Trade Talks Begin In Washington Following Choppy Price Action Overnight

Hi guys, good morning. It is October the 10th, just gone 8 o'clock here in London. You can see from picture on my right-hand side, it's all going to be about, or potentially all going to be about, the trade talks today in Washington. The two-day, or is it a two-day, talk between President Trump and Xi. Just before we go into a bit of detail on that, it's worth bringing up the, the charts and this morning. We've had some decent moves already, uh, not, uh, to go into detail on stocks just yet. You can see how choppy they were overnight, but euro just coming to an interesting level and worth bringing this in before we go through, uh, any points on that. We're just coming to the top end of this trend line, really going back here to— well, if we start it on here on the, on the 13th of August, so here looking at a 240-minute chart, then the next high that we had post ECB. If you remember this, the full reversal which made a new low of the year to then go higher up to where we made a high for the 13th. We're now back testing that point. Uh, we talked about this resistance level in the briefing for the last few, uh, sessions. You can just see here, always struggle to get above. We're now above there. We're testing this trend line, uh, up 36 ticks on the day in the session already. So worth keeping a close watch on, uh, on what happens there. And actually, just to— and I was looking at the, the trading live chat, and Alex, I hope you don't mind me talking through part of your trade here, uh, just on the euro breaking, uh, that high. You can see, or you may just be able to see, the entry point here to, to go long and fading in up towards that top end of the trend line. And here, I imagine this, this line here is, is the high that we had from, from last week as well. So great trade, waiting for that breakout to get in, part on the aggressive. I guess, uh, maybe someone's waiting for the classic or not, but great trade. And, and the euro strong this morning, uh, so we can see here, uh, it's just testing that, that, um, that trend line. I'd be really waiting to see, can we get a confirmed close above there? At the moment, uh, it's, uh, just testing for, for now. Uh, also, I mean, if we— before we go on to today's headlines, um, and overnight to an extent, I guess it's worth talking about what a day yesterday was, especially considering it was, uh, a dataless day other than the oil inventories at half 3. And we obviously came in in the morning and we had, uh, this headline. Let me just drag this into picture. I've got a I need to bring this in one second, bear with me. Have it, uh, drawn up on Paint, of course. Uh, we had the headline in the morning, uh, new EU ready to make a major concession on consent by allowing a double majority in the Northern Ireland Assembly to leave. New Irish backstop after as yet unspecified number of years. This saw the pound strengthen, as you can see, breaking above its pivot, which had been good resistance However, that did get retracted or denied later on, and price came down. And of course, yesterday as well, you did have the, the big drama between Colleen Rooney and Rebecca Vardy, which I'm sure everyone was, was interested in. That was a pretty good one, a pretty good spat, shall we say, over Twitter. However, you know, it got a bit more serious overnight, and I remember coming in through the door yesterday, and I had football training last night, and I can never sleep after football training. I think it's the adrenaline is still in my body, and I put, uh, well, put Twitter up on my phone and in bed, and here I'm really sounding like Anthony now, uh, checking, checking Twitter in bed, and it was all kicking off. Um, and so for an hour or so, I was just literally refreshing my feed and having a look at the charts to see, uh, what was going on. You can see stocks were really topsy-turvy, pushing to the downside quite aggressively on the futures open before reversing back. And literally a full reversal by— obviously I wasn't awake at this time, thank God, but by 3 AM we had full reversed. And reasons for this, so just before we actually go through those points, a lot of the, the comments on, on Twitter around midnight and 11:30 were just saying how badly, you know, stocks are going to get killed following these comments. We've you know, pushed higher on, on the hopes that there's going to be this great meeting. And, uh, now, uh, our— as at that time, you can see here just the, the big push. So this was here, 11:15. This is when I really started checking, uh, Twitter around 11:15, 11:20. So we did get a strong move to the downside, but you can see that reversal, uh, coming back. And this is obviously around 1, and then a push higher to, to 3 o'clock. And, and since then no real move, no real move. A 10-point zone, if you like. Some of those comments that did come through, uh, so overnight we had the, the South China Morning Post reported that deputies had made no progress in talks before the principal negotiations. So for, for