel, whether that be to the upside above that trend or, or to the downside or not. Situation in Italy, not necessarily moving things too much, but you can just see from the last one, you know, including today, 1, 2, 3, 4, 5, 6 trading sessions, but just starting to get squeezed in from both ways and not too much happening. So a case of, for me, I would just say waiting, waiting here for you know, confirmation of, uh, you know, a bigger push to the upside and downside to maybe really get your, your bias going forward from, uh, from then. The pound yesterday, and if we were to put this on the daily chart, you can see if we would draw up the— well, we'll put it, keep it on the 60, but my point being that high from yesterday, you can just see if we scroll to the left-hand side just how much, uh, resistance, uh, well, what was support supports. And now obviously resistance we had from those previous days, that and the R1, we couldn't get, um, back above there and we have drifted down since. The low that we've just made, also the, the previous high of the Asian session yesterday before the recovery, uh, for the pound and the euro started. So worth keeping an eye at 1.2064. Yes, we've got the data coming, and if that is bad, maybe we get that all-important 1.20 on the futures, which isn't too far away, 69 ticks away. Before that, you'd have the S1, a nice area of support on, on the low of yesterday, uh, and the overnight low at 1.2033 for the pound. To the upside, well, you know, it still seems that this market does for whatever push on, and it could be at 9:30 we have some good numbers or the US is weak. It just seems like it's a better opportunity to get short higher up. Where could that be? Uh, well, looking, you know, other than the, the high that we did have yesterday, could also favor the sort of the breakdown area that we had yesterday morning, 121.52. Doesn't look all too bad, and it may well be that we also get the top end of that, that trend line at that point. Just at the corner of my I just seen— and I know we don't really talk about the Kiwi too much, but you can see after that retracement or part retracement that we saw after their shock 50 basis point cut, we are just drifting down to the lows and, uh, of the yesterday as well. Um, and quite a key level support. You can see last few days are just starting to trend down as well. So I'd have this on if you're, you're trading the Kiwi, even if it's against other pairs as bit of a signal, uh, and obviously favoring this to break yesterday's low, uh, and the low that we had on the 8th, to maybe even look to, to get a further retest down eventually of that low that we made following that. Is that going to have a drag through on the Aussie? Where you can see this morning we are just drifting down as well. Um, it's a shame we didn't quite get up to the low of yesterday morning, uh, today with the Aussie, with those previous lows as well around here for that short. You can just see we're starting to trend down and worth again having a similar kind of trend to the one we had in the Kiwi there. You see this one started on the 7th, yesterday's low, yesterday evening overnight low, and maybe, maybe I should say, waiting for a break of that. The dollar up a bit, relatively, uh, you know, choppy over the last hour or so after a strong morning. But certainly for the Kiwi and the Aussie, you could argue there's you know, a favorable move to the downside if these levels are to break. The euro and the pound— by the pound, I think you just got to look for the best place to short. Uh, obviously take the data with a pinch of salt and then made that decision. But certainly with the euro and pound, it might be just better off waiting for, you know, a move later on. But certainly the Aussie and the Kiwi under a bit of pressure, and the Canadian dollar as well, you can see, is coming to its lower point of the day. You've got some quite key levels just below where we're trading, obviously, the low from Friday. But you've also got the previous high from the 7th in the morning, uh, level, uh, from the 8th as well. So just under a bit of pressure, obviously keeping an eye should we come back to test yesterday's, uh, low as well, which you can see offered a bit of support this morning before that breakthrough. So the dollar trying to strengthen against some of these, uh, pairs. The euro and pound, I can see, not necessarily doing as much. Well, keeping an eye here on the DAX, of course, come down to test that, that low just as we speak, not just from yesterday but also the evening that we had, or the afternoon I should say, on the 7th as well. Break of that and then you're looking to get down towards today's S1, which is also a triple bottom from the 6th, uh, and a couple of times on the 7th as well. The S&P, worth, uh, just having a quick look