Morning Briefing - 20th August 2018

Hi guys, good morning. Just, uh, gonna do the morning briefing for Monday the 20th of August. Just gone half 8. Let's have a quick look over the markets, how they're trading now. And you can see the DAX, my middle left chart, they're pushing to its high of the day. S&P following above last week's high. Gold higher as well. So sentiment from last week perhaps has changed a bit here in terms of where the DAX is trading. I'll come on to these market levels in a bit more detail in time. But we have quite an interesting level of resistance from last week. On the 14th was also the low that we had back on the— well, near the 2nd and broke through on the 10th. Not too far away for the DAX in, in what has been a very positive sentiment for equity markets following on from Asia, where perhaps a bit directionless, but if anything was to the upside. So from last week when there was a couple of, uh, sort of negative drivers in the market, well, with Turkey and and everything going on, uh, it seems that that's been pushed aside for this morning and equities are pushing higher. Worth noting as well, just having a look at the dollar, which did weaken into Friday's, uh, sort of close. That sort of recovered that move pretty much to, to the tick now, uh, both in EUR/USD and, and GBP/USD, uh, only to just sort of go sideways for the last sort of 15 minutes or so. Having a look at the, the dollar index from last week You can see it was the first down week that we had since middle of July. So again, worth keeping an eye on there in, in what could be quite a relatively calm week going into the sort of back end of the month data calendar-wise. Just having a quick look over this, and we'll come on to that later on as well. You can see quite quiet today, no sort of tier 1 data, a couple of speakers to, to be aware of, but really this week is going to be focused around middle to the end, I would say, in terms of sort of data points that could sort of drive the market. Having a look over here, just going to sort of read off a few of the, uh, well, important things to, to be aware of. Obviously you've got the oil data Tuesday and Wednesday as usual in its, uh, sort of usual slots there, but the FOMC minutes Wednesday evening, uh, could offer a bit of direction into the end of this trading week. ECB, same on the Thursday. You've also got, uh, Raab speaking on Thursday and a couple of Brexit-related, um, sort of comments on the sort of the impact of a no deal, what that could have. So that will be out on Thursday. So Monday, Tuesday, relatively quiet. You've got the US-China trade talks that are ongoing, which is sort of leading to this sort of positive sentiment that you can see here as well. S&P, where we're trading right now, how far are we away from the all-time high, uh, would definitely be something to, to bear in mind. Not too far away from this high that we had last week, uh, a couple of weeks ago I should mention, which would be obviously the first, uh, resistance point in terms of percentage move to the all-time high. Let's have a look how we're trading now. It's not too far away at all. There you go, just over 0.6, probably about 0.7% move, which is obviously pretty much the, the last sort of couple of days trading into one there. And you could expect that to come in relatively soon, all things considered. Having a look at the markets, how we're trading currently, just going to move over to the EUR/USD. Quite an interesting trend line that I see a few people were looking at this morning as well, going back from the 15th Thursday and Friday. Tested this morning to, to an extent. I think if we do get a break of that level and a bit of support that we had back on, uh, on Friday afternoon, you might start to see, uh, a bit of a swing back towards the dollar strength. Uh, quite interestingly, we'll come and look at gold in a moment. Really, from the similar day on, on Wednesday or Thursday morning, you have seen a bit of dollar weakness come back into the markets. Really just an unwind of the beginning of the week where you had the Turkey sort of crisis really escalating. That seems to almost be forgotten, put to one side. And sentiment, I would be, you know, going with the flow for now, almost letting the markets tell you what is going on in terms of looking for a continuation, uh, to the upside. Probably worth having— not get another trend line on here just for the euro and see respecting it quite well to, to the downside, a bit of a break of that maybe also where the morning support was, and you can get a push higher. I think overall, you know, I'm not really too confident that the low that we had back on the 15th is going to be, you know, the low for a while. If we can push a bit higher, uh, this week around sort of 115, an area where we found resistance back on the, the 10th of August as well, I'd like the look of a short. But for now, I'd let the market sort of tell me what's, uh, going on. And, and dollar strength to continue here for me would be a break of that level, uh, where we had support on Friday, and also this trend line. Similar for the pound, a couple of key, uh, points to be aware of. I think up towards R1 would be an interesting area to look to go short. For me though, as I talked about, you know, just recently, Thursday is going to be quite a key day, um, you know, when, uh, we get, um, sort of perhaps a clearer view of what no deal could mean. So I would expect relatively low volume to trade into sort of Wednesday, then the Fed, the FOMC minutes, and then obviously Thursday with Bank of England. One point to make, which should be definitely for those that had a bit of a trade in dollar lira last week, it is a holiday in Turkey this week. So trading volumes will be down, um, liquidity will be a lot thinner than it is anyway. So expect sharp moves if there is any sort of developments on that front as well. Aussie dollar, so we had a bit of a recovery into Friday close, um, obviously seen that reverse across the free pairs we've looked at already this morning. I think we've got quite an interesting area to, to look to go short if it turns out that the low that we had on the 20th isn't actually, uh, the key resistance. But the 3rd of August, uh, for me looks quite a nice area where we could perhaps see a bit of continuation of this sort of dollar weakness over the last few days to then continue the overall trends of this picture. Having a look at the