today, uh, the paper said, uh, Premier, uh, Li He would also cut the scheduled talk short by a day. So this This really, uh, helped ignite the push lower. That talks were literally just gonna be a one-day, uh, home early on Friday, uh, and that was it. And then, uh, Bloomberg and other media reported that there was no change in the schedule with talks set to continue Friday. So from a trade opportunity, maybe any clarification, uh, or confirmation, should we say, that there isn't going to be a Friday talk, we already know we're going to see some downside for that. So that's a little, uh, one to keep on the back burner there, uh, as well. Uh, Fox Business reported— I knew that talks would be one day as well. Uh, so if we can get any confirmation of all of this, then expect some downside to come in. One of the positive points that helped rally us or take us back to where we were— Bloomberg saying the White House is looking to roll out a previously agreed currency pact with China as part of an early harvest deal that could also see tariff increase, uh, next week suspended. So, uh, you scratch our back, we scratch yours. And looking for some currency stabilization, uh, for the dollar yuan, uh, and also therefore the US scrapping some of that tariff increase for, for next week. This is a positive, um, but we are exactly where we were on the open last night, pretty much. New York Times saying that Trump administration would soon issue licenses to US companies to supply non-sensitive goods to Huawei. So another good one there. And the Financial Times saying the US is weighing options to crack down on shipments of contraband goods from China. So slightly negative on that, but overall, all things considered, back to where we were. Let's have a quick look at the, the other reactions that we saw. Gold, as you'd expect, on the, the Wandeya talks and, uh, on the sort of the, the futures open, if you like, pushing higher, pushing higher above 1520, snap back on the more positive, and exactly where we are trading. So it looks like it's going to be a pretty interesting day, not to even go through the data yet. The data calendar actually looking like it should be a pretty good one, but certainly these comments are looking to come out quite often, you'd imagine now, and especially as once Trump starts waking up. Although he was tweeting 2 hours ago, so a late, late one for the Donald. Euro, of course, pushing on here. A couple of, couple of comments this morning, or headlines, you know, saying that the euro is pushing higher because of the trade talks. And of course, that link between the euro and the Chinese yuan, I guess, effectively the dollar index, but on the Chinese side, the euro is a large weighting of that. So you know, really positive put moves to the upside for trade talks. You can also get the euro pushing on, and, um, one to keep an eye on. So if it was to go negative, then maybe this trend line on that 240— you can see this looks like such a good opportunity to sell. The dollar index is, uh, as you could imagine here, slightly weak, already down a quarter percent. Quick look over at the pound. You can see at the time the euro push, we did just get above that pivot relatively important resistance zone yesterday, just where we found, uh, almost a top today. So again, want to keep a watch on 122.58, the high of the day on the, the futures, or previous high of the day as a potential support. And as usual with these, these moves, I always like to have trend lines on from those lows, which you can see not that respected, but potentially later on maybe something to have on as well. But With this, uh, weaker dollar, gold is just trying to get back above, uh, the pivot. So just putting this on to a 5-minute chart, you can see, worth having on even just a little trend like this. You can see 1, 2, 3, 4, 5 tests of that. If we can get a further push in the dollar, uh, to the weakness, so euro-dollar higher, gold you'd expect to, to break through this resistance, uh, trend line as well. So 1 to to have marks up on the charts for, for the future. So those talks taking place, uh, today, uh, really going to be the, the main driver for equities, you would imagine. We do have US CPI, and we'll come on to the Fed minutes in, in a second, as some of the, uh, the, the reasoning behind the majority wanting that cut was to do with the, the previous CPI number missing, uh, expectations. So it will be quite a important reading, but with the trade talks today and potentially tomorrow, that's really going to be the, the main driver, uh, of things. So I like, uh, on Bloomberg here, they, you know, always do sort of go through the, the key, uh, events coming up for, for the week and the day and things to look out for. And obviously we do have the ECB minutes to come as well, um, and then the inflation numbers on Thursday. I would still say there's some other important things to come, but certainly from a euro-dollar related market. It's going to be about the trade talks, the dollar and the euro side of things. We've got the ECB minutes and then those inflation