Central Bank Decision Week

Okay, very good morning to everyone. Monday, 20th of January. Hope you all had an excellent weekend. Uh, usual routine then for Monday, gonna have a look ahead from my perspective, from what's on the calendar, as you can see here, of highlights for what's to come from a fundamental perspective. And then got two other chaps that are joining me as Sam, you know well, he'll look over the charts both for today and the week. And then I've got Alex as well, who's looking at something in the euro over the longer term to be looked at if you're looking at swing trading and anything like longer time frames and so on. So first off, before I get into the, the actual calendar, let's just have a review of the charts quickly at the market open. And one thing of course to be aware of today is a US holiday. It is Martin Luther King Jr. Day. So US index futures are open at the moment, but they're going to see early closure, and there's no floor trade today. So it is a full closure in the US in that respect. So you can expect today's session to be fairly quiet, all things remaining equal, as we're going towards the latter part of today, and for the Americans to come back in full force as of tomorrow. So do bear that in mind. In regard to any of your strategies and execution of trades over the session ahead, because it could be fairly quiet barring any surprises. Looking at the general mix of the asset classes at the moment, the dollar index up a touch, major pairs, EUR/USD down very slightly but getting close down toward the bottom end of the range that we're seen towards the back end of last week. So worth just keeping an eye there. But cable underperforming and just below the 130 handle in the futures, at least for the moment, targeting the S1 on the downside, down about 43 pips. We'll have a look at that in a moment because from a fundamental perspective, there's definitely enough out there to have a bias to be short that pair at the moment. And the, the kind of economic data that we had last week, obviously in a variety of different ways was, was poor out of the UK, and that's prompted quite a big rethink over a short period of time about the prospects of the Bank of England cutting interest rates on the 30th of January. So we'll talk about that in a second. But otherwise, gold, the US 10-year, and equity markets overall is pretty quiet. The other thing that does stick out though is oil prices. You can see here we've had a gap up at the open Definitely nothing to the degree of what we had on that original Iran, on the Iraqi-US air bases situation, but a bit of a pop, about a dollar looking at the market close to the overnight initial reopening high. It has settled since and we're trading about 59.12 at the moment, so still up 54 cents, but perhaps just worth keeping an eye on, uh, as well today. And there's a few things I can update you on that's behind the reasoning why oil had a bit of a gap up in the overnight session. So with that, let's jump straight to that story, and then I'll kind of draw back to the calendar to wrap things up for the week. And this is the two things that we've had: Libya's oil production reportedly now limited to 72,000 barrels per day its storage tanks are full, according to the state-run National Oil Corp. And that is down from more than 1.2 million per day on Saturday. So just to be clear here, Libya's production is at 72,000 from 1.2 million. So a sizable amount has been taken offline here. It's the lowest level that Libya has been pumping since August of 2011. Now, why is this happening? Well, Eastern military commander Khalifa Haftar blocked exports at ports under his control, according to a statement on Saturday from the NOC. The company declared a force majeure. Um, to give you a bit of context as to geographically, the main natural gas and oil pipeline and offshore fields within Libya I will share this and I will retweet it as well on my Twitter account. But worth, as per kind of my instruction when we were monitoring the Iranian situation and the infrastructure on Saudi Arabia, I would definitely have a little bit of an update, refresh your memory about where are the key areas and what's the kind of structure within Libya. And so in case we do see if any other particular conflict, of which has been very common in Libya, where would be the potential sites that would cause the maximum type of disruption? The other thing aside from Libya has been Iraq. And why Iraq? Well, don't forget, they're particularly important within OPEC because despite some of the recent geopolitical tensions, they still remain the second largest producer within OPEC behind Saudi Arabia. Security guards in Iraq seeking permanent employment contracts They basically blocked access to the al-Habdab oil field, prompting a production halt, according to officials who did not want to be identified. And the Badra field is also at risk of closure, and that's a fairly sizable field as well to, to keep an eye on. So a combination of the two coming at the same time over the weekend has prompted that move in oil, but I would say going forward, with this type of information, I definitely don't think oil now is just going to go up dollar after dollar after dollar on the back of just this, because ultimately the situation in Libya is not unusual. Sure, it's had an impact that hasn't been seen to the degree of several years, but this is kind of the way of which the the political situation develops within Libya, you tend to get fairly drastic action that brings relevant people to the table, and then things start to return back to some degree of normality. And with the Iraqi situation, it's almost the same. Don't forget, this recent blocking of access to these oil fields and its impact in production is all down to, to pay and permanent employment