Morning Briefing - 15th August 2018

Hi guys, good morning. Wednesday, 15th of August, just gone past half 8 in the morning. So let's have a quick run over of what went on yesterday and what could happen today. We've got a bit of data coming out this morning and then into the afternoon as well. Well, actually, better place to start, I guess, is the dollar lira. You can see here regained 6 to the downside here, only to start retrace after that move. But, uh, that's really been the theme, I would say, of the last sort of, uh, few hours or so, is just the calm coming back into the markets. And definitely in case of the lira as well, a bit of risk off coming back as well towards the back end of yesterday's session, which we'll also have a look at, where, you know, equity markets started just to regain some of their, their losses that they perhaps had, uh sort of materialized from Thursday onwards. But yep, keep an eye, I would say, this morning or in general just on the dollar lira. If we do get a sharp push higher at all, then that might be the catalyst for seeing extra weakness in the euro and pound against the dollar, which we'll have a look at as well, which of course have continued to push lower. But if these— if this market continues to perhaps repair some of the losses over the last few days, you might then start to see a bit of profit-taking coming, coming into these dollar, dollar pairs, and even gold as well, which of course is on a big decline. If we have a look over at how we traded yesterday, a couple of half-decent opportunities in, in what was relatively choppy early trading for the euro. You can see here, once we sort of had a break of the low of the day in the, the pivot, uh, for the sort of the third, fourth time, you can see then we got that, that push through, uh, found a bit of support initially just before the S1 to then come back. And, uh, at this sort of time, the, the dollar was strengthening all over the place, um, and then we made a new low for the year. Mentioned with the dollar lira just recovering slight, uh, slightly more this morning than, than in the previous days. We, we've had a bit of retracement here in the euro, so definitely worth keeping an eye on that. In terms of areas today where the euro looks, uh, likely, uh, to— if it was to go there to sort of find a bit of resistance, I think the pivot marks, uh, marks up quite nicely with the low of Monday that we did break through. So that would be an area to to, to keep an eye on. Alternatively, it might be safer just to see, you know, if you are looking for this continuation, you know, a break of, well, this, uh, downward trend that we are on, and also the S1 and low of the day, um, rather than if it was to come up quite quickly. I think the pivot could be okay. Other than that, it's then starting to get into a bit of the mess that had been occurring Monday and Tuesday before we did get that further break through. So pivot, I think, depending on how we get up there, or a break of the low of the day, is definitely an area I would be considering going forward. Similar opportunity in the pound when we had a breakthrough of, well, the pivot and the low, and this, this trend line that you see going on. And, and, uh, similar as well to the euro, and just starting to see a bit of a retracement with the dollar index still obviously nicely above 95. Positive for the day still, but just coming under a bit of pressure. In terms of where we could find a bit of resistance, looking at the, the pound on Monday's low, literally where we're trading now, uh, it'll be worthwhile to sort of to see how we react. We were here, and I'll put this onto a 5-minute chart, about 10 minutes ago we had a little bit of a bounce, only to then sort of find, uh, support along this trend that we are following over the last hour or so. As well. Pivot in the mix for an area that I would be looking to consider as a resistance point. But with the dollar just weakening a touch, it might be worth just having your, you know, your dollar-lira chart up, just a bit of an indication of where this market or these dollar markets could go. Aussie dollar continued as well, the sort of trend that's been on really hurt last couple a few weeks or so, coming under pressure, breaking the low. Decent opportunity, uh, at the same sort of time that we had the push down in both, uh, the euro and pound as well. In terms of this market, to look for an area to go short, to continue it, I like the idea of, of going, uh, short around the pivot. You've got a bit of a trend that matches up there, the low of yesterday's morning, and I feel if we were to push on, it would be a nice place for anyone looking for a long here to be taking profit. as well. Final sort of dollar pair to have a look at with the, um, sort of risk-off coming back into the market. You can see, well, when obviously it was all kicking off, if you like, uh, the yen strengthening. And then last sort of couple of days, uh, fears of, uh, all-out war, if you like, have just chilled down a bit. We've had a break as well technically, which has sort of added to the mix. But the dollar with that strength that we've seen in the last couple of days helping pushing this market higher as the yen has sort of weakened on, on sort of money going back into equity markets. You can see yesterday afternoon following the cash open up to a really key level, and I talked about this yesterday in the afternoon when we were sort of having a look over the markets, and it was a key area where for me I'm just sort of waiting to see if we can get a break above that. Then I think it's— it would be a relatively quick move until we get to the highs that we had of the, of the last week. I feel if we break