Fed still on course to hike rates

Last night, a bit of an update on Brexit and parliamentary figures, i.e., doing the maths on if Theresa May does secure some kind of deal, what she's going to have to confront in Parliament from a numbers perspective. So we'll have a look at that. And then what I'm going to do is hand you over to Sam North, my colleague, and then he'll give you a bit of a run-through from the technical point of view, because some interesting points if we were to close beyond certain levels to see out the week, which could be technically, uh, significant going forward. First things first though, one thing I just quickly wanted to mention before we get cracking on the briefing, and this is this: Student Minds, which is the UK's, uh, student mental health charity. Um, the reason I'm mentioning this is because, um, one of the Amplify team or not one, actually two. So Dinter Foster, who is part of our tech team, but also our MD Will DeLucy will be jetting off to Athens, Greece later on this evening because they will be running in the Athens Marathon this weekend. And in light of that, they are looking to raise money for this charity. And obviously anyone who knows Amplify We do work with a lot of students in universities, and obviously, just given the kind of pressures and the change in certainly technology and social media and so on, the stresses and burdens on young people, I think is definitely a charity that we're very much in support of. So if you are able to, even if it is the smallest contribution, a pound really does make a difference. If there's enough people that will contribute that amount. So don't feel like you need to give an extraordinary amount, but obviously this goes straight to the charity itself. I've put the link in the chat room, and I will do so on the, on the YouTube bio later as well. Dinta's just off the target. She's raised just under £1,300, just another few hundred pounds to go till she hits her target of £1,500. So please do help us out for, for this good cause. Um, and good luck, Dinter and Will. All right, let's have a look then of what is going on in the market. And just looking at the S&P 500 chart here, and it's come under a little bit of selling pressure, um, in the European Open. So since we've come in, slight edge down to retest really the, the S1, which was also the low that we saw yesterday evening in the wake of some of the movement with the FOMC. But, um, well, really just quickly, two things. Let's just have a look. That actual 7 o'clock type price movement here was, as you can see, yes, we had a little move lower, but it was quickly recovered. And if we look at the US 10-year this morning, the FOMC was this candlestick here. So you can see the actual reaction to the FOMC in a lot of the markets was relatively tames. The dollar though did appreciate, which has had ramifications for the major currency pairs, which both have moved lower. But I guess one thing you could say is that despite the October rout in the market, the Fed are staying the course. And if there was anyone expecting, well, maybe a bit of a nod to the increased volatility that we saw, the correction in the US stock market at the time, the kind of drop in crude prices into bear market territory, the ongoing trade war, the political gridlock that's now on Capitol Hill. None of this was really even mentioned. And so the Fed, as what we were expecting really, have kind of just not really commented too much on those factors and just stayed on the party line, of which then means that we're on course for a Fed rate hike. And so all the more reason for a little bit of a pullback on that extension of the run-up we've had in equity markets kind of post, uh, the midterms. So, you know, it's not a catastrophic fall, it's just— I think just warrants, given the Fed's commitment to continue hiking rates multiple times going forward, a little bit of profit taking. And so we've had a bit of a retest at that previous low, yet to break though, and that S1 and last night's low still holding up in the futures, at least for the for the time being. I'll leave Sam to really go over the, the longer-term technicals in a bit more color, but I was just looking at the, the fib retracement of the, the October sell-off, and you can see here it's kind of worked out fairly nicely in terms of where we found this resistance point in the late US and Asia-Pac session from two— one night ago, and we've bounced ever since that point. One thing with the slightly negative start to the equity performance though, obviously as I said, the Fed kind of pursuing their plan of further gradual rate increases, that meant that Asia did see a little bit of pressure overnight. But there was a few other things that we've had. Beijing plans to set quotas for banks to pump credit into private companies and some Bloomberg quoting, some are fearing that this will boost non-performing loans, so i.e., a net negative. We also had some Chinese inflation data overnight, producer price gains or softer producer price gains, weak car sales, disappointing outlook from top online travel companies rounded off the bad news, they're saying. And then of course we had this, which isn't really anything particularly new. We've been talking about this for some time. Uh, but this is the kind of persistent repricing that we've had in the crude market since the peak that we saw at the beginning of October, and we've now moved officially into bear market territory, down 21% now for WTI. Um, looking at the Fed firstly, then we'll have another look back at oil in a bit more detail. But what did the Fed actually say? Well, I've kind of summarized it already, really. We weren't weren't expecting much in