The Trading Week Ahead: 25th - 29th November 2019

Okay, very good morning to everyone. Monday, 25th of November. Hope everyone had a fantastic weekend. As you can see to the side of me, usual routine for the Monday morning briefing, a look ahead not just for today but for the entire trading week. This calendar, of course, available on my Twitter account, and I'll, I'll share it in the trading live room as well afterwards. But remember, we do have the US Thanksgiving holiday on Thursday, which does mean that markets are entirely closed on Thursday. Early closure as well on Friday, which means that the week overall is likely to be very front-loaded because even though there will be electronic trades, some short floor sessions happening on the Friday, although the NYSE might be open, the volumes are expected to remain particularly light if going off any historical precedent. So definitely, uh, the calendar is shaped towards all of the major economic data kind of stateside, pretty much coming out then on today, Tuesday, and then Wednesday. It's quite busy as well for US data, so do bear that in mind. A little bit different than to our general kind of landscape that we see with really relatively quiet beginnings and quiet finishes, whereas this week's going to be quite first half centric. So worth bearing in mind. But let's just jump Before we go into the actual news highlights of the weekend, let's have a look at the charts this morning. And there's quite a distinct air of positive sentiment. And this is coming off a couple of different things we're going to talk about, which is updates on the US-China trade war. There's been local district elections in Hong Kong which have been translated into quite a positive event for markets. And I'll explain more shortly. Then we're going to have a look at Brexit. Updates on the UK latest opinion polls. And after the Conservative Party have released now their manifesto, how does that compare to Labour and what are our thoughts going forward? So overall, uh, risk appetite quite clearly apparent this morning following the positive session overnight in Asia-Pacific trade. Hong Kong, which you'll remember, has been getting absolutely hammered recently amid the escalating violence violence that we've been seeing, um, has bounced in excess of 1.5% overnight, and that's translated into a pretty decent open for the futures market. Gap up in terms of the US and European stock futures. You can see here the DAX already up just shy of 100 points, just residing above its respective R1. And US index futures also positive. We're just looking at the S&P 500 here. You can see managing to get back above what was an area of resistance, uh, going back on both that double top on the 21st and 22nd, so Thursday and Friday last week, managing to leap that and also just finding a bit of support now during that Asia-Pacific session at not only the R1, but that R1 also coinciding with the resistance that was seen on the 20th during the US session. So quite a neat area of consolidation perhaps until the US come in at least at around those levels. So the upper bound defined really by around that 3120 and three-quarters, and then the R1 at around 3118 or so. Having a look at some of the other asset classes then, with that, T-notes down about 4.5 ticks, gold down about $6.50. So kind of your classical, uh, unwind, if you like, of any flight-to-quality move that might have been apparent in recent sessions. If we're looking at gold, just coming down to technically quite an interesting point on the 90-minute candlestick. You can see just finding a bit of support around that low that we had back on the 18th, so around this time last week. So worth keeping an eye on that today, particularly if the US come in and take on this positive sentiment a little bit further. Any break of that could well put some pressure down towards the lows that were seen back, well, about a week and a half ago in gold. And I'll let Charlie go over some of the technicals beyond that point, but gold obviously we need to be looking at some further downside levels would be prudent if we're looking at the whole week as a whole. Elsewhere, WTI crude then up a touch as well, just given some of the risk appetite, and we're just around pivot at the moment. So just holding a $58 handle off around 30 cents. And in the currency markets, dollar index just a touch softer, both major pairs positive. If anything, cable seeing a bit of outperformance here, just breaking above its Asia-Pacific high in the pivot point, just seeing some moderate upside. We'll have a look at those polls in a second. And then looking at euro, I mean, this was something the guys were looking at last week in respect to quite a key level that you can quite clearly see. This is looking at a T— uh, 240-minute candlesticks, and this upside level that really has failed to break, and then closing below, um, the 100-day moving average as well. So that 1111 kind of level just holding, and we continue to push down lower. And on the The daily chart, obviously important if you're looking at it from that higher time frame, and you can see it just hasn't managed to get above that key level on multiple tests last week, which you would think now has got to cap at least for this week the upside price action. Moving beyond that point would have to be quite an important test. CPI data coming out, out of lots of eurozone nations as we go through the week. So