Morning Briefing - 13th July 2018

Good morning and welcome to the briefing on Friday the 13th of July. Already been a pretty interesting morning and a spooky one, if you like, for Theresa May, who has found herself in a tricky circumstance, which we'll come on to just in a minute. Worth having a quick look over just at the charts now from this morning, and you can see looking at the 3 at the top here, you've got pound against the dollar and its lows, euro against the dollar and its lows, and gold as well. Through its low and the S1 there as the dollar has strengthened this morning, just under 95 on the dollar index. We'll come on to the reason perhaps that the pound— well, definitely the reason the pound is, is on its lows, uh, in just a moment. As you can see, the middle two, you've got the NASDAQ, which we'll just put onto a full screen here, testing and breaking the new all-time high just yesterday, really pushing on through as Amazon, Facebook both making new highs as well. S&P, um, not too far off, just over 2.5% as well. So we got some earnings out, uh, later today and then obviously throughout next week. And not too far away from its, uh, all-time high here, having just this morning tested and had a little breakthrough the high that we made on the 13th of March there. So quite a significant area for the S&P today. Um, where we finish this week, i.e., the end of the day, will be quite significant going forward. Oil near the low of the day. We've got the contract rollover happening this, this week, weekend, so you might see a bit of, uh, thinness in the market just as that market becomes, um, the different contract date. T-notes relatively stable. If we have a quick look at the DAX as well, middle left, you can see that it's gapped higher this morning and testing the high. But more importantly, you've got that sort of gap fill in play as well from a few days ago. Going over to the stories of overnight, you can see probably the first time in briefing history that we're starting the stories off with an article from The Sun, um, Trump's Brexit blast. You can see here— well, you could have heard overnight. You can see in the pound as well, has come under pressure. Trump has told May how to do Brexit, but she's wrecked it. The US trade deal was off, says Donald Trump. So quite a significant headline there. The Sun, second most read newspaper in the UK online and paper sales. 26.2 million readers a month. So Trump knows what he's doing here, him and his team, to get this article out, and it's definitely caused some headlines. So some of the key points from this article you can see here. We posted it in the chat, and if you haven't already had a look, it really does sort of go to town on, on Theresa May and her Brexit deal and how he told her how to do it, she disagreed, and it's a mess. If she— if they go for the, the deal as it stands, then his trade, or their trade, will be definitely going to, to Europe rather than the UK. So other factors as well: blamed Khan for spiring crime in the capital. Um, you can see these points here really not looking too good. Uh, yeah, here you go. I told May how to do Brexit, but she didn't listen to me. Pretty negative reading. Uh, it was quite incredible really that his— the timing of this article is when he is, you know, living in our hospitality. And well, nothing can surprise us anymore. But let's have a quick look at the reaction, uh, in the pound this morning. You can really see literally from the very first moment of the open It's been one directional. And if I just get the open there, you can see broken through yesterday's low, broken through S1 and S2 now as well, really coming under a bit of pressure to finish the week. In terms of levels, I, you know, there's the, the low of the month from the, the 2nd here, and then, uh, well, the low of, uh, of June as well, which don't seem too far away. I think one thing is, is definitely worth taking note. You would expect, um, there to be some sort of reaction to these comments. I think it wouldn't be at all surprising to see those come out, um, at some point today. Not to suggest that we're going to get a full reversal because obviously this is, you know, a pretty big story from Donald Trump and his views on Brexit and whatnot. But, uh, just would be a bit careful about trying to join the party a bit too late if not already traded it. Um, not too often is the market going to finish below S2 or above R2. So I'll just be a bit careful in trying to, trying to get aggressive onto this move to the downside. And the dollar has strengthened, as we mentioned, you know, got the euro really sort of pushing, pushing down as well. S2 sort of supporting that as of now. As I see a couple people in the chat, really nice opportunity here once we broke through yesterday's low. The S1. We came back and it was also the 117 handle on the futures. Really good opportunity to have got short, uh, this morning. We have a quick look over at the trend of the week, just in terms of the dollar against a couple of the pairs. You can see it has been gradually grinding lower, especially in the mornings of the last 3, and today the 4th day. You can see you get a strong move in the morning and then it sort of retraces back. Strong move in the morning, retraced back, and yesterday was the same. So I'd just be a bit careful in, in terms of looking for this, this market to really continue, uh, lower for the euro and the pound. I would just be more cautious on any comments to come out in retaliation. But it's definitely an interesting ploy here from Donald Trump, especially going to, to The Sun, as mentioned, uh, you know, 26 million people reading that. A month, let alone how many people are now going to read it on an intraday basis today. Really strong headline has affected the, the pound, as we've seen. So I would, uh, would expect a bit more, uh, focus on this story going forward today. I don't think we've heard the, the end of it by, by any means. Uh, have a quick look over, um, at the, the NASDAQ, as we mentioned, making that new all-time high yesterday. Really pushing on. If we get the currency tool up, yesterday's move from the open to where we finished, you can see about 1.8%, really strong move higher, breaking the new, uh, all-time high. And that's, uh, really has continued to push on as we've seen. As mentioned, Amazon making new all-time highs, really helping to drive this market. The Dow Jones finished, uh, higher as well, breaking through the, the week's high. We mentioned the S&P about 2.5% away. The Dow has been held back quite a bit more, so we'll just get that up. You can see more so just under 7% for that market there as well. In terms of other stories, um, this morning that's sort of driving the market, it's actually relatively limited, not too too much happening other than, of course, the, the main story, um, of Donald Trump. We