the way of, of changes, and that was really what materialized. They acknowledged the drop in jobless rate. Remember, unemployment rate is particularly low, multi-decade lows in fact, in terms of the US. But there has been some slightly slower business spending, and there was a nod to that. In terms of the economic activity, you know, despite what happened in October, the central bank remains firm that it continues to rise at a strong rate and job gains are strong, and that they repeated their outlook for further gradual rate increases in their statement. The risks to the outlook appear roughly balanced. So that language left basically unchanged irrespective of what's happened over the last couple of weeks. So for December, the next Fed meeting, so the second day of which they'll announce the interest rate decision, so the 19th of December, uh, federal funds rate futures are currently priced in a 25 basis point hike with a 75.8% probability. So hasn't really altered, it's kind of been around that percentage likelihood for some time and it hasn't really changed the belief of the market at this point. Having a quick look then, let's look at crude on a chart because And again, Sam will look at this in a bit more detail, but this was the level that we were looking at. If you remember the briefing this time yesterday, the price of oil was finding a little bit of, um, it was a kind of a double test on that level at $61.31. You can see there I'm on a daily continuation here, but both those low points on those previous days were held at that level, and then the subsequent break which came yesterday just saw that continued push. So it kind of, as per what we were, we were stressing in the Thursday morning briefing. That was quite a key significant level short term, of which breached pretty much opened the prospect that 60 would be tested because of the lack of real credible technical support points between that break of the level and then the handle psychologically, psychologically itself. Not too much is different here, just the technical breaches. The narrative from the fundamentals remains the same from the bearish perspective. And if anything, you've got the new addition now of a little bit of an extension of dollar strength given the continuation of the Fed rhetoric to tighten their policy, which is also, you know, just imparting a little bit of downside pressure further on oil. $60 though, I do think is a pretty decent level, not just because, you know, psychologically it's not like a $61, a $62, you know, this is a $10 increment and that tends to be a little bit more kind of potent from a mindset point of view, particularly when we've fallen so rapidly. But you can see previous points of support and also resistance that we've had in prior price action going back to 2017-18. And we just get to the point now at $60, of which we already heard in the last few days, where I just think that Russia and Saudi will start doing what's necessary to increase the frequency of their kind of verbal intervention to prop up the market to ensure that it doesn't fall any further. So with that being said, more commentary, um, kind of rumor-mongering that they're going to potentially cut production, I would say, is likely to increase. And therefore they're looking to mitigate any fall further beyond $60, because if that were to materialize, you can see here, just looking at the previous highs that were seen late in November of 2017, and then the corresponding low that we had on the pullback in February, which really is the year-to-date low. You know, if we break $60, well then those levels correspond quite nicely with the handles, and then I think $60 could become $59.58 quite quickly. But $60 I think is a line of which some of these bigger OPEC/non-OPEC producers will be particularly mindful of not wanting to see a breach of that point. So So, um, something to just be aware of. And of course, this comes this week, most notably after an incredible rise in US output of north of 3.5% to 11.6 million, I think it was, which is obviously a record high. Okay, quick look at the pound. And yeah, not too much. I mean, just looking at the broader, bigger picture here on the daily continuation and You know, we never really quite got up that 132 handle, has been the kind of the pivot point for turning of price action as this week has gone on, as we just faded some of the initial kind of euphoric feeling that we were making potential progress to get a deal done. And that still has not yet happened. Northern Ireland obviously still the contentious issue. So on the pullback here, as we trade obviously just above the 130 handle, the handle and itself to keep an eye on, and then the 2967 more long-term. Um, looking at slightly more short-dated, I just put the pivot levels on, see where we are. So, so many under some pressure. As I said, the EURUSD price pair, or the EURUSD pair price, has kind of followed a similar pattern. Just given the gradual dollar strength that's emanated since the release of the, the FOMC last night. And obviously cable has the, the prospects of, if just given the, the meaningful rise we've had over the last kind of, I guess, 10 days, you know, there's plenty of scope for a bit of a pullback. That being that it's still on the balance of whether or not they can strike a deal on the divorce terms to then have a deal to put forward to the various European summit meetings and then eventually Parliament. On that latter point, this is what I was talking about, and I won't go into this in too great a detail, but I did— I'll post a link into the chat again for those interested. But this was an interesting Bloomberg piece, and they were looking at the maths where, granted, if