certainly warrants keeping an eye on as we go forward. Okay, let's get into the calendar then and a couple of the news headlines. As I say, Charlie's going to look at the charts after me in a bit more detail. But for today's session, what have we got? Well, probably the main highlight is going to be the German IFO Business Climate reading that's coming out at 9 AM London time. Generally speaking, obviously the economic conditions in Germany have been suppressed with with manufacturing activity as defined by the PMIs being particularly weak of late. So just seeing how companies on the ground are feeling about current and future expectations would be pretty interesting. So if you are looking at European assets— DAX, Bund, Euro— I would keep an eye out for that coming up at 9 AM. Otherwise, for today's session, not too busy. A couple of ECB speakers to be aware of. Holzman, Villaroy, and Lane all speaking throughout the day. And you'll notice that that's quite a distinct theme really throughout the week. You've got Coeur speaking on Tuesday, Lane makes another appearance I think on Wednesday, Villaroy on Thursday. So quite a few things to have a look out for on the ECB side. Of course, following Christine Lagarde, we heard for the first time at the end of last week. Let's go straight into though the news stories before before we go on from Monday on the calendar. And this is one of the main ones that people are looking at. And this is Hong Kong's pro-democracy forces bolstered by a huge election win. So what is this? Well, the first thing to be aware of is that this is kind of local elections, kind of district elections. So if you were looking, as far as I've read about this subject this morning on my way in, this is not like the UK general election, for example. This is about the lowest strung tier of politics that you can get within the setup in Hong Kong. So is it meaningful? Perhaps not from a technical perspective, but from a symbolic point of view, it is particularly interesting. And that's because what we've got here is pro-democracy candidates won 86%— if I flick over— of the 444 seats that were counted so far on last check. So here on the graphic, you can see the difference between 2015, which was the last time we had these kind of district elections. And you can see the color is indicative of— the more kind of pink the color, the more pro-government margin. The more green, the more solid green, the more pan-Democrat margin. You can see a huge monumental shift from being pro-government to pro-democracy. So again, they won 86% of seats. In the last election, they won barely 25%. Uh, pro-government camp won about 12% of the seats overnight. That was against a previous 65%. The turnout rate was 71%, which was a record and more than double the last time this took place in 2015. So hugely reflective, I guess, a sign of the times of the the violence that's been happening, and of course the public interest there locally. But this will again go against somewhat the ability of mainland China, the kind of headquarters in Beijing, looking to impose kind of more One China control over that jurisdiction, is going to be pushed back. And for the moment then, this has been seen as a net positive for markets given how strong that has come across. Uh, to have a look at the differential between how quickly pro-government support has flipped to democracy, you can see there the, the drop in the, the kind of pink line and the rise of the green line to just make it absolutely clear what's happened. Now it's not just about Hong Kong, there's also been some updates on the, uh, the trade front. So this is the latest out of the Global Times, which as we know is the, the kind of main state media that updates on the Chinese side via Twitter as well. And they said that China-US very close to phase 1 trade deal. They said that China also remains committed to continuing for a phase 2 or even phase 3 deal with the United States, according to the state-backed Global Times, citing experts close close to the Chinese government. So still particularly bullish on the, the ongoing negotiations from the Chinese side. I'd say that's more repetition, but again, somewhat soothing for any investor fears about potential breakdown of these talks. Another positive coming out of China was this: they said at the weekend that they will raise penalties on violations of intellectual property rights in an attempt to address one of the sticking points in the trade talks. With the US. So essentially saying that they would drop the barrier or the thresholds for criminal punishments for those who steal intellectual property, and that would be particularly aimed at appeasing their US counterparts in these talks specifically. And these came as guidelines were issued by the government on Sunday. So really, it's the collection of all of those stories which is leading to this, this kind of risk-on attitude to the market open. For the moment, I would say much of the move has happened. You can see that stock futures are— have kind of been bid, and I'd say I've kind of phased out, and we're kind of— or fizzled out, and we're now consolidating. Perhaps we need to wait really until the US come in to see if there's any more meaningful response in, in markets to what's developed. Okay, the other thing that we're going to focus on is we're going to have a quick look at the, the pound here. You can see just coming up a little bit this morning