numbers on Thursday. So that will really determine where we, we finish the market, uh, or not. Moving on to the, the FOMC minutes, a good, uh, tweet here in, in just, uh, clarification really of those, those minutes last night. Very limited reaction as usual, as usually is the case here. So this tweet here is from, from Michael Brown. Many cited inflation and economic risk management in justifying rate cut. Debate emerging on when to end policy easing. Officials generally more concerned about risks relating to trade and global economy. Where have we heard this one before? Every single central bank meeting, it seems. Labor market and over overall economy readings are strong. Although I did see an interesting tweet from, uh, from someone yesterday saying the unemployment figures in US are skewed. and a fake. Um, let's not talk about their GDP readings, I guess. Uh, also continued, a couple policymakers said rate cut may be too much insurance, others saying, uh, factors keeping rates steady. Clearer picture emerging of weakness in investment, um, as well. Interesting remarks, several favored keeping rates unchanged may make further easing more difficult. The, the next meeting, the next Fed meeting on October October the 30th. So 1, 2, just under 3 weeks. We'll be doing that live on YouTube as well, covering it. Uh, the day later, Draghi is leaving. The day after that is non-farm payroll. So, uh, that week should be pretty, pretty key. Um, and also, actually, I was gonna go talk about this later, but considering we're talking about that week there, of course October the 31st isn't just Draghi's leaving, dude. It's also the, well, the current date for when we will leave with a deal or no deal. I haven't actually got my phone on me, but I got a text from someone, and I'm not going to name names to put them in it, and I'm not going to say who sent them the text. Actually, it was an email, but they may or may not have had lunch with Steven Barclay yesterday, and he was just confirming that they would be leaving on October 31st with or without a deal. I think the press have looked into the consequences of a no deal too harshly, and in fact they're getting offered trade deals every single day. Of course he would have to say this as well. He's not just gonna tell anyone, you know what, actually we're, we're really worried, we have no idea what's going on, and we're getting no trade deals. But yeah, worth, worth just looking into that. Just seen a couple of comments come through now. China Foreign Foreign Ministry. China deplores US smearing China on protect— protects of religion and rights. A couple of comments coming through. The pound actually just coming under a bit of, uh, weakness, but I did mention that it's a pretty key resistance level from yesterday, so it seems more technical there. And euro just having a slight bounce but back towards those highs. On the subject of— oh, sorry, I wasn't, uh, on the charts there, just talking about the pound resistance level from yesterday. And the euro on that trend line as well. So seems a bit more technical than anything there as well to, to have marked up. Worth, uh, you know, having a look while we're talking about the pound. And, you know, whether you want to believe those Stephen Barclay comments or not is, is up to you. Um, if they're that confident they're going to leave on the 31st of October without a deal, then yes, there would have to be some more downside priced into the pound. But ultimately 6 months' time, I see us higher than where we are now, to, to be honest. So today, uh, we have UK PM Johnson meeting with Varadkar, the Irish PM, um, around midday UK time, uh, which, uh, you know, the, the few times they have met is nothing's really happened, has it? It's just been Boris has just been shot down, uh, just like most times he speaks to, um, you know, people in charge within Europe. So not expecting too much in the way of positivity from that. Um, couple of headlines overnight from The Times and confirmed in The Sun. Uh, if I just bring this article in— Brexit latest: no extension without new referendum or election, the EU insists. And then following on from that, um, Corbyn is willing to grant Johnson a general election on November the 26th if Brexit is delayed. So I did a— let me see if I did a tweet a couple of— 4 days ago on if there was a general election and it was confirmed, is the pound a buy or a sell? Sell, holding trade for at least a couple of weeks. So, you know, more just going with what is your, your general view on the, you know, the medium-term direction of the pound. And 52%, of course, 52-48 was the result, but 52% saying buy, 48 saying sell. And it is, it really is a tricky one going through that because I guess on the, the buy side you're getting, well, if conservatives and also Stephen Barclay was was saying to this person, they really do believe they would, would clean up in a general election. My view is I think they would as well. And so on the general election side of things, you've got positive idea that they're gonna have more sway, more opportunity