Trump takes aim ahead of G-20 Summit

Okay, very good morning. Hope everyone is doing well. It is Thursday, 27th of June. I give you an overview of things to cover. We're going to have a look at Trump and the upcoming G20, what's the latest status with that in terms of the headlines. I'm going to have a look at as well at what Boris Johnson has been saying, what his latest stance is on a no-deal Brexit, and then going to have a look at the calendar. And then I'll pass you over to Sam and what he's looking at as well this morning from a technical perspective. But to kick things off, I thought I'd just transition and go straight to the charts we've had. Let me just make two charts a little bigger here on my screen and I'll overlay one on top of the other. That being that the top chart here is the euro. The bottom chart is the Bund, so the 10-year German government bond in the futures market, and you can see inverse movement here. A little blip higher in EURUSD momentarily, still finding some resistance upside close toward pivot for the moment, but the Bund hoping to break through here in this latest move, not just this S1 but the recent low that we had, folks, from yesterday's session puts us down at kind of the lower bound of some of the price activity that we had would have been going back to last week on the 21st to keep an eye on. Now, reason for this, we've just had the first of the German state CPIs come out. Uh, the German state of Saxony CPI year on year 1.8% against a previous— there's no expectation for these figures— so against the previous of 1.4%. Month on month 0.5% against previous 0.3%. So if you think about it, everyone's been talking about the idea that the, the ECB, like many other central banks, becoming increasingly dovish on the way into work today. I did read, presumably it was based upon the latest Bloomberg survey of economists, but on balance they are now expecting a deposit rate cut of 10 basis points in September. A little bit split on whether or not the ECB will have the need to recommence their quantitative easing program, but all of this A lot of it coming in the wake of the fact that forward-looking inflation indicators, that what we would look at, the 5-year breakeven, is indicative of the inflationary conditions in the eurozone are particularly weak. And therefore, you know, does it require further kind of dovish moves from the central bank for policy perspective? But if it's based on inflation and then you get the German state CPI, the first of which normally is the most reactful in markets because it kind of sets the stall out for the other states to report throughout the morning. And that figure actually was pretty strong, a pretty decent bounce, so maybe just catching a peep— quite a few people off guard in its strength. Now, you know, one number certainly doesn't summarize an entire thing, and, you know, central banks will often say that they'll need more evidence than just one month's release. But if you were concerned about lower inflation in the eurozone. This latest German data, I think, would explain the reason why that euro had a little momentary blip and the Bund came under a bit of pressure, just because the market is so focused on the other way around— decreasing, not increasing inflation on a, on a month-to-month and a year-over-year basis. So yeah, so just thought I'd point that out. Do be aware you'd have the German state CPI throughout the morning. The next one's actually scheduled we're going to pretty much get the whole feel for the national sentiment because at 9 o'clock you get Bavaria, Baden-Württemberg, Hesse, and we've already had Saxony. So by 9 AM you should have a pretty good insight what the deal is for the pan-German figure at 1 o'clock. Moving swiftly on though, and a quick look across the, the other charts, uh, I, I did catch the all-infantry release yesterday Yeah, quite surprised there. Was it drawdown of 12.77 million, something like that, comparative to the APIs of a draw of 7.55. So, you know, I was kind of giving a bit of a lecture at the time about market prepositioning. And you had that big move on the back of the APIs the night before. We kind of were then bid into the release on the break of the technical level around 59, which was the high that we printed on that morning. And the bar was set awfully high because we built in almost about $1.50 ahead of the release. And it's very rare to see such, such sizable drawdowns into the double-digit value in the millions, but it occurred. And, you know, one good example there from a short-term execution point of view is when, when you do get that kind of fast money move, it's often the pivot levels that act as a pretty good precursor of where particularly I think algorithmic systems would want to work on a binary fashion. And given that pivot levels are a fixed mathematical formula based on the previous day's prices, then they often act quite well as a target when you get those really quick flash moves. And you can see that, you know, kind of broadly working yesterday. We hit that level, $60 that also if you draw out the chart, the longer timeframe is quite an area of also technical relevance and the markets come back down. Now, I think that's probably fair. We're still higher, don't forget, from where we were from Tuesday night, but pulling off a little bit because don't forget there's a key risk event on the table, that being obviously the G20 coming up at the end of the week. Otherwise, stock futures a touch positive this morning. Both across the US and the European indices. Currency-wise, probably that last little euro news just helping just weigh on the dollar index a little bit this morning. The cable getting a