Morning Briefing - 8th August 2018

Hi guys, good morning. Wednesday, 8th of August, just gone past half past 8. Let's have a quick look over the markets, how they've been trading from yesterday into this morning. A couple of stories from overnight, and then we'll run through the calendar for the, the day ahead and a couple of technical levels to, to be aware of. Yesterday, as you can see from the markets on my screen, uh, it wasn't the most active day. We had a bit of dollar weakness into the morning, and then into the afternoon you had a couple of half decent opportunities to, to get short the pairs. Euro and pound coming back below, um, euro's case the R2, and the pound has half decent opportunity. I know a couple of the traders in-house took advantage of the pound as we broke, uh, below— it was the pivot level again— and then came back to test the, the low of the day, found some support there before pushing higher. Just having a look at the pound for now. It's coming under a bit of pressure. Probably worth keeping an eye on the low of yesterday, obviously other than today as well, and the low of the week that we had on Monday. 11-month low, a bit of a trend line going on there that— well, possible one to, to be aware of. We do get a breakdown there, you could— the level of S1 will be of some interest as well. 11-month low off these sort of no-deal expectations weighing on the pound there. Euro this morning slightly higher, and the dollar itself a bit weaker. We'll come on to the dollar index again now, below the 95. Gold yesterday, we had a decent push higher on that dollar weakness, only to come back lower, which was the case for most the pairs. It's a bit of a topsy-turvy day. For those markets. S&P, or equities in general, we did push higher to, to make a new high for quite some time in the S&P. We're now, or we were, just half a percent off all-time highs. You've got to say it probably does feel like it's just a matter of time. We'll come on to these charts from a more sort of technical point of view. Um, the opportunity yesterday really was on the break of the high of the day, and again, a few traders did get in that today. I like the look of, um, the high of Monday as a level of support if we were to come back down and get involved around there. Whether we, we get down there remains to be seen. A bit of a trend line forming from the highs of yesterday. I wouldn't mind to see that push higher with a bit of volume going into the afternoon as well. NASDAQ, very similar in that we were pushing higher off the the, the cash open, slightly bigger reaction to the downside. But you can see the, the sort of opportunity we were looking for in the S&P in the morning. We were talking about the high of Monday offered a good level of support for the push on to the upside. Uh, Dow Jones, let me just change that chart there. You can see that the trade again was on that break of the high of the day, much similar to the S&P, uh, in that respect was also the high of the 27th, 26th. So equities, unless you know, you're going to get something massively changing fundamentally-wise, I think you've got to say it's a matter of time now before, uh, S&P goes up to its all-time high. European equities lagging behind, and yesterday, what— despite a good start for the DAX, we did come under a bit of pressure and have made a new low this morning, found support on Monday afternoon, and actually we have had a bit of a bounce. But be interesting to see and I'll make this chart just a bit bigger for you guys to see what happens technically. Just almost around these points, we had good level support yesterday evening into the close, and having broken through could offer a decent level of resistance as well. In terms of overall sort of data points moving the market, or these markets that we're focusing on, it was, it was very limited. We had a bit of Canadian data which weighed heavily on the CAD. But other than that, it was, it was pretty quiet until going into the evening. API, we mentioned yesterday, was probably going to be the highlight of the, the day, uh, calendar-wise. And, uh, it's not often that you say that. Uh, the data calendar today as well, quite light. We'll come on to that in a bit. But, uh, crude there, a decent draw, 6 million, you know. Or that on its own, oil price would, would go higher. But of course, you take into account quite a few things here. Cushing, uh, draw of half a mil. Gasoline, however, a build of +3. And distillates also a build of almost 2 million there. Worth keeping an eye on this coming into the DOE at 3:30 just to see the correlation between the two. The initial reaction that we got in the markets. You can see a bit of a spike higher initially off the crude headline number, only to come back down. Gasoline really weighing on oil price here. As I switch over now to the gasoline chart— hang on, it's not showing, is it? One second, placing current page. There we go. So here's the oil reaction, bit of a spike higher to come back lower, and then gasoline, as you see, really weighing on price this morning. Quite choppy, no real