contracts that So if they cause big enough damage, then push comes to shove. You're just going to have to sort it out from the corporation's point of view, and then the necessary things happen. And so I don't really see this as a lasting bullish factor from a new kind of catalyst that's going to keep oil prices elevated. I think if anything, you've probably seen the best part of the move, and it's been and gone now. That's a separate point, though, to the ongoing monitoring and remaining of being vigilant with tensions just more broadly in the Middle East. But again, we've— there's really nothing really new worthwhile me talking about when it comes to Iran. So that's a separate issue to what's happened at the weekend. Okay, a few of the other headlines before then I give you the overall summary of the calendar. So a couple of central bank meetings of course happening this week. We've had the PBOC, we've got the BOJ, the BOC, the ECB, The ECB, not expecting a great deal, but a lot of people talking about this lady, your new president Christine Lagarde, because she could officially kick off a review of monetary policy strategy at the central bank, which would be the first time I think that's happened since 2003. A lot of people, of course, focused on the, the metric by which they define inflation, which is right core to their mandate of how they manage policy. But ultimately, is that, is that a big deal? Well, I guess what they're going to focus on in terms of the, the review could be quite interesting. I don't know how impactful it's going to be because the actual results of this is probably not going to be known until the back end of this year. And so it's not like an immediate review where they come back in a month's time. You know, this is a prolonged exercise of which the researchers have to do crunch the numbers, so to speak. You know, if they're going to say, okay, inflation now can move above or below target, or of an inflation targeting band of a percentage degree, for example, these things need to be thoroughly stress tested to see whether or not that's going to be a viable strategy going forward. So a lot of people talking about it. I don't think it's particularly that big a deal, but Christine Lagarde is actually speaking a couple times this week, as we'll see on the calendar. So always worth listening into. And then the other thing just quickly to mention was this. This is the implied probability of Bank of England action at the next meeting. Rates obviously in the UK currently reside at 0.75%, but as you can see here, there's now a 72% probability of a rate cut, and that's been brought drastically forward. Actually, it was only 10 days ago the pricing of a BOE cut was 20%. Now it's 72%. And this has come after last week, you'll remember, everything from GDP, manufacturing industrial production, soft inflation, retail sales, everything is kind of tipped in the balance now of that the economy is really kind of feeling the pinch, the aftermath of the political stalemate that we've been in under the uncertainty of Brexit. And so likely then coupled with the increased dovish rhetoric from the Monetary Policy Committee that they're going to have to take action. If that was not going to be the case, you would have to be thinking, well, there's got to be some Bank of England new comments to come out to even the keel, because at the moment, as things stand, I can't see the BoE disappointing the market when it's priced this overtly for one type of action, which is for a rate cut. Just a further weigh on the pound, and as I said, the British pound is underperforming this morning. You might have caught the weekend, um, Sajid Javid, the UK Chancellor, in an interview with the Financial Times on Friday. He urged businesses to adjust to a future where Britain no longer adheres to EU rules and regulations, and that's caused shockwaves across the eurozone. Over the weekend, because without an alignment within those— in that respect to rules and regulations, well, basically there is no deal with Europe. And so therefore, the prospects of a no-deal hard Brexit come back to the forefront. And so, yeah, fundamentally there's plenty to go at at the moment to have a bias to the downside for sure. Um, just quickly jumping back to the calendar then, a few things to be aware of for today. You do have the House of Commons report stage on the EU withdrawal bill. So just a quick word on what that means: the peers are going to be debating the WAB both today and tomorrow, but this is more just kind of going over with a fine-tooth comb the details and having some debates rather than anything meaningful to disrupt Boris's delivery of Brexit by the end of the month, of course. So don't expect too much from that. The other thing that you do have today is the Davos kicks off, the World Economic Forum. The IMF World Economic Outlook update is due. Usually it will come a bit later on this morning. Again, I don't really think that's going to be a real distinct market mover, but nonetheless it's a decent insight as to overall growth projections and where we stand at the moment. From a Davos point of view, there's really two events that I'm quite interested to see, and possibly even though it doesn't really have much to do with markets, I'm quite interested to see Donald Trump and of course Greta. They're gonna go— they're speaking on the same day at Davos. That's obviously going to be quite an interesting one to watch given Trump. I think he tweeted a week ago saying, chill, Greta, chill. So let's see how that goes down. I would definitely love to see both of them on the stage at the same time. But probably Davos, the biggest event that's happening is at the end of the week on Friday. You've got Christine Lagarde, you've got the BOJ Governor Kuroda, US Treasury Secretary is speaking