from— we're just getting above this kind of areas that were perhaps resistance back earlier in the month and a key support on the 15th before the push higher. If we continue to move on the upside, uh, see the 20th low comes in, starts to look a bit more interesting. So potential upside now until really towards the 129 handle. So why, why the pound so bullish? Well, there's a couple of things that have been coming out over the weekend. This is one. We had the Tory manifesto released, so coming about a week after the Labour Party, and the kind of headline title pretty much wraps it up. Uh, Tories pledging extra nurses, tax cuts, but to get Brexit done, unveiling a sensible manifesto. I did read this morning that for every £1 that the Conservatives are saying that they will spend as a government, that's equivalent. So every 1 Conservative pound, Labour are promising £28 for every Tory £1. I think that is just mind-blowing in terms of the monumental scope of what Labour are proposing in terms of government spend. What it does mean though, and I think that this is an absolutely strategic play by Boris, because if you actually start— for me, when I read the Tory manifesto last night, the one thing that really, um, stuck out was the fact that in 2017, I think Theresa May basically shot herself in the foot by some of the changes that she's tried to do. In particular, you'll remember that dementia tax, uh, particularly hurt her amongst other things. And so John Boris Johnson's kind of, and his team apparently, or seemingly, have learnt from that mistake. They've kept a pretty consistent continuity to what they're proposing, nothing too outlandish. And what they've continued to bang the drum on is that this is all about having a strong economy, and that is contingent on getting Brexit done. So again, he continues to kind of draw focus on it's the Brexit issue. Obviously pledging extra nurses is to counteract probably Corbyn's biggest piece of, or proposal, which is that of targeting the NHS specifically, of which they're seen more popular on that particular area. And so, yeah, the main point is that I think Conservatives are still keeping that, that tactical stance of let's just continue to not get too bogged down in these domestic issues, do something that just basically, uh, does— gets the job done without putting at risk anything, and then let's just deliver Brexit and keep people's minds focused on that singular issue because that ultimately is what this election is going to hinge on. Now on the back of this, what Well, how is this playing out in terms of elsewhere? Well, this is the average poll of polls, and as you can see here, just to emphasize again, since the election has been called, the Liberal Democrats have really been hurt. This kind of switch that we've had from calling for a confirmatory second referendum to now the idea that they're looking to complete revoke. I'm not sure if you saw the televised debates that we had at the end of last week. I don't know, I was talking to a few of you on social media about this live when it was happening, but Jo Swinson got absolutely just killed by the audience in that debate. And, you know, the main take-home point here being that she might have distanced even Remain voters by the fact that not having a second referendum but just revoking obviously would go against the democratic will of over half the country, of course. And so Lib Dem and Brexit Party, of course, now Farage has kind of struck this semi-deal with Boris. So Brexit Party is about as low as its popularity's ever been, understandably. Lib Dems though have dropped, and we continue to see this movement back into the two traditional parties. But one thing that's become more evident over the last couple of weeks is that the Conservatives have continued to increase their gap over Labour for the time being. And we had 3 new polls over the weekend, the biggest one of which was the opinion poll. I think that was for The Observer, and it showed that Conservatives were 19 points ahead of Labour. So we're almost getting into that, uh, 2017 territory when it was kind of in the low 20s, the that Conservatives were over Labour. But again, I must stress, you all remember what happened then. Even though it looked like a slam dunk for Theresa for a commanding majority, the reality of course was far from it. She came out with the hung Parliament and in a worse situation, having to form that working majority with the DUP. Now, this was the, uh, I mean, this is the top level Tory manifesto. And as you can see, before he even gets into the guarantees of the different things like the NHS, the police, the immigration Australian-style points-based system, first thing on the docket is we must get Brexit done. And that is continuing to resonate with the electorate as far as the polls are concerned. The Conservatives still have a commanding lead at the moment. Now, one thing I did see last night, and I do think this is important, was this was the first big election model seat projection. And this takes into account— and I don't want to make this too complicated, I'll try and simplify it— but last election, nearly every pollster got it absolutely wrong apart from one. And that one pollster used something called MRP, which stands for multi-level regression and post-stratification. Now what that is basically is a way of producing estimates of opinion and attitudes for a small defined geographic area. It