it, uh, to the downside, so just below today's S2 and the low of, uh, Monday that you can see here, then the next area that I would be really interested in and perhaps one of the most interesting levels on these charts at the moment, 2790 on, on the S&P. Quite a lot of support found there from previous day, uh, previous days and weeks. And, uh, mentioned yesterday, probably likely to have quite a few stops placed around here. So in terms of this market, whether we can get another push higher to perhaps test all-time highs, uh, I would only really be looking to get in on that, uh, if we can get a confirmed break above this range that we've been in the last sort of 2 and a half days. But sentiment, um, certainly better than it was a couple of days ago. So I would suggest, um, to favor the upside. But of course, only really trading what, uh, what you see. Overnight we had the oil data as well. So you can see here from the rectangle marked up there at 9:30 for oil and gasoline that, uh, it would have been negatively received. So if we have a quick look over at those, uh, figures as they came out— let me just transition the chart there— so you can see, uh, an unexpected build, uh, of just over 3.5 million, uh, was really the, the lead driver in this, uh, this oil, uh, move lower that you've seen. And it's sustained today, and I'd be keeping an eye literally where we're trading now, $66.59, but just below $51. Yesterday evening, sort of lower point, and this morning we found a bit of support. And just looking at the previous, um, sort of couple of days, when we do break lower in oil, it really does go. So I'll be keeping an eye, uh, on that. But yeah, going back to the API figures, also had a build there for Cushing, over 1.5 million, um, more than expected. But the API, uh, with a drawdown expected 2.5, the, the big sort of swing there of 5 and a bit million really leading the way. Of course, that's coming out today, uh, at 3:30 as usual, and as usual slot. But we also had the data, as mentioned, coming out 9:30, uh, the UK, the, uh, inflation numbers, core CPI and CPI, both the month-on-month and year-on-year figures to come in. You can see the expected for the year on year at 2.5% for the inflation, and core coming in at 2— at 1.9%, sorry. So here you've got the recent sort of trend of, uh, of numbers that have come out over the last, well, 12, 12 months. You can see it's been quite steady around 2.4%. Um, the lowest is, you know, so with 2.5% expected to sort of bring us back into really the average of the last sort of 4 or 5 months. I think in terms of looking for real reaction from this, it'd be interesting if we could get, you know, lower, uh, than the sort of the 2.4%, which has been the low of the sort of the 18 months. If we can get anywhere back down to sort of, you know, just below 2.2%, then I think we'll see quite a bit of, uh, weakness coming into the market. But the core Uh, gone are the days of up near 3%, uh, back now below 2, 1.9 again expected. That's the lowest it had been for 12 months, uh, and again lower than that, maybe sort of 1.8, lowest we would have for a year and a half. I'd expect to see continued weakness come into the pound. In terms of opportunities for the pound, it's going to transition the chart over I'd be looking, um, for a key sort of pre-10 minutes to 9:30 to see if there is— has been a leak, whether it could be better or worse, uh, into the market. And sort of that might change my view on how to trade it if there is an opportunity. Um, I feel if we were to have a continued weak number, so below that sort of 1.8 for the core, or, you know, 2.2%, uh, for the inflation number, then I think we'd, uh, get down to the low very quickly. Um, EUR/GBP as well, I think, would go on to make a high, and R1, yesterday's high, would look to come into play. Um, however, definitely worth keeping an eye on what happens in the next sort of half hour for the pound. Notoriously, it can sort of give away indication whether it's better or worse. We had the, the numbers out yesterday, which as you can see here from 9:30 were a bit worse than expected, and that helped push this market low to then break the pivot as well. So that coming out at 9:30 as well. Uh, into the second half of the day, retail sales at 1:30, uh, out of the US, expected month-on-month to come in at 0.1. Uh, relatively volatile, uh, release as we know Um, what would 0.1 really mean? Not too much. I think you'd really want to be seeing a pretty big break either way to get a full-on move here. Uh, the sort of the high of the year, 1.9, or a negative number, I think would be probably the most interesting one. We haven't seen for, uh, well, once we've only seen that, uh, in the, in the sort of the last 12 months. And then of course coming on, you've got 3:30, uh, DOE numbers to come out as well. And speaking of oil, you're just starting to see a bit of a break lower here. Of course, volume is going to be slightly affected compared to the afternoon, a bit lower, but, uh, you can just start to see coming under a bit of pressure here. Worth having a look at gasoline as well, which on that low created last night is also having a break here as well. So Be— remains to be seen if we can get a confirmed break. For now, just had a little 10-tick pop. Bit of resistance likely to be found around these previous lows of, uh, of the day and yesterday evening, um, for oil. So worth, worth having a look. Let's see if we can continue this push down. $66 marks up quite nicely with the, uh, the S1. Um, it might well be that the, the DOE has to come to save the day for oil, which has been on a bit of a messy ride as of late. We had obviously this move, as you can see, uh, from the 8th, big push