little light relief as well, just managing to break above its pivot level. And then elsewhere, just given that kind of relative risk-on attitude with equities a little bit higher Fixed income futures lower. So as I said, probably also pressured by the idea as well in terms of the Bund is underperforming, down 46, the 10-year down 4. And then gold also, maybe a little unwind of that kind of risk premium that's been built in, having soared through $1,400 over the last week or two. So that's the current state of play. You know, why is there this kind of moderate sense of risk appetite. Well, you saw this news yesterday, and Trump— this is, you know, one thing for the newer traders that you'll start to realize when you are monitoring markets more intently over weeks and over months, is that there's a definite PR strategy that Donald Trump has, and he will normally become incredibly vocal ahead of going into a large global meeting like the G20, because basically he wants to, again, from a domestic point of view, he wants to appear that he's, you know, he's being strong, he's delivering this mandate of making America great again, not letting other nations take advantage of America in terms of the trade. This isn't just about China, as I'll run through in a second. He had a Fox News interview and he pretty much had a pop at everyone, even allied nations. No one was spared the wrath of Donald. But the point being here is that even though he says all of this, on the same token, the key issue at play is the one with China. And this was the comment obviously that came out yesterday. There was Steven Mnuchin who was talking about this prospect of a deal being 90% done, albeit that got somewhat unwound later in the session. But this idea that even if Trump was going to do tariffs, if they don't really come to any conclusion at the G20, then those new tariff amounts potentially could just be 10% versus the typical 25% increment of which has been implemented so far. So yeah, the couple of comments here that he was saying, and there was one, the way he said it I quite liked, he said my plan B's maybe my Plan A. My Plan B is that if we don't make a deal, I will tariff, maybe not 25%, but maybe at 10%. So again, this is all just political posturing, Trump kind of management. If I cycle through the other headlines, this was quite surprising. Just reading the article this morning, a lot of kind of political analysts are slightly bemused by the fact of why he would choose to do this, but Trump basically blasted the US and Japan defense alliance, and he said that if Japan were to be attacked, then given the relationship, US would be there to save Japan and would be all in. However, if the US got attacked, Japan would purely watch this unfold, watching on a Sony television. Now, I don't know, maybe because I'm half-Oriental, I do find that mildly offensive, the fact that you're saying they'll be watching on a Sony television. But I don't know why I'm surprised by that. But yeah, Japan is an ally, of course, of, of the US. And at the moment, if you think about it, the US probably needs its friends in that region given that hostilities with North Korea are picking up. Maybe it's a bit of leverage in order to get a better trade situation with Japan. Because if tensions grow on the Korean Peninsula, essentially Korea and their focus is to take that out on Japan. And without the US, Japan are not defenseless, but significantly will be, um, unprepared, just given the geographic tie that North Korea has with China and so on and so forth. So maybe Trump's playing a bigger game here in order to just cement a relationship that already really is pretty bedded in, but just making that kind of stance strong. The other thing, Trump also attacked the EU. He attacked the EU action against US tech groups, saying that, you know, why are you filing antitrust lawsuits? If you remember, Brussels has been quite firm at fining for kind of monopoly practices the likes of Google and Facebook and so on and so forth. So he's kind of taken aim not only at the EU on a regulatory level, he also took aim at Germany for manipulating their currency. He also had a pop at India for the tariffs and measures that they've had. So, you know, I think we need to rephrase this G20. It's very much going to be, as it has been the case the last few years, it's the G19 plus one, and the plus one is Trump. So What does this mean, more importantly? Well, I actually, I actually don't think this changes the narrative at all. I think people see through now, from a market's perspective at least, what Trump is doing here because he's done it many times before. Does this mean that, you know, the rest of the G19 are going to isolate Trump and leave it on his own? No, I absolutely think they will have a lot of dialogue with him. He will talk to them in a very diplomatic way. This is just purely the messaging and key, the timing before he then sets off, that he's got a strong message that he sends at home in America. On that point, here is the actual timetable for Trump, 'cause a lot of people were asking me, A, who is he meeting? B, what time is he meeting Xi? And any other associated times that you need to be aware of. Well, most of it's not kicking off, uh, until the real— I'd say important stuff— the meeting with Xi is not happening until Saturday, uh, local time 11:30 AM in the morning. So it's actually going to be on Saturday when markets are closed. The ones that it's going to be when markets are open, uh, that could be interesting, you've got him meeting Shinzo Abe, uh, meeting, uh, India's Prime Minister Remember, these are two guys that he's just had a pop shot at in the press last night. He's then