Theresa May can muddle her way through this particular point, and get everyone on board, that being Europe, the Conservative members, the DUP, and so on, to agree with her deal on the backstop, then, you know, the second battle is the numbers that she would need in terms of support to see this pass through Parliament, of which there are 650 members, the sweet spot being 320. And you can see here on the graphic that the kind of blackout section is the Tory loyalists. But you've then got the Tory Brexiteers, the kind of more pro-European view Tory members, the DUP, the Labour rebels, all of which would be required in order to get over that line. So the article kind of going through, uh, the maths and the kind of current state of play. So, you know, kind of worth the read. Not that this is going to be something to trade in the intraday environment right now, but it definitely goes some way to just planning ahead and making sense of the parliamentary procedure and what exactly the probability is then of this being passed in Parliament when the time comes. Quick look at the calendar then, and this morning actually quite interesting from a, a pound perspective, but such as UK data at this present kind of juncture, I'd say it kind of creates a bit of a short-term distraction, but then markets quickly return their focus back to the bigger, broader picture in question, which is that of the Brexit negotiations. So as we've been saying for some time, as this debate over the terms, particularly on the customs union and so on, continues to intensify, that any execution of trade over UK data should be prudent as possible. Not wanting to sit in an open position any longer than necessary on the prospect that you might get just spiked out on a, a comment that hits the tape. So be aware of that. And at 9:30 there is quite a few things coming out, with focus being then on the preliminary reading of UK GDP for the third quarter. Now we are actually anticipating on a median consensus an improvement quarter on quarter. We printed previously 0.4, we're looking for a 0.6 6% reading. There is a range of 0.3 to 0.7, so GDP in a sense still looking to, to hold up for the moment. Alongside this though, we get trade balance, also some manufacturing data, industrial output as well. So a whole cluster of things coming out at half past 9. Into the US afternoon, PPI, University of Michigan sentiment, Baker Hughes rig count for any of those interested in trading the oil markets. Speakers pretty light on the ground for this morning, but this afternoon you do get a Fed voter, a member of the FOMC, Fed's Williams, Fed's Harker, non-voter but called, or qualé, is speaking later. And then Bank of England's Haldane, who has kind of flip-flopped between being kind of more centrist to hawkish, he's going to be speaking later on this evening. For any FX traders sticking around late into the evening, he'll be at 6 30. Okay, that's it from me. I'll wish you a fantastic weekend. I'll catch you in the chat and I'll hand you over to Sam. Have a good one.

You say your oil stat? No, I didn't. I never know. Hi guys, hope everyone is doing well. Uh, we'll have a quick look over, uh, the markets in terms of where we finish. You can see Anthony's got some, some levels marked up here on, on oil. It's crazy to think just how quickly we come back down to those lows, um, potentially of the year, which is, is mad. Uh, well, you know, a couple dollars away or so. Um, so yeah, be really keen to see what happens. I think around 60, those lows that we had in, uh, sort of the March time circle there, where we can close above or below, I think will be, will be certainly key. Um, Friday's price price action in, in oil can be quite tricky at the best of times. So it'd be interesting to see how we do close there. Looking at, uh, at the pound just on a, on a daily chart, um, that trend line that had broken a couple of weeks ago, we came back to sort of really get a test of that in, in recent trade a few days ago and found strong resistance. You can see that's come down quite strongly since then. So while, yeah, a win for the bears of this market. I think this is a case of just the Brexit comments that will come out will determine whether we go higher or lower. But in terms of perhaps wanting to get long on a more sort of medium-term trade, you would have wanted to see a close above that. And if we had those trend lines from the sort of end of September to middle of October, would have been the next sort of resistance point there. But yeah, key, key hold for, for the bears there on that retest of that trend line, uh, come in with obviously a bit of dollar strength into the mix as well. Um, similar sort of trend to the euro, and you know, we're really creeping down to that yearly low, uh, again here. I think it probably is a matter of time, and you can see perhaps if we look more intraday whether we can close below the sort of previous low of the week on Monday's low, I think will be quite key. And then you're looking really down to October and then the low of the year for the euro-dollar, you know, price looking quite heavy. So unless we were to sort of close above 114, I think sentiment is going to continue to the downside, you know, comment permitting, of course, but not too far, too at all away from that yearly low. If we were to get a continued push, I think 13.5 is a sort of profit area target, could be quite good as a potential third test of a trend line. And you're getting, you'd imagine, a bit of profit taking ahead of that low that we had in October as well. Having a look at the Aussie dollar, obviously we got that, that key trend line break we had from, uh, you know the previous high of the