works by combining information from large national samples, for example tens of thousands of respondents, very different from the usual, more like 1,000. And then it cross-references that against ONS and census data. So it has proved before to be particularly accurate. Now, this was the projection that came out using a similar model, and it had Conservatives with 349, Labour at 213, the Lib Dems almost unaltered. And so that would give the Tories a majority of 48. Now again, how accurate is that going to be on December 12th? Who knows. I mean, I wouldn't certainly bet the house on it, but you can see if he does get a majority and if we are using polls as one of the only real definitive metrics we can for building in market expectation for the event, well, we're still odds on for a, a decent Tory majority. And so the pound responding a little bit more positive this morning to these latest developments. The other thing to be aware of is in the second half of this week we do have more general election debate. Thursday night, Sky News, and then there's a BBC election debate happening on Friday night at 7 PM, and then there's two more after that. One happening on December 6th and then one happening on December 9th before the run-in then to the actual date itself. All of these dates available on my, my Twitter account. Just going back then to summarize the rest of the calendar for the week. Tuesday, probably the main thing here as I've identified with the, the bolding and the underlining on this calendar, you got Fed's Powell speaking. That's going to be particularly interesting, I think, because it's the first time he would have delivered a speech since his impromptu meeting with the US President and Treasury Secretary Mnuchin and Trump that we had last week, when Trump apparently was talking about negative rates and a healthy discussion on policy options and so on. So Powell speaks on Tuesday, and then Wednesday again you get quite a lot of US data. You've got the weekly jobless claims pulled forward a day of course, owning to the Thanksgiving holiday market closures on the US on Thursday. And then on Wednesday you get the preliminary Q3 US GDP figure, durable goods orders, PCE numbers, real consumer spending, Chicago PMI, pending home sales, personal income spending. So it's all going to be squeezed in the calendar, uh, in order to fit in that market closure on Thursday. So Thursday is going to be particularly quiet, I would say. Thursday, all things remaining equal, no major kind of North American data to speak of. Then on Friday you have those early closures as well in North America. And normally, given Thanksgiving is ultimately the biggest holiday in the States, most traders, and subsequently then reflective in market volume, they don't come back on the Friday. They typically then take that off and they'll take the whole extended longer weekend and come back on the Monday. So it could be quite quiet into the week. The final two things I want to mention is that on Friday, Friday, of course, is, is Black Friday. Now, Black Friday, an estimated 165.3 million people will shop between Thanksgiving and Cyber Monday, according to the National Retail Federation in the United States. Now, we have been seeing quite a distinct shift between the behavioral or behavior of the consumer moving more and more online. So online shopping is set to continue to grow. E-commerce sales on Cyber Monday are expected to hit $9.4 billion, and that will be up 19% in a singular year, to give you a bit of insight into the actual statistics around that. Now, so far we've with the US retail sector. Walmart, Target have raised their outlooks that we saw most recently in their quarterly earnings for Q3, while others like Macy's have underperformed against expectations. So normally what happens at Black Friday, you get some of these early little indicators of how have these companies performing, uh, how aggressive is the US consumer spending, and that sometimes can translate then into Friday session with some potential movement in the retailers. And then on Saturday, arguably one of the most important pieces of data coming out for the entire week— the Chinese do often release their data on the weekend— and on Saturday you get Chinese manufacturing, non-manufacturing PMI. And of course, this is watched particularly closely under the, the cloud of whether or not we can get this Phase 1 trade deal wrapped up. But if you actually look at the manufacturing PMI in China, it has been recovering over recent months, but Some have been speculating, is this due to the, the anniversary that we had, the 70-year of the Communist Party not so long ago? So was it kind of propelled by that one factor, or is it to do with front-loading, trying to get ahead of the curve for impending tariffs from the US in mid-December? So it's going to be quite telling to see whether or not we can continue that consistent pattern of a slow recovery in the manufacturing sector in China on Saturday. Okay, that is it from me. So I'm just going to set up my screen and I'm going to hand you over to Charlie, and he's going to come on and talk over the charts in a bit more detail. But I'll catch you guys in the chat room. Just so you're all up to speed, the guys at home, uh, the guys trading live as well, that Sam is not in the office today. So please direct your questions this morning to Charlie directly and to me this afternoon. Thanks very much.