at literally where we're trading now. You can see yesterday day's low. We just hit that again, so very similar to, to the DAX here, but also the low that we had back on the 8th. And really, I would say this is more of a zone and quite a key one. Obviously, the DAX may be the, the reason we were to, to push lower, uh, if, um, if it doesn't find support. But a break of this area, 2870 down to 67.5, and I think it could, uh, we could see a further move lower. To the upside, Yesterday's, uh, original low is, is today's high. So you've got this, uh, what we could call it, 18 or 20 point range in the S&P. And they could be your lines in the sand, really, whether you would want to necessarily get long or short on other than just yet in the morning. Looking to see what happens around either of those points may well be favorable, I would suggest. Quick look over, uh, at oil, and then obviously Gold as well. Oil, you can see after— well, we went through this yesterday, that bounce from that multi-month low and decent recovery yesterday in the morning. It was threatening to come back to the downside, didn't quite necessarily get to the original high that we had on Friday's morning, but we did push on and continue to do so. The pivot acting as a bit of support for now, and if if I just make this a bit smaller and draw the, the sort of the high from, uh, yesterday, you can see just how choppy that whole area had been, uh, certainly the beginning of the month. So quite a lot of resistance just above where we're trading, and, uh, it would— I feel it will be a bit of a struggle to get through that, and not just because of those days, but you can see just how well a level of support it had been before we did get that breakdown on the 1st of August, uh, you know, the beginning of the month. So quite a key level, just, uh, resistance point in general for, for, for oil, for certainly for medium-term and longer-term traders as well. So until it would maybe clear and, you know, close above 56, and maybe if you want to give it a bit of, you know, 56 and change there to get above, really I'd just be a bit patient about looking to get too aggressively long. To the downside, you can see we're just starting to, you know, have this nice trend to the upside. Can we get any trend line on? You can see we just had the third test of that literally at half 7. Knowing that, okay, we've got the free test, people are looking at it. A break of that could well lead to more downside. Obviously yesterday afternoon's low, S1, and yesterday's low would be the targets for that. So that's something just to, to have a little think about. Yesterday's high while we're not got that third test of it, you could argue price just getting squeezed a touch. So something just to be aware of, 56 to the upside, that trend line from the downside, uh, worth having on. Gold, well, what's going to stop this? In terms of resistance levels, you can, you know, try get a couple of trend lines from previous highs to match up, and probably worth having on if we do just keep, you know, pushing and pushing to, to see say, well, look, could we get the third test there? But you're almost hoping, you're almost hoping here for that place to, to, you know, see a ceiling. I think you just got to go with the flow. Yesterday, 1500, um, you know, we got during the briefing, uh, down it, below it by a couple of bucks, but not enough to really, you know, confirm a push to the upside. And you can see what's happened since then, just breaking levels and It was actually relatively technical yesterday. The pivot after breaking acted quite well, uh, and the previous highs, uh, as well. That level that did break overnight, uh, you can see what happened, uh, there. Just a really nice technical break of that trend, push higher, snap back, find support, goes again. Really, uh, working nicely there. Keep an eye on any of the previous highs, I think, for, for gold. But as with market conditions as they are I think probably worth still looking to, to go along, uh, and if you can get it lower down, fantastic, is the way that I would look at it. Any questions, as usual, obviously please, uh, do let us know. The, uh, the dollar pairs just having a little bit of a breather, but worth certainly for the Kiwi and the Aussie just having a look at these lower levels with the Canadian dollar if they were to break. Understandably just having a bit of a pause now. Stocks looking to turn around a bit. Keep an eye on that DAX, on that key level of support. The S&P just having a little bounce from it, so if that was to go, you might get a further move. Key levels above in oil and that trend line also important. And gold seems like the only way is, uh, to the sky. Uh, any questions, as usual, please, uh, do let us know. I don't speak to you. Hope you have a great trading day.