year. Let me see if I can get that into the picture. Let me just draw that up here. You also got the break that we had of the October low. So yes, we've closed, you know, nicely above that last week, and we've seen a continuation, uh, higher. Bit of resistance come up at the, the middle, uh, to sort of late end of September. That will be quite key, uh, as well. Um, so that would be the focus. I know a few people were looking at the potential of a retest of this trend line at some point, or perhaps the, there's the end of, uh, sort of middle October lows as a point to get in long, uh, in this area where it's trading. Unless already in, I think best to sort of leave alone, let it do its, its thing, uh, for now as prices to sort of consolidating, uh, ahead of any sort of further push. And you can see see that trend line from September broken through. It also tested the high a few times. So can we close above there today? Well, it's quite a long way away, so I wouldn't be expecting anything substantial to happen. And then you're just sort of in no man's land, I guess, between that and then the break higher that we've had. So a case of wait and see for, for Aussie dollar, I would suggest. And, and those that trade the New Zealand dollar, it would be the sort of same as well. As you can see, we've had those sort of trendline breaks. And actually, on a more intraday point of view for the New Zealand dollar— I know Dara isn't always happy when I talk about the Aussie dollar, let alone the New Zealand one, so let's, uh, we'll keep it brief. But looking here more so at, uh, potential for sort of the S1 area— this is sort of roughly drawn trendline if it was drawn, you know, clearer. You can see it sort of marks up quite nicely, uh, with that S1. I know not going to be the clearest, uh, one to be looking at now on this time frame. So on that breakthrough around there, so yeah, it could be that comes down, uh, later on around that sort of area. I think it actually marks up on this one as well. So quite key level New Zealand dollar around the S1. Gone through oil, gold, you know, I was, was, remember even doing the briefing a few months ago, talk about how I wanted to, to get long gold if we could get a close above, uh, the key level, and we just haven't, we haven't, uh, at all. $1,235, $1,238 on the continuation on the futures. You can see just the recent price action of the, of the months, how strong a level it's been, and once a support, twice the support, then the breakthrough, and resistance quite a few times as well. And that sort of pullback that we've had— can we close above that today? Obviously would be, you know, a really large-scale move, one that we want to see similar to the sort of the 10th of October when equities started coming down and gold perhaps regained a bit of its sort of safe haven status. Within this range now, and that's, you know, case of Vibha, I would look to go short if we break below, or along above. I wouldn't really be looking to get involved too much in that, in that midsection for a more medium-term trade. Usual sort of picture for the S&P, uh, key resistance just a bit above, um, that we had, you can see, in October. Also in a more sort of straight, uh, line support resistance, the, the high that we had on 2nd November, that could be another, another level to, to look at in In recent months as well, not far from where we're trading now, just 5 points below 2790 sort of area has been really, uh, key on multiple, uh, days and weeks. So I'd be, you know, looking here as well for a bit, you know, how the price action reacts. Obviously cut through when we had that follow-through from the, the fall down on the 10th, but will still be interesting to, to have a look at that as well, uh, if we can close above today, and it would be a, you know, big, big move, the 17th of October, I feel more comfortable about holding this position longer and then looking at the, the next sort of target area, uh, on the 7th and 5th of October before that breakdown on the 10th. While the NASDAQ is, is lagging behind the most from its all-time high, you can see the Dow, how close that is, which is just incredible considering, you know, how quickly we, we did move down. I think it's just over Yeah, 3 and, uh, 3 and a bit percent, 3 and a quarter percent there from that all-time high. Uh, quite clear, um, trend line to, to sort of be aware of in that breakthrough as well. You can see really strong test. So can we close above that will be something of interest. And also you've got that, that low that we broke down on the 10th as well. So really key level for the Dow for any further push up. I mean I mean, we close below that, you might well get a further push lower, and then you're sort of looking sort of to 25,800 area, uh, as well. Any questions obviously about the charts, please, uh, do let me know. I'll be posting and talking about more intraday ones throughout the day anyway, but quite a few key points of interest near where we are trading, um, as well. And it will be worth keeping an eye on, on oil, just to wrap up. You can see how many red candles there are there. This currently would be the, the 10th, uh, down day in a row, which would take us back to March 1983. So for 10 points, and even if you're watching on The Briefing, comment in the, uh, the YouTube— if you're watching on YouTube, comment in the section what also happened in 1983? In March 1983. So that was the last time we had 10 down days in a row for WTI crude oil. But what also happened in March 1983? The clue is on the video right now. But I hope you all have a great trading day, a good weekend if I if I don't catch up with you, and answers in the chat. But yeah, have a great day.