to get a deal through Parliament. The last person to say that, of course, was Theresa May in 2017, and that didn't end too well. But this could be seen as a positive. But also on the The flip side, if they're going to be more hawkish and, you know, even favoring a no deal or whatever, then that's kind of got to be a negative as well. And you flip it around to the other side and, you know, if Labour were to get through or the Lib Dems were to provide the shock of the century and, you know, these are, you know, going down the route of more remain, then the pound has to strengthen as well. So I think, you know, if that had finished 4 votes or 2 votes either way, it would have been 50/50. And I think that's almost fair enough, to, to be honest, looking at that. But today, yeah, midday, you got, uh, you got Johnson-Vareka meeting, uh, one to keep an eye out on as well. And, uh, and these talks of a general election, uh, as well to come through November the 26th, the, the rumored, uh, date there as well. Which, hang on, election on November the 26th? Elections are always on a Thursday, so I don't quite know why they've said that's a Tuesday. Um, interesting, interesting. We'll look into that. Uh, data calendar-wise, um, you can see yesterday was obviously, you know, incredibly quiet here. There was just literally hardly anything out. It was just that, that crude, uh, oil number. And let me just bring in the today's, uh, calendar. One sec. Just open that up for the 10th of October. Here we go, Thursday. So yeah, coming into the morning, actually the morning is, is a pretty good one. You've got GDP out of the UK, as we know, uh, not expecting too much in the way of movement from these UK numbers with, with the Brexit still the main driver. ECB minutes, uh, at half 12, uh, not expecting too much, uh, from from that. And then we get into the afternoon, we have the, the US CPI numbers, obviously the weekly initial jobless claims as well. And we've all got the, uh, the amount of speakers here— Carney at 10:20, and then Fed and ECB speakers making up the, the afternoon post-EU close as well. Those inflation numbers, you can see here, the, the straight inflation coming at 1.7%, a bit of a miss, hasn't been at 2% since April um, that was a miss expected last. I think the consensus for that was around 1.8, so slight miss on that. We're now expecting it to rise again to 1.8, so potentially a bit of dollar strength. And it'd be, uh, you know, this could really, um, you know, confirm— or well, let's just get the FedWatch tool up and have a look at October. This could really, you know, sway this quite drastically. So at the moment we're 82.8% priced in for a cut in October. I saw Anthony Cheung on his, on his Instagram did a, did a poll recently, um, saying how many are expected this year, and the majority, from what I saw anyway, I'll get him to confirm, we're saying they expect 2. Um, and at the moment you can see 82.8%, but if we were to have a really strong inflation number, if you've got certain members citing their reasoning behind, uh, the cut in September was because of a poor inflation number. Well, if you get a good one, that 82% isn't going to be 82% much longer, and it will come down and get closer to that 50. So quite a good potential opportunity there of a good number, uh, as well. Just having a look actually at that dollar again, it's just having a further leg down on the Dixie, which means obviously the euro is now back up above that trend line? Can we get that confirmation push? In terms of resistance levels above where we're trading, you've got quite a few highs, uh, on the 25th, uh, that are, you know, 1.1090. It's another 30 ticks to the upside. I think that's not out the question, to be honest. Euro has obviously been such a small mover all year with, you know, a big day here and there. But, uh, you know, even so, this looks like it's a massive move. It's only 38 $1.26. So still quite small, uh, but a break above that trend line, you should see maybe even a bigger move, uh, as well to come through, uh, on, on that, uh, as well. Uh, just having a quick run through the, the final bit of that, uh, of that calendar there. You can just see those speakers, um, are coming through. But the main points that I would say to, to focus on today, obviously we have the the numbers out of the UK in the morning, not expecting too much from that. Then we go into, to midday, we've got PM, uh, Johnson and Baraka speaking. Be interesting to see what comes of that. Into the afternoon, we've got the US numbers, which should be pretty important. We've got the two-day talks in Washington. Is it going to be two-day? Are there going to be the suspension of tariffs next week? All these things will, you know, influence where the S&P actually finishes up. As well. Any questions, as usual, please do let us know. Obviously be on the mic through, throughout the day and going through some setups as well around midday, which I'll put on to YouTube or, or Twitter or something as well. But hope you all have a good trading day and I catch you in the chat.