Morning Briefing - 6th August 2018

Went on Monday, 6th of August. I said Wednesday, getting ahead of myself. It's going to run through the charts from today, stories from the weekend, what could happen this week, and what, what sort of happened last week as well to get to, to where we are. So going back to, to Friday, we had non-farm payrolls out. I think it sort of lost its significance significant now in the actual number of new jobs created. A lot more focus is now on, on the wage growth, as we keep saying. Uh, the number, however, for the, the non-farm payroll, a bit of a miss of expectations, coming in at 157 compared to the sort of 190 consensus. However, the revision to the previous month was, uh, raised to 248, which was, uh, quite a significant revision. Um, so the initial reaction As you can see from my chart, as I just bring it up here, uh, on the euro-dollar was to the upside on the weaker number as that came out. You also had the hourly earnings which was in line. You had the unemployment rate which was in line. However, the revision to the previous month for hourly earnings was actually a bit higher as well, so that's, um that's, uh, a weaker, I should say, sorry, which helped push the euro again up towards its pivot point. And the dollar continued to sort of weaken over the next 15 minutes or so. Pound was pushing higher, gold was pushing higher. Um, if I just bring up the gold chart here, you can see that actually pushed through its pivot point and made a new sort of high for the session. Continued to do so. Um, but it was around the sort of the time where, uh, there was a bit of trade war talk, or trade talk I should say, that was sort of weighing, um, on the dollar pairs, which sort of helped prevent these moves go any higher. Euro, the pivot as I just mentioned really held strongly as an area of resistance, and then we, we pushed back down into the remainder of the session in quite a, a choppy non-farm payrolls, where the initial move of the, the weaker number was counteracted by the revision higher. The hourly earnings in line with unemployment, but the revisions, the hourly earnings was weaker. So an overall mixed batch. Um, and as you can see from the dollar index, if I just bring that up here, we are now above $95, which significantly has been a good area of resistance in, in previous months and years. So now we look to have sort of contained, um, the, the move lower and push back above. It might be now that we look to see a bit more downside towards, uh, the euro dollar and the pound. Last week, of course, we had the, the Bank of England on the Thursday. Overall reaction initially was to the upside on the 9-nil vote split. But with nothing new really happening, the Brexit talks and/or no deal really sort of leading the way, we continued then to push lower and we're just making a new low for the year literally right now. If I can just move that out the way of the, the camera there. So in terms of where we are, in, in terms of the actual chart, 2018 low Last time we had a rate hike back in November, we made a low then and went higher for the next 6 months. Is that going to be the case now? Well, I think it all depends on Brexit talks for the remainder of the year. We did a poll on the Twitter, on Amplify's Twitter, about what is going to be the, the trade for the remainder of the year. I think the options were long pound, long gold, long oil or short equities, and the winner was long pound. So people are, you know, having identified that the pound perhaps is a bit oversold, in some people's opinion, that there may well be an opportunity to get long. I feel that that opportunity will present itself, but with headlines over the weekend such as no deal most likely, you know, the, the Trade Secretary Fox here saying that the no deal for Brexit, the most likely outcome, it's only going to weigh on the pound. And it might be that we're not going to actually push on a bit higher until we get some positive stories come out on whether there will be any sort of deal at all come what, March next year. I feel that if we do have some positive news, then we can look to, to push back towards at least sort of 132 here on the spot. You can see we're still contained within this downward trend. I'm just going to remove the pivots here and put the trend line on this trend channel, holding quite well for the pound, still being squeezed in. And in what is a relatively quiet week, uh, data-wise, which we'll come on to, it might be that Brexit-related stories are what helps maybe drive this this market. I said low of the year, sorry, it's not the low of the year. Back on the, the 19th, the Donald Trump comments on the stronger US dollar, or being too strong, uh, is the actual low. But we're not far away from testing that now. So lower the 19th, a big sort of target area for those looking at the pound. Also last week had the ECB, um, relatively quiet boring, I would suggest. Um, but we did come a bit lower initially, pushing higher and drifting down to towards sort of the lows of the day as they were slightly more dovish than had been initially sort of priced in there. Again, the euro significantly pushing down as the end of the week. Non-farm payrolls, bit of a mix. Uh, but then again, like with the pound, we are now near the, the lows, uh, of, uh, of the day. So keeping an eye on the dollar index, as mentioned. I feel if we can sustainably push above the, um, the $95 handle, these, these currency pairs are going to strengthen, uh, to the dollar side and make new lows. And we'll be looking back at levels from sort of September, October for the pound and euro as well. That may be the next sort of level of support Gold as well, we mentioned, did push higher on the sort of back of the weaker, uh, NFP, but still near those lows. And I've talked a couple of times about the significant sort of level to the upside that we really, I feel, need to get in to sort of have an opportunity to push higher. If I just mark it up here around these highs that we had back in, uh, the sort of middle of July was also a low from earlier in the month as well. We did push above the high of that 19th from NFP, but I think unless we were to get above 1235, I'm not really going to want to get into this market. I know a few people have been looking at gold having a sort of a summer rally and wondering where that may be. For the last 9 years, there has been a decent rally of sorts in gold in July August, significantly good months, uh, historically. So while gold has been on a bit of a tear to the downside, pretty one-directional, it might be that there is an opportunity to come, uh, for gold. For me personally, I'd like to see it just above these levels before, uh, getting in to that trade as well. But dollar, really the only, um, main correlation I would say with gold at the moment, risk trade talks situations between Iran and US and North Korea, not really having an impact at all on the price of gold at the moment. Central banks obviously meet— met quite a lot last week in a very central bank heavy week. You can see just from looking at this, this central bank chart, if you like, of where the