also meeting Russia's Vladimir Putin and also Brazil's Bolsonaro as well. So that could be particularly interesting for the key speakers being Putin and probably Abe on that day. One thing to be aware of just from a practical point of view, from trading and interpretation of this news, Stephen Mnuchin yesterday, you remember, the market saw a bit of a positive bid tone. Equities rallied, gold actually fell, and I'm aware that that stopped out a couple of the traders here which were in a technically good setup for a long position. As much as that comment was pretty much a repetition, I mean, the US administration has said it's 90% a deal done, you know, back in April. But, you know, context, the fact that it hasn't been seen or said in a while. And given the— what I mean is the context of the meeting happening just in a few days' time, I think you get a bit of a knee-jerk reaction. But what I'd encourage you to look out for or be particularly mindful of is a rebuttal from China. Now remember, China, their foreign ministry, their commerce ministry, who has actually just been talking— well, let me just cover those comments. The Chinese Commerce Ministry has just said now as I've been talking, they will consider placing firms on an unreliable list if they implement discriminatory measures on Chinese entities and the firms that threaten national security of China. They urge the US to immediately cancel sanctions on Chinese firms, including Huawei. So, you know, this again is kind of all setting up ahead of the meeting. You can see markets not really responding too much to that comment. What a point I was going to make is that it's more frequent that the Chinese government like to put out the feelers rather than using the official line like the Commerce Ministry here. They tend to use this chap, um, Hu Xijin, the editor-in-chief of the Global Times, which is state-backed media news agency. So I do highly recommend if you are using Twitter that you follow this chap because he basically is the voice of the Chinese government. Remember, in China using Western technology is pretty much impossible. It's on absolute lockdown. You can't use Twitter, you can't use Google, you can't use YouTube. But what seems to be happening here is that they're using this guy as the conduit in order to communicate to the Western markets. Now, two things here that this chap tweeted, and one that came yesterday afternoon, and that was this one. This came after, shortly after the Stephen Mnuchin comment, and he reported, there's a current atmosphere between China and the US is not good. What I have learned about China's stance now is holding constructive and positive attitude toward the upcoming China-US summit but fully prepared for its failure an escalating trade war. So for me, reading between the lines, this is a lot of, I think, China management of any potential fallout that you could have. And if you think about it, you know, we were saying here at Amplify in the briefing about 2 weeks ago that we thought that this G20 was going to amount to very little. And I think as we've got closer to it, more and more of the market has come to that thinking. And hence you've had a bit of a pullback from that kind of like that gold move, the equity high on the all-time high, because the realization is, is that, you know, probably it's going to be conversation and just that and a commitment to talk more, no real concrete measures being, being concluded. So I think this is China's management of that, tempering market expectations in order to manage any potential fallout, uh, or negative economic response it could have in the short term. So definitely worth following this chap. Okay, other quick things, and then I'll hand you over, uh, to Sam. And that is Boris Johnson. Uh, this is very reminiscent, of course, of Donald Trump, because Boris Johnson is doing the various different, uh, political debates against Jeremy Hunt as he goes in front various different Conservative member audiences. But if you, if you think about it, if you take all of the Conservative members across the entire political party and nation at a grassroots level, there's about 160,000 of them. And obviously not all of them are of a hard Brexit kind of focus. A lot of them are Remainers. And so actually what Boris Johnson said yesterday was quite a big, a big backpedaling. If you remember, this time yesterday I was talking about headlines where it was kind of no deal or die scenario, and then yesterday he said actually it's about a million to one chance of a no deal, it's definitely not going to happen. So Ian, again, whoever his audience is, he's basically flip-flopping between what it is and how kind of aggressive his style expansive about the pursuit of no deal. So how much is this factoring into markets? I'd say very little. This is again political posturing. The one thing that might be interesting here is that you've had the anti-Brexit MP, uh, Grieve, making a new move to block a no deal exit. So if you remember, Grieve is one of the guys who's been particularly important with the, the kind of legislative part of the dealings with this. This is the chap here, Dominic Grieve, this gentleman here. And what he's proposed is an amendment to government spending limits that would forbid the government for spending money on some areas if there had been a no-deal Brexit that wasn't approved by Parliament. That vote could come next Tuesday. It's not clear if it would succeed. The move could be too drastic and too soon for many MPs who are preparing to fight for a no-deal Brexit. So again, is there— these legal amendments that could be made in order to just block the whole thing in its first instance anyway. If