can have a quick look over the calendar before having a look at the charts in a bit more detail about where we could possibly finish the week. So going into the morning, uh, later morning I should say, nothing really coming out. I mentioned before, I would just have the, uh, the squawk turned on, your TweetDeck's up just to see if there is any retaliation, or you can expect the pound to continue to weaken here. But the morning is very flat on the, on the data front. You've got some speakers into the afternoon, and you've got some lower tier US data as well. Things to be aware of around sort of 3 o'clock, 1:30, and then some earnings coming out in the afternoon— Wells Fargo, JP Morgan, Citigroup— ones to, to be aware of there. So If we have a quick look back over at the charts, um, the Bund, which gapped higher as you can see a couple of days ago, filling that gap, and we're now just pushing to the higher point that we've been for quite some time in the futures. Worth keeping an eye on, uh, there. The high that we made, uh, the sort of the, the middle to back end of May, obviously quite some way away, but trending higher in this market. T-notes, which is um, really recovered from those lows in May. It's quite similar in the fact that we've been grinding higher in that, uh, and that, uh, high that we had back in the end of May, similar to the Bund, uh, is sort of the next key resistance point if we continue to push higher here. Mentioned that we're having the, uh, contract rollover for, for oil, uh, this weekend, so Um, just be a bit careful into the close for those trading it. Last 2 days we've seen from the high of Wednesday at $74, you know, we moved down below, um, $69.50 yesterday. So $4.50 move by, uh, sort of yesterday afternoon, quite significant there. Just where we're trading now, you can see on the low of the day we've got $70, um as well around there, which offered some half-decent support yesterday. In terms of this market on a longer-term sort of basis, um, we've— if I just move the pivot points, you can see it was quite a significant bounce yesterday off this, this high that we had from the 25th before breaking through. From the weekly perspective, I think quite significant whether we close above or below that level Another interesting point is, and perhaps not as significant, but I would expect another down day here for gasoline. The, the, um, the contract, uh, to hold gasoline has raised— has been raised, I should say, to $4,000 from $3,500. Maybe not too significant, just half, uh, half a grand more to hold, but just something to bear in mind. You know, it's now going to cost more money to hold a gasoline contract, so you might see a bit more selling come through into that market. So that's been raised, and I would expect significant— well, not necessarily that too significant, but I would expect some more downside for the gasoline and oil markets today. Having a quick look over at the Aussie dollar, so we mentioned that the US dollar had continued to strengthen this morning and is now up 0.37%. Aussie dollar has broken through the pivot as well. So yesterday, sort of closing low, the pivot continued to break on here. And I, I feel, um, definitely for the morning, you would look to be getting a continuation of this dollar, dollar strength. R1 yesterday was a level that I was waiting for for quite a while in Aussie dollar. It didn't really come in until, uh, sort of time to, to back up shop, so I didn't actually take that trade on. But you can see that area in general holding quite well, and we've seen a continuation of, uh, the last couple days trend for the dollar taking place here in the Aussie dollar as well. Dollar-yen having broken through, um, the 50% fib from, you know, a couple years back, uh, we've continued higher. And as it speaks now, you can see testing the R1. This level If I just remove the pivots, in terms of where we finish the week, again going to be quite significant. You know, can we get a confirmed break above these two highs that we've, uh, sort of broken through, or this low from the beginning of the year? The high that we had back 8th of Jan, not too far away as well. Whether we get there anytime soon, uh, over the next couple of days or not remains to be seen. But a significant break higher, uh, for this market as well. Gold, where we close the week again, will be, uh, quite important. Uh, every time it sort of looks to have a, a bit of a recovery, it's just sort of snapped back into reality below 1250 again on, uh, this, uh, this morning. Quite significant support level back from the end of last year. You can see here 1236 on the futures, 12th of December. If we can get a close below there as well, would definitely be quite significant. If we can get a decent bounce from there, maybe into the afternoon, uh, might just have a, another similar reaction that we did have in the back end of last year. So markets where they finished this week, near some interesting levels. You've got gold not too far away from that support. Where would the dollar-yen finish? Can we continue to push higher? Oil and gasoline, I'd just be a bit careful about. The dollar has strengthened in the mornings of the last few days. We've seen a bit of a slow grind higher in those markets into the afternoon. For the pound, I think the focus really does have to be on Brexit-related comments. Any retaliation to Donald Trump basically putting the two fingers up to Theresa May and her Brexit plan will be the focus of the morning and afternoon for that pair. If we have a quick look over at the Euro Pound, so obviously we see both those markets, the Pound and the Euro, on the low. It's quite interesting to see actually the Euro Pound. You can see the Euro strengthening on this day against the Pound as well. So more a dollar-related play for the Euro Dollar. The Euro, as you can see here, just over the last day see quite a liquid this market on the futures, but strengthening, um, this morning. Just touching quite a key significant resistance though for EURGBP. So if we can close above the high that we had on the, the 11th, would definitely be of some interest. But for now, seeing the EURUSD and GBPUSD continue to push lower, uh, as well here. You just get those pivots back on. As you can see, testing the S2 again now. So data and news headlines other than the Trump one, quite, um, limited overnight. Uh, focus gonna be heavily on, uh, on Brexit and Trump going forward. Any questions, of course, please do, do get them in the chat. Relatively short briefing today as the stories other than that Trump one quite limited, uh, data calendar rather thin on the ground, but interesting, uh, points of interest in the markets near where we're trading now and where we closed the week as well. If I don't speak to you guys, hope you all have a fantastic weekend and catch you next week. Enjoy Friday the 13th.