next meetings are. They're all over a month away for the significant ones that we sort of look at that are going to move the markets. Fed not meeting until the 26th, I believe that's priced in just over 90% at the moment. Uh, yeah, 91.2% priced in for that hike in September. Uh, the Euro ECB and Bank of England next meetings, um, as well, still over a month away. No changes there expected. Uh, for the Bank of England, it will talk in terms of rates will be, are they going to hike next year, or is it another case of just sort of one a year like they, like they did last November, uh, and now obviously beginning of August. ECB, um, as well having quite a dovish meeting. Any sort of rhetoric out of that will, will help sort of move the market, but I'd suggest Brexit talks for the remainder of the year are going to be the main, main thing there, uh, to sort of look at out for. We had as well stories over the weekend, uh, the White House, uh, to detail implementation of new Iran sanctions. So oil has been the focus of this market, which was, I guess you could say, buoyed a bit this morning on, on those talks. I was reading on the way in that the oil market was sort of boosted by these sort of concerns that knew the, the sanctions were going to be implemented again. We're just coming to the high of the day there, uh, on oil. Quite significant resistance, uh, you have from last week on the Friday and Thursday, along with today's R1, also the low that we had back on the 31st. So I prefer the upside for now for oil, but you know, just looking back at the previous price action of the last couple of weeks, it has been, uh, quite a choppy market, to say the least. Um, mentioned that this week is going to be relatively quiet. Uh, the calendar for today, if I just move over there, you can see, is pretty much in line with what we're expecting over the next couple of days. Limited, if anything, in terms of, of data that's going to move the markets. Later this week though, we have, uh, the US CPI on Friday, which stands out as, as the highlight. And that will be really the sort of the main thing I would be focusing on. If I just drag this into picture, you can see, uh, here is a sort of the calendar highlights for the week ahead. So Monday, very quiet. Tuesday, obviously you've got your APIs, the JOLTS, job openings, which really don't move the market too much. For those Aussie dollar traders, you had the, the rate decision in the early hours, which will be something to bear in mind. Wednesday, obviously the DOE. We had quite a relatively calm DOE on, on Wednesday last week, which again is, is probably the highlight of that day. Coming on to Thursday, some important data out of China which will sort of drive the markets, but perhaps in the morning before we come into the afternoon, and, uh, US PPI and weekly jobless claims, uh, sort of taking the highlights there before Friday, um, and, uh, the US CPI, which will be the main sort of thing to focus on there and sort of those inflationary numbers as they come out. Looking at equities, the reaction to non-farm payrolls was, was rather limited. If we have a look at the, uh, reaction. I'm just going to move the pivots off. Give me one second. You can see we have pushed higher, and again, it's up to that sort of resistance point that we had in the middle of July in terms of where the, the, the all-time highs were. Still relatively, uh, a bit away, about 2%. I'll be focusing on, on that all-time high this week. I don't really see why we can't continue to push on. Every sort of couple of down days at the moment are met with some positive sentiment off of Wall Street, and I'll be focusing on that again. We, we've had the earnings, the blip from Facebook, from Netflix and Twitter. Well, you would be looking at those charts, you wouldn't really be able to tell that. So that's sort of almost in the past now. I feel it's pretty inevitable that we're just gonna continue to push higher. The trade war talks aren't really having a big impact on the markets. As I mentioned on Friday, there were comments out, and the reaction was limited. So sentiment, I believe, still very much to the upside. You can see this morning, however, we are just coming down a bit here towards the low of the day. But in terms of the rest of the week, I do prefer a move to the upside. However, of course, if there was to be any real sort of developments on trade talks, you have to be aware to sort of change that, that view as it comes later on as well. Other markets, just have a look at from a technical point of view. I think it's going to be quite interesting for the remainder of the year to be having a look at the euro against the pound. You can see the Super Thursday, Bank of England higher, lower, came back, and quite a choppy market as we know anyway. Um, having a look at this chart over just the last 3 months or so here, going back to— well, having a look at the year, and again I'll remove the pivots just to, to clear this up. We're within this sort of this channel, if you like. I feel Brexit talks are going to be the reason we either push higher and have a go at that high that we had from last year early summer or perhaps we come back down to the— those lows. If there's going to be, you know, a positive deal reached, no deal, I feel— believe we are going to go and test the, uh, the high of this, um, this rectangle, if you like, and then we can push on. It's definitely going to be an interesting market to, to have an eye on for the remainder of the year. 4 months to go, of course, anything can happen, and I'm sure there'll be plenty of developments. that arrived from that as well. So in terms of today, going to be quite quiet. I'd be focusing, uh, on oil. Are we going to continue to push higher? These sort of sanctions, uh, boosting the price. Uh, equities, I'd keep an eye on obviously the cash open favoring the upside in my opinion, unless we really do get some major developments. What's happening at the moment isn't driving the market too much. Pound, you have a couple of interesting technical levels if we were to continue to push lower, keeping an eye on that trade channel to the downside. Uh, euro, the dollar remaining strong across the, the board. As long as it stays above $95 consistently, I believe we'll continue to push lower for these pairs as well. Central bank meetings not for a while. Remainder of the month, I would expect to be be relatively quiet. Take profit when it's there would be my advice. In terms of how these markets do behave in August is always just a slightly bit different to the remainder of the year, and it might well be that until we, we come back to normality in September and these central bank meetings do start to pop up again, you know, middle to late September, that these markets just, uh, act a bit unusual. Any questions, as usual, please do get them in the chat. I'll be on the mic throughout the day. Uh, Saif will be sending out the strategy report for the week ahead. Obviously the calendar highlights a bit limited, as you've seen. So if I don't chat to you guys, I hope you all have a great trading day, and I'll catch you all in the chat.