alongside Sajid Javid, the UK Chancellor, and they're all giving a kind of panel discussion on the global economic outlook on Friday. Otherwise, the way Davos works, for any of those who are not familiar with that as an event, it goes on all week, and basically there's keynote speakers going every day, everyone from major heads of corporations to celebrities to politicians. Angela Merkel is actually there as well, and she's giving one of the key speech— speeches midweek. It's probably the other main one to keep an eye on. Other than that, then, from a BOJ point of view, so from the central banks, that's going to be coming out overnight. Not expecting anything with policy. However, they could actually upgrade their economic outlook, if you remember, given the substantial fiscal stimulus enacted by Shinzo Abe. That is not going to be a particular surprise. However, it's likely that the BOJ keep their more kind of dovish spin on their communication despite that economic upgrade from that one-time fiscal boost. For the BoC, again, pretty similar, not expecting any changes. So the same with the ECB, apart from the latter, that monetary policy strategic review is likely to be given the go at that point. The final thing for me to mention then is earnings. There are 58 S&P 500 companies reporting this week, so we do start to ramp things up a gear or two. There are 6 of the Dow 30 components. In terms of one of the ones that will capture, I guess, a lot of the limelight, even though it's not the biggest of all companies, is Netflix. Netflix is going to be reporting on Tuesday night, and that's the first of the FANGs to report. And it's going to be interesting given that option markets are pricing in an approximate 7.6% swing in the stock price on the back of those numbers. But actually, on average, they do see about a similar type percentage move. That's on an average basis. But obviously Netflix has been under pressure, hasn't been a particularly good quarter for the stock price uh, specifically, not in comparison to likes of Disney. And that's because Netflix with Disney Plus and also Apple streaming TV and AT&T bringing their network as well on board, there's a lot of competition out there, meaningful for the first time. So it'd be interesting to see how they perform. But that's pretty much it from me. We'll have the weekly strategy report issued a bit later. As per normal. But for the moment, let me hand you over to Sam first, and then Sam can hand over to Alex to have a quick word as well about the euro, as I mentioned. All right guys, thanks very much.

Yeah, hi guys, good morning. I hope we all had a good weekend. I'm just going to bring you US equities in here just coming down this morning, obviously only 25 minutes into the EU open, which is perhaps dragging things, uh, as well. But from that all-time high, uh, 3,330, uh, just 11 points down. Nothing to get too excited about just yet about, you know, calling tops or anything very early on a Monday morning. And not really much has changed. But let's just have a look at a couple of these, uh, potential levels where you could find support. I think If we were to come down to 3309, previous high that we had Thursday evening, it's going to be an area where people, uh, like the look of, uh, as an area of support. Haven't quite come back to retest that yet. I mean, before there, we'd have to get through today's S1 area around 3316, nice support in the early hours of Friday, uh, could be another point of interest, uh, as well. A couple of trend lines have broken for us to get to here, and very similar across the the board for US equities. And, and you can see here some nice, uh, support off this trend all through Friday, and then again this early morning along with the low from Friday evening. A break of that, you just seen a bit of an extension. And it's the same for the Dow, uh, and the NASDAQ, uh, as well. But early hours, uh, of, of trading, and obviously we're so elevated anyway, uh, but, uh, whether we can really get a strong move lower. We'll have to wait and see. The DAX here just leading that break this morning. However, we have seen a bit of a recovery as it's come to a key level support, which on Friday acted as a good base to get long again, was the previous high from Friday as well. So strong level there on the DAX, and unless that was to, to break close, maybe the hour below, you're not gonna get too excited about a move lower. And if we have a look last week, there was plenty of, uh, sort of moves in the morning that reversed pretty quickly, uh, into the back end of the afternoon. So you can see here a lot of those lows coming around well before midday. So we'll have to wait and see there. Having a look over the pound, that trend line is getting hit right now. Let's just quickly remove the pivots and get that trend on, because this is key. Yes, last week, I should say Tuesday morning, we got a nice test of that as that came through. You can see here now a nice reaction again, also 130 handle, uh, just finding a bit of support. But this is massive here for, uh, the, the pound against the dollar. A break of, of this and you could well see a further push lower targeting some of these lows that we had back on, uh, what's this, the 23rd of December, around 129.42. And, and then these lows that we had from end of October, beginning of November, uh, to the end as well, around 128 on the futures, which seems to me like a good enough area where you could argue this market could find a bit of a bottom. What a level going back here to May and June and February as well before breaking through in October. So if I was to get that above the camera there, you can see the significance of that point, uh, break of this trend. Well, could well be a formality that we, we do push lower. Looking a bit more intraday