down, bit of a recovery. And it's even on, on the Monday when you had the recovery of, uh, that, that big push, uh, lower we had, uh, late afternoon into the evening. It does feel like there's a lot more sellers in this market for now. I think If I just bring this up on a longer-dated chart, I mentioned a couple of times of, uh, I see us getting just to the low 60s. I think obviously key support literally around these sort of lows around 66, but I feel we can sort of drift lower down to 63, and, and that might be the, the area where we do find a bit more support for this, this push-up. Uh, remains to be seen what happens on these lows, but definitely worth keeping an eye on, uh, on on that for any oil traders as well. NASDAQ, uh, is starting to get squeezed in. I mentioned obviously the, um, uh, markets just sort of easing off these, these, uh, the Turkish sort of crisis, and, and that might well now lead to equities looking to push higher again. However, much with S&P, with the resistance sort of zone that we're in, I'd really, really be looking to take this one if we can get a break above, uh, this sort of trend from the, the recent highs and the high of the day. I feel that could be a decent opportunity later on, and obviously targeting the, uh, the high that we had on the 13th, the high of the week, and then we could get a further push as well. In terms of the pivot, obviously we found a bit of support there this morning. If we were to come back down, it wouldn't really interest me. I feel if we were to, to get another test, it'd be perhaps more likely to see the level break. And then, you know, I wouldn't necessarily be wanting to look to go short at the moment. The Dow Jones, similar to the NASDAQ, in that I'd only really be interested on a break above this lower trend coming down. And then the highs of the day can be sort of targeted of yesterday and then up to the R1, a key resistance level. So remains to be seen where, you know, these markets close the week. Uh, but does feel like, you know, we are going to get another sort of push higher, although technically it might well be, uh, that could change my mind if these lower levels break, um, as well. Having a look over T-Notes, a bit of a quieter day yesterday in comparison to the move that we saw late last week, um, and we're starting to, you know, just see an unwind of this move. In terms of technically where it would be interesting, you can see we've had good support or had good support, I should say, on the 19th, only for that level to then act as resistance before breaking through late last week on the sort of the fundamental side of things. So if we come back down here, 119, uh, 27, I'll be looking for an area of support. Uh, obviously we've had this sort of brief rally when the market's still heavily down for the year. You can see, let's bring that into, into play, still not too far off those lows that we've had. Gold, just to wrap things up, really key level that had broken here on the futures. Really nice support on previous days, came in Monday. Then you had that push down, couple of opportunities to sort of rejoin the, uh, the recent trend that there's been. With the dollar still relatively strong, uh, I'd be favoring, uh, the downside, but it might just be worth preferring it from a bit higher up. A couple of times, um, yesterday you can see there was a decent opportunity to get short this market. Much was the, the same with the pound and euro in the break of that sort of trend from these lows. And also you had a bit of a chance late last night on the pullback, um, of that area. Pivot looks quite good. We've obviously broken to the downside the, the 1,200 level on the, on the futures. I know the spot did that a few days ago. I think pivot would be, you know, an obvious place to look to get in. The lows of yesterday around S1, we had a bit of initial support there early this morning. That would be a point in the market I'd also be looking at, but it would be a case of just sort of paying attention to the, like I mentioned earlier, the dollar, uh, lira, just to just get an indication if you know, that could continue, or we might start to see a bit of a retracement to the downside. And you know, the lira starts strengthening, and these dollar shorts, or that you see on the charts, in the euro and the pound and gold and Aussie dollar, start to unwind as well. So got about 40 minutes until the data that comes out. So it'd be structuring the morning really around that, and what in terms of waiting to see uh, if that can offer any opportunity. Be focusing on the dollar side of things and preferring a bit of a retracement or a break of the lows, uh, as well going into the sort of afternoon, structuring it around, uh, the retail sales data, uh, half one. Got a bit of lower tier data coming out as well, the US with industrial production capacity utilization, manufacturing output as well. Coming out at 3 o'clock, not expecting too much of a move, and then waiting for oil at half 3 as well to sort of drive the markets into the, the rest of the day. Equities, as mentioned, uh, would prefer to see these sort of break out of their, their zones and their ranges that they're in. It might well be that cash open is the sort of the main driver for those markets to kick on in volume. Oil still continuing just to trickle, uh, below that low. We're finding now resistance, as mentioned, on the previous level, uh, that was a support. Any questions, uh, as usual, please do get them in the chat. I'll be sat on this desk for the morning, so we'll cover the retail sales— uh, not the retail sales, the inflation numbers as they come out, uh, at half 9 as well. I hope you all have a good day, and I'll catch you in the chat.