Morning everyone, hope you had a good weekend. Quickly starting off with the charts here, I'm going to look at the Bund. Something that caught my eye this morning, we've got somewhat of a trend channel coming from the top here. One of the highs from last week over the a few highs. And coming from this week, as you can see here, already to start off with, we've hit that— we've hit that pivot point. And actually, as we hit that resistance point from last week, you can see how well it respected. I'm just going to ellipse this area here. Now, if I quickly zoom in, you can see that after following support here on the— well, resistance turned support, and then further support before breaking back through and then getting that resistance. You can see that actually we've respected it rather well, and as we got a bit of a sell-off from that actually, and then continuation through the following day, and then that data that came out from the Eurozone on Friday that had this blip lower and ultimately higher in with that inverse correlation with the euro. Uh, now looking over to gold spotted on a longer-term trend. Perhaps we've got a bit of a trend channel working, not the most perfect one in the world, but it's still definitely something that caught my eye. If you just give me a moment to get it on— trend channel from here and here. So you can see that these lows here coinciding quite quite well, and that, uh, top-down area. So looking ahead for this week, well, we can have potentially some, some nice downside. Obviously this high is, uh, quite a nice area here, and then I'm following through. We didn't actually get a confirmed close below that from these levels down here, so for me that area is still very good as support. Just getting that right onto the tick there. Already breaking through this morning, it's been an interesting one. As Anthony Cheung was doing the briefing, actually, I believe he, he mentioned it briefly, funnily enough. You can see we did get a bit of a stop run as I was watching that as we broke below the S1. Well, whether we see that continuation further to the downside this morning is yet to be told, but obviously with the stocks pushing higher, you can see somewhat of a risk-off move with the Bund already moving down with, uh, T-notes. So whether we see a continuation is yet, but also if we get a close below that— now on a 60-minute, a close below that for me would be quite a bearish indicator. And then levels further down where you've got the S2 level, and obviously these lows are from the 11th, 12th, and respect— and 13th respectively. Again, opening it back up quickly to a longer time frame. Following that, there isn't much support, rather, uh, following, following through that that's of that much significance. I mean, the 1446 level, and then obviously this trend channel that I've got on here will provide some nice support should we get down there later on this week, or, or perhaps even later next week. But for following that, you can see that between here and I suppose here, there isn't much support going on from these levels here, or offering much support rather. So it's, uh, it's an interesting one to see if we can break below then and how far we do go. Gold notoriously is quite nice from technical breaks. You do get quite a, a big and accentuated perhaps reaction in that. A quick look over to the S&P. Now there's a few nice technicals on the S&P. If you just bear with me a moment, I'm going to clear up this chart so we can see a bit easier. Drag it out slightly. So now, one of the lows from the 6th, you can see there is a trend line that is still very much in play, in my opinion. So as you can see here on my chart, although gapping up, it's still a nice area if we can retest test. Now unfortunately, this 3100 level is, uh, well, is it too far away to use as a— to coincide with the trend line? I don't know, you know, I'll draw a rectangle on there as a— as an area of where I'm looking at. But should we come down there, break the pivot, you've also got the S1 there in play as well. Uh, something we always say to the live traders is, you know, two technicals as a reason for entry is one of our key key things that we try hammer home before you enter a trade. But first of all, I think we've got to try close this gap, and then we can see where to go from there. Not only that, you've also got this form of double top from Thursday and Friday last week. So should we get a breakthrough there, then you've got that gap fill should we break through that, and then the pivot level. So there is some nice support to the downside as we do trickle down. If we break through them, like I said, said, you'll also get gold rebounding off those lows. So gold coming higher. But again, if we push higher— and let's have a look perhaps to the all-time high at $3,132. Bear with me, I'm just gonna open up my chart. We've got a trendline all the way back from earlier on in the year, around April time. But as you can see, I believe Sam was looking at this last week. One second, let me just get it right on so we get the most precise area to look at. Put it back on the 60-minute and you can see that that trend line is very much in play. As we had perhaps grind higher towards, uh, the end of this week into Thanksgiving, we might get a bit of a rally perhaps. But $31.32 there as your all-time high, and then that trend line, uh, using as a nice technical area of resistance following that. Again, just to reiterate there's Thanksgiving Thursday this week, so volatility quite low, perhaps more than usual. Last week wasn't too great overall, I would say, but, but you can't have everything in this world, can you? Okay, euro, almost just to finish up here. You can see Sam's already got that highlighted on. I think Anthony went through it somewhat this morning. This is a nice area, I really like this. Again, it looks very very similar to the pound chart actually, but it's this area up here with the, with triple top really, not the, the cleanest in the world, but as you can see, oh, too far back. As you can see here with these levels, uh, these support areas working fantastic, and obviously that 100 daily moving average coming in and swooping in using as extra resistance. Got quite a few levels on here, I'm just going to take those off quickly. But should we get up to this area here, I would, I would say that, you know, the short perhaps looks on the more favorable side, to be honest, if we can get some more dollar strength. Leads me on to the pound, just to wrap up here. Leads me on to the pound. As you can see, the middle chart, just going to make slightly bigger. Something I noticed this morning a small trend line, very steep, but from an intraday perspective, it's what we like to see being respected. Just gonna draw that on like so, and you can see we're still getting nice respect from that trend line. So for me, that's a nice area for us if we can break above. Got then the 129 level here, as you can see, used to support on Thursday. And then, uh, this area here. Again, it's a few lows in the mix there. So should we get a break of that trend line and then perhaps moving above there and up above the 129 level, I'd expect a few comments out this week perhaps from Parliament. That's it from me. Hope you have a fantastic week, and again, just be careful of the volatility as we head into Thanksgiving Thursday. Cheers, guys.