here, it's going to put the pivots on for a bit of a guide. You can see here we've just been drifting lower from Friday, uh, quite steeply, you have to say. But any of these previous levels, uh, of what were support could well act as a bit of resistance throughout the week. And you can see, uh, what time is that we broke through? Around 5 o'clock. And what was the Asian session low then was the high. So relatively well, uh, respected this market technically when these levels do break. So a couple opportunities you would say to, to get short, i.e., on the break of that trend, or if we can just drift a bit higher up. This market has acted quite technically, so these levels should well act as a bit of resistance. Quick look over the euro, uh, obviously Friday decent move to the downside. Trend lines are broken. The 50% fib from the, the high of the year acted as really good resistance on, uh, that Thursday. Let's have a quick— oh, let's have a quick draw of that. On here, you can see the significance once that came through. Lovely push lower, trendline broken on, uh, Friday, and we're now back down on the low of the year. Uh, let's just get this trend on just to bring that into picture there. Lovely opportunity, that was a really nice move on Friday, one you can hold for a while, which hasn't been said for the Euro for quite some time. Significance of the level where we are trading, you can see the lows obviously today, Friday, uh, the 10th, and then 24th, 23rd, and 20th of December, and even some levels from the beginning of that month as well. Really key, key, key zone. It'll be interesting to see what Alex has to say about the Dixie, because if that breaks a technical level he'll talk about, well, you are going to get a nice push lower in the euro. And now you're talking December, end of December, end of November, December levels, back down on on the futures anyway at 1.1061. So yeah, a couple of, uh, key points both for the euro and pound to the downside. And if they go, likely to see a bit of a follow-through. So that would be potentially one to look at because the false breakout where we close the day could be key for a reversal, but time will tell. Gold this morning, let's bring that into picture. You can see we've still got a level drawn up either, you know, from the briefing this morning or from yes, uh, from last week. But you can certainly see 1563 is a key point, just above today's R1. Keep a watch on that. The high that we had back on the 10th, the afternoon of the 8th, and some decent price action, uh, around the 6th and 7th of this month. Above that, you're happy. I mean, where we closed the week, not quite, you know, convinced either way. We're still in the top end of that range and And the trend line from the low, you can see, still nicely respected. So it's a wait and see for me for gold. And I think I'm, uh, I'd be a buyer above this area. And if we can break below those lows, the pivot, the trend line, then I'd be a seller. What happens in between, not too interested about. I think it's a case of let the market tell you what is going on. And then go from there. Quick look at oil before Alex comes on. Uh, you can see obviously that gap higher. And, uh, well, let's talk about the last two times oil was gapped higher— September and this month— and it didn't take long for it to close either time. And of course, as we know, it's almost like those have been the tops, uh, short term anyway. So don't get too carried away, but this is more mark up those areas where we did gap, because as we know, that can offer at least a bit of a level of support. And where we closed Friday was pretty key as well. The high, uh, tested multiple times on Friday, uh, that we had Thursday, but it was also a nice area of price action going back to the 9th, 10th, and then the Monday the 13th last week as well. So key level 58.84. We're just testing what is currently the low of the day price action-wise around 59 handle below there, you'd be looking at Friday's highs, that closing price as well on Friday, as a key point of support below there. And well, it's just happened again, hasn't it? If, uh, you know, you don't want to get sucked into buying as soon as you hear these headlines, because of course, uh, what has happened the last two big times, big gaps, they've been filled very quickly. So don't get ahead of yourself would be my advice there. Quick look over to see what's, uh, what's going on. NASDAQ is testing that pivot. The DAX back up to its pivot. The Dow and S&P just deciding what to do as they come to potential key levels of support. For me though, S1 and S2 I think will likely have some potential for the buyers to come back in. From a bullish point of view, where would you be happy that this market can continue and continue to, to go? Really, it's going to be, you know, what, potentially in a couple hours time if we were to get back above this trend line and that pivot. Then I'm, uh, like with gold, and in the case I'm gonna let the market tell me when to buy. And for me, that's above that pivot. So, well, it remains to be seen, of course. You know, the start of the day, we're only 5.25 points down. You'd be surprised if, uh, if we were to finish down anything more than 1%, because of course that has, uh, been a long record, uh, that's intact at the moment. Anyway, hope you all have a good trading day. Like Anthony said, we'll get the the strategy out before midday. Any questions, please do put them into the comment section below on YouTube, and we'll spend today answering those, whatever they, they are. But yeah, I hope you'll have a good trading day, and I'll catch you all later on and throughout the week as well. I'll just pass you over to my colleague now who's just gonna go over the, the euro on TradingView here. Give me one second just to remove that.