dollar yen, another market where we're sort of getting a bit of a reversal from the last couple of weeks' moves. So you can start to see the sentiment sort of shift in the markets. Can we push a bit higher? I like the, the idea that we've already broken out of here. So along with the sort of the lows that we had on Friday morning, if we can get to this point, I'd expect to see a half decent reaction. If equities were to continue to go higher, it might well be that actually you're looking for this area to break. So on what is likely to be a relatively quiet morning, I'd let the markets sort technically tell me what's, what's going on. Having a look at those equities again, we are just coming up to a bit of resistance, R1 in S&P. You've got the Dow Jones, another positive sort of close to the week coming up with its R1 as well. And you can see that really is the, the highest it's been for quite some time. Uh, the Dow Jones, key resistance point from the sort of the recovery we had back in, uh, towards the end of February. You know, it's not, you know, out of the question that we could reach that level today. Um, NASDAQ, you know, we did actually have— of the 3 equities that we sort of look at with the US, we did actually have a down week, but we've already had a nice recovery this morning. R1 and just a bit above, I think, uh, should be a sort of a short-term ceiling for now. Uh, remains to be seen whether that actually holds. I mentioned gold had a bit of recovery from sort of Wednesday evening, Thursday morning, early hours, and we have continued to push on this morning. Uh, the dollar actually is up for the day, but, uh, just worth keeping an eye on, on just above the, uh, the R1. Obviously got the 1,200, sort of psychological handle in the future, but you also got quite a key area of support from the back on the 13th and 14th that I'd be keeping an eye on. For those that, uh, want to get a sort of look for a break, that would be the area, uh, I would be interested in. Key level to the upside, 12.13 as well. Not to say that we're going to get there anytime soon, but just ones to, to be aware of going forward. Oil in what has been, uh, sort of a quiet sort of trade, uh, early Asian session. You can see really ranging this morning. Uh, obviously you've got Tuesday's API and DOE to take into account, but the follow-through that we saw from Wednesday's move, we have started to recover most of that it came out on, uh, on Friday, by 2 o'clock that whole move had pretty much been reversed. So longer term chart, we've talked a couple of times that it might just be a bit more left in this to come down to the low 60s. I'd favor the downside for now, but again, intraday-wise, it might be that, you know, if you do get a push above this sort of pivot level, there's an opportunity, uh, as well. A couple of sort of trend lines to be aware of looking at previous days as well that I'd be focusing on, you know, if we were to, to get a breakdown when volume's higher, perhaps into the afternoon. That's when I'd be, you know, maybe focusing on a move to break below the trend up to a test it again and then get that continuation down. But technically, if we break that pivot, you know, what's to say that we can't continue to push on? So really, you know, a summary of you know, trade from overnight. Let me just remove this chart. Equities higher, uh, Bayer, which obviously got a bit of a beating last week, has recovered this morning. You can see that evidently then from the DAX up towards its high, pushing above R2 in, in what has been a very bullish morning for US equities. And that in turn has brought the Bund under pressure, uh, S&P pushing higher. You see T-notes, my bottom right chart, as well near the low of the day. So very much a case of risk on here in, in terms of these markets pushing, pushing higher. Dollar coming up towards these top end of the, of the, these trends lower. I'll be keeping an eye to see whether we can actually break, break, uh, through. It seems the move that we had on Tuesday, Monday, Wednesday last week has been completely flipped here. Turkey seems to almost be just pushed to the side for now in, uh, in what's going to be a relatively quiet week um, you know, volume-wise anyway, out of, uh, out of Turkey. So directional bias going into the morning, I'm favoring equities to continue to push on. Dollar, I'd almost let the markets tell me, technical breaks higher or, you know, moves with volume to push lower as well. Um, yeah, dollar was down first time in 4 weeks. Euro, the first up week we had since July the 18th. Perhaps starting to get a bit of a shift here. Gold, I'd be careful before really committing to these longs, but technically we have some quite interesting resistance and almost targets that the market might well be, uh, be drawn to there as well. China equity markets off their 2-year lows as well, so sentiment really starting to change. Oil favoring the downside, oh, uh, for the week overall, but technically if we can get above that pivot and the high that we had on the— basically the close, uh, on Friday of last week, then you could continue to, to see a sort of a move, uh, that we've had over the last sort of couple of hours, uh, as well. Going into the week ahead, Wednesday, Thursday would be the main sort of days I'd focus on for, for moves. Data is, is quite quiet. You've got Jackson Hole as well coming into this week. Of course, you've got to bear in mind that usually the last couple of weeks of August are up there with the most quiet of, uh, the year, definitely this summer anyway. Uh, so escalations of Turkey, while it seems to be in the sort of the, the back of people's minds at the moment, any Brexit-related talk, uh, as well, comments out of speakers. But I'd really be waiting for Wednesday and Thursday for, for the minutes there as well. Um, any questions, as usual, guys, please, you know, do get them in the chat. We'll be posting the weekly strategy to come shortly, but sentiment has changed from last week, and I'd favor that to continue unless we were to technically, you know, let the markets tell you when that, that isn't to come into play. But if I don't speak to you guys in the short term, hope you all have a great trading week. Limited data out today. Profit expectations to be a bit more light in terms of direction. Just keeping an eye on oil here as well. But, uh, speak to you guys in the, in the chat. I hope you all have a good week ahead of you.