direction. The lows of, of yesterday's session acting as a half decent level support this morning, um, and the high of last night or the, the API offering a good level of resistance. Um, uh, just done that now. Um, so yeah, worth keeping an eye on that little range for oil, but coming into Wednesday, half 3. We'll revisit the, the API numbers and, and what to, to be expected for those figures coming out. Gasoline though will be the, the one that I'm also going to be keeping an eye on at that time, as we had a decent reaction there off the build, or bigger than expected build, of +3 million. Other stories from overnight, so we'll come on to the API again later. You had the, the Tesla news. I'm sure people coming into work this morning, or your offices, or just reading the news in general, would have read about Tesla up around about 11% by the end of the day. We had a couple of tweets from the man himself, Elon Musk, driving price higher. Number one marked up here, the Financial Times report Saudi sovereign wealth fund had built roughly a $2 billion stake in Tesla. Price move higher, quite significant currently there, 12 PM, uh, US time. Elon Musk tweets that he's considering taking Tesla private at $420 or $420 a share, and price continued to push higher really into, into sort of the close of the day. Closed up 11%. Worth keeping an eye on those that do follow individual stocks, obviously not on the same capacity as your sort of Apples and Microsofts, Googles, Navifeds. But definitely worth keeping an eye on there as well. Another half interesting article. Obviously, really, the pound is going to be moving here off, off this no-deal talk or deal coming together. But pressure builds on UK Labour to back second Brexit referendum. Personally, I think it's a bit of a tricky subject there. If they do second, do they do third? It's going to just cause unnecessary drama. What will be will be. And also I feel, you know, if Labour do go down the route to back that second referendum, you know, Jeremy Corbyn might, you know, look like a bit of a clown. So, you know, are they going to go down that route or not? What do people think? You know, should there be a second referendum or not? I'll be interested to see what you guys think. Coming into this idea that there's going to be no deal. A lot of people that I've spoke to that have or did vote for leave would happily change their minds. So maybe a second referendum would get a different outcome, but then you have a different outcome, then there's surely got to be a third referendum from that. Whether Labour would want to go down that route with Jeremy Corbyn as the head person in charge, I think remains to be seen. But something just to keep an eye out. The odds on Theresa May leaving this into the back end of the year is still pretty favorable in terms of this year being the favorite compared to the next year. So something just to bear in mind. Also, a bit of chat yesterday and perhaps still weighing on pound and into the afternoon when the dollar starts to strengthen as well. A couple of reasons why, but the UK sees Brexit deal deadline slipping to end of November. So a lot of the talk was of this October deal, and now it's, it's, uh, it's November. And if it's now November, why is it not going to be December? And so on. So you can see it's getting pushed on and pushed on. Um, I was speaking to Charlie and Ant today about, you know, sort of almost ready to pull the trigger to go long on pound as soon as there's some positive news. I could also do with another couple Donald Trump comments trying to weaken the dollar. Um, let's have a quick look over at where the, the pound is, is trading in the grand scheme of things. We mentioned 11-month low, and you can see here price just, you know, is following this, this trend channel better to the downside, but we are still drifting lower. Uh, the, the articles yesterday were talking about 120, um, which obviously from looking at this here is, is considerably lower. There you go, marked up, uh, would be quite a big move. But on a no deal and further escalation, uh, of negative news, it's, you know, definitely not out the question of that, that 35-year low, the low, the double bottom from, uh, you know, post-Brexit. However, positive news, you know, I think we could, we could push higher. I think we could, you know, break out of this trend channel and then, you know, the the, the upside is definitely there for the taking. Also, you know, weighing on, uh, the direction of not just the pound against the dollar in general, but the dollar pairs, is this $95 handle. It really, you know, it's been talked about a lot. Usually I'm not a massive, you know, follower of the dollar index as such, but around here you can see just the, the resistance we have found previously at this area. So this is here is looking at a weekly chart going back, you know, a few weeks. Here we can look at 6 months and you can see the amount of time it's just spent around 95 only to come back down again. Here's the yearly chart again going back to levels from November. Every time we come up, coming