Okay, cheers. Hi everyone, Alex here. Thanks, Sam. Can I get a transition over to this? Oh, it's on there? Okay. Bear with me a moment. So yesterday was quite a significant week for the euro. Just going to pop this 200-day moving average on, uh, bear with me. So where are we? So this 200-day moving average was very significant. And the reason being is because back in, back in June, we moved above, we tested support, support, support, support. It's on a daily, on the higher time frame. And then we broke below. And actually, within 30 days, we tested the previous low. If I've removed this chart back here, within 30 days, we were testing the previous low. It's a move of several hundred pips with one little consolidation before we moved below. And actually, the following month broke below, made new lows for the year. And actually now what's happening is we want— we're back in the same situation where we was above and then below. And you can see this 200-day moving average acting as big magnet. It was resistance, then we broke above it, support, then we broke below, and then it was resistance. And actually last week it got very, very tricky here. I came in short, um, just, just below it, and then we broke above it. And then actually last Thursday we had a big rejection of that fib 50 that Sam mentioned which was from the high of the year. Excuse these dodgy fib level, fib retracements from the TradingView. We can see this fib 50 here was a big rejection of that with the bearish sort of piercing pattern with the top tail closed below that 200-day moving average. And then we had a really nice bearish follow-through on the Friday. And I think that's really important now because we're, we're now on bearish below the 200-day moving average. And actually, if we— it could take sort of 30 days, maybe we, maybe we see the, the, the previous low of the year. Just sort of looking at the 100-day moving average, this is a sort of target area I was looking at for anyone that is short off this setup, is area of support coming into that sort of 1065 kind of area just ahead of the 100-day moving average and those lows from the back end of December. This time around as well, if we are going to test the low of the year, there's quite an interesting trend line I'd like guys to be aware of coming back from 2017. So very, very significant trend line testing the lows from 2019 as well. You can see at this trend line Unlike any other trend line in the near area, is actually above— it comes in ahead of the 2019 low. So if we are going to test the 2019 low, it's actually even more significant because we'd have this, uh, big trend line support break. And I think if that trend line support break does follow through down through new lows, we could quite easily test the the Macron gap from back in 2017. There's this gap back up the 1.0770 level, which is where Macron got elected. And that's, that's a really, really nice move. I'm not saying we get down there in one go, but definitely if we are gonna— if the bears do take control now, we could get there. Maybe one move, consolidation, another move, reload, and, and we could definitely get down there. So I don't— just to go back to the Dixie, we focused on the Dixie last week. I don't focus on the Dixie very much during trading, but it's interesting when there are key levels coming up on the Dixie just to be aware. Because if I just get the sort of trend line up from here, you can see that actually there's this huge trend line from back in 2018, and last 2 weeks ago we had the completion of this morning hammer, uh, this morning star formation with a hammer at the bottom off trendline support, which indicates, uh, more bullish. And for the pattern to follow through, you have this trendline resistance coming down from the top. This is a daily now, and you can see that that trendline, we are literally testing the, that trendline resistance now. And if that trendline resistance breaks, then I think 98 is where— between 98 and 98.50 are the next sort of resistance levels. So around 98 handle, and more significantly above that, 98.50 kind of zone where you've got these tops from back in August. We've also got the November tops, and that's the sort of zone in and around that area between sort of 98.40, 98.55, this sort of zone of resistance which I quite like, would be the next stops there. So where was the November tops, that 98.50 level on the euro? Well, that would have been these November lows here down at the 110 handle, which is still about 100 pips away. So that'd be really nice, that'd be a really nice move there if you can try and catch that. So I'll leave it there. Yeah. Thanks for listening. Hope you have a good week. Cheers. Thanks, Anthony.

Cool. All right, guys, that's a wrap for now. As Sam said earlier, though, any comments, whether for myself, Sam, or Alex, or anyone, member of the team in fact, just make sure you leave a comment on the video. We will do our best to reply to everyone, as we always do. And if you've made it this far and you haven't already done so, don't forget to hit the subscribe button to the channel so you can access the updates every morning. All right guys, have a good session. Remember, it's a US bank holiday this afternoon, so just be mindful of that as we go into the afternoon session. And I'll catch you guys later on. Thanks very much.