back down, really, you know, struggling to push on. We did, you know, break through, um, to the downside, uh, a couple of, uh, well, just over a year ago. But even before that, we found some quite good price action around that point. And having a look at the charts, how they've been trading— obviously the pound is a slight, uh, discrepancy in this due to the fact that, um, the, the pound really is quite weak at the moment. But euro, you can see, has been squeezed in, no real direction. Yes, we've had a bit of a break of this trend, but in terms of the actual range of this market, it's been pretty steady, no clear direction. And I think we need to see a further push above $95 or actually, you know, firmly reject it, uh, to, to sort of see a clear move from this. So be interesting from a technical point of view looking at this market what happens when we come back to test this trend line. Also just having a test now of the, the low of the 27. So pretty interesting resistance point in terms of, uh, EUR/USD here, uh, the dollar index just on its low or lowest points of the day. Not a bad place to perhaps look for a reversal. The, the dollar-yen— or this is actually yen against the dollar— we've just broken a bit higher, but even so you can see the price action has been, you know, relatively undecided in, in the direction it really wants to be going. Um, Aussie dollar— if out of the, the last three you would probably say this has been the most choppy, no real direction, very, um very sort of almost undecided in where it really wants to go. I'd be interested to see what does happen if we, if we come up to test this trend line coming down over the last sort of few, few weeks. I think not a bad place to look to go short, but you know, things can, you know, happen where, like on the— where's the 19th? So here you had the, uh, the comments from Donald Trump on the, on the week. Well, the too strong US dollar. And since then, this market hasn't really come back to test that area. If we have a follow-through on that again, you know, it could well have been that the 19th of, um, of July was a good opportunity to, you know, take profit on those and see price pushing higher. Where's the 19th on, on EUR/USD? Around here as well. Now here we go, 19th which this one has actually come down under a bit of pressure now as well. So it's a tricky one. I think we really do need to see, uh, this, this dollar index push quite significantly above or retrace quite significantly below to get a breakout of these ranges. Uh, you know, for the remainder of August, it could be quite tricky. Looking at the data calendar for today, you can see it's empty this morning. You've got a couple of things that came out overnight, but nothing too important that is going to be driving price now for the remainder of the day. Coming into the afternoon, the only thing there in bold of interest is going to be the Department of Energy inventories at 3:30. And then into the evening, you've got, um, you know, some, some data out of, uh, China as well that you would want to have a look at tomorrow. And of course, tomorrow and Friday, it does get a bit more interesting. Speakers-wise today, limited. Definitely going into the afternoon, the only one of interest, you've got Fed speaking, but non-voter, so unlikely to move the market. Earnings, you have a few to sort of keep an eye on, but really, data calendar quiet. Moves from yesterday, half choppy as well, and dollar weakness in the morning coming through, and then a bit of dollar strength into the afternoon. Equities, I think you've got to favor the upside still. Bit of a trend line forming from last night's highs into tonight's highs for the S&P, where it would be quite nice to see a break higher with a bit of volume to look to go long. And maybe it's, you know, a matter of time now before we do get that all-time high. T-notes today, this morning, very flat volume, obviously quite low. Gold, however, and, uh, Dolly Yen have or the yen, I should say, have pushed on on this slight dollar weakness. Gold, we talked about a couple of times about when this sort of summer rally could come in. I've still got the level probably marked up on this chart, uh, or I don't. I'll just put it on again. Let's remove all of this. $1,235, this sort of area I want to see break before really getting involved. Yes, you know, if, uh, if we do get up there and break on through, the entry, you know, ideally would have been now, but I'd rather the markets would tell me when would be a good opportunity to get back in and see oil— uh, gold price, uh, drive a bit higher, uh, as well. We'll come back onto the mic, um, throughout the day, and of course do a bit of a rundown before DOE. So much like API was yesterday, it's probably going to be the highlight of the day and, and sort of drive the, the market action into the afternoon. Tomorrow picks up. Friday, obviously not a bad day as well with the inflation numbers out of the US. Any questions, of course, please do let me know, and I'll catch you guys all in the chat as well. I hope you all have a good trading day.