you are interested, I did cover this yesterday, but just for clarity's sake, I was kind of talking to my wife about this last night, and believe me, it's a short conversation because she's sick of me talking about it. But I said, get ready for not Article, you know, 50. It's going to be Article 24 and Article 112. Now, that's going to be the one that people will talk about. Article 24 is the GATT, the General Agreement on Tariffs and Trades, and then Article 112 is kind of the offshoot of that if we start going down this route. And basically there's two articles here, a BBC link and a Commons Library one, which is an explainer section of UK parliamentary website. And if you are trading these types of products like the pound, it will take you no more than 15 minutes to read both articles, but I think it would be time well spent in order that you're ahead of the game and you're aware of the legality around particular clauses that, you know, basically make up the Lisbon Treaty and this process of exiting the EU. Okay, enough of that. Calendar for today, what have we got on the agenda? Well, you've just had the, the state CPIs, more coming out at 9 o'clock there. As I've just looked at the headlines, I can see there's been some Iran comments. Iran is still short of nuclear deal's limit on enriched uranium stocks and are on course to reach the limit at the weekend, according to the IAEA. Now actually, talking about Iran, there's probably a tweet you might have caught me— so again, as a, as a reference for anyone If you follow me on, on Twitter, every Sunday I basically tweet this, which is my calendar of major economic highlights for the week ahead. Um, if you actually then go on that, what I said with a few comments, uh, you'll notice that I said this, um, other news. So this was on Sunday that I'm monitoring for the week ahead is any further developments in the Gulf as tensions remain high and Iran is set to breach its previous limit on its stockpile of enriched uranium in the previous 2015 accord struck by Obama, and that happens symbolically today. Hence the reason why you've just had that comment from the IAEA. So again, comments like that are not unexpected when you know about these particular milestones. The one thing that could be quite interesting then, if I was Iran, I would feel fairly incentivized to be making some explicit commentary, not just because it's going into the G20, but because of the nature of today in his— in history. I would not be surprised to hear Iran making some, some pretty aggressive words towards the, the ongoing situation at the moment. So if you're an oil trader, definitely be aware of that. Going back to the calendar, other than the German state CPIs, you've got Europe— European sentiment-based data. To be clear, although this does look interesting, it's, it's very seldom market moving, so I wouldn't really have it as too much of a contemplation for your, for your trading strategies if you're looking at the euro. Uh, the US afternoon, you've got US GDP, but bear in mind this is the final reading of Q1. So remember, this is Q1 data. We're almost in July, so it's pretty much a moot point. It's hardly going to be market moving, I would imagine, unless very surprising, uh, final numbers, uh, broadly see none to minimal revision. You've then got the weekly jobless data, pending home sales. So really, I would say from an economic data point of view, a couple things to be aware of, but I would say more broadly speaking, it's more likely going to be a more macro sentiment-driven day, as has been been the case. Close eye on the trade war developments and any further commentary in response to Iran, as I said, or on a response to what Trump was saying, given that he was shooting from the hip somewhat, being quite aggressive, calling out pretty much every nation on planet Earth in the Fox interview yesterday. All right, that's it. Let me hand you over to Sam then, and I'll catch you in the chat room. Wish you a good day ahead. Thanks very much.

Hey everyone, we're all doing well. Just having a quick look over at stocks, and the US is pushing to highs for the day. The S&P now back above that R1, which around this— well, just a bit further than where we're trading now I guess started the down move yesterday when Trump was speaking, and cash open as well led to a bit of a push lower. What started the move higher today, you can see what was quite well respected as a trend line all morning after those two highs from yesterday, finally broke through 630, retest, good opportunity. And I know a few of the traders we were waiting for for this break of the trend line. Let me just get that right. The trend line of these lows that finally went at 6 o'clock and would have been a good little trade down to, to those lows. However, switch around and then we're now back above. Good little line in the sand, this. Just where we're, we're trading, there's still going to be a fair bit of resistance. You got traded here, a bit choppy on the cash open, but above where we're trading, um, the 30 8 level, which was a previous high back on the evening on Tuesday, and then yesterday, and then of course back up to 42 as well, which offered some good resistance in, in previous sessions. Uh, not to say that it's definitely, uh, out the woods and we're gonna push higher. I would say you probably would still want this potential trendline area to all go as well, and that would come in and around 29.35, and then these resistance points might offer up that last bit of defense before we do get a final push. But for now, a bit of risk on in the market, holding pretty firm on R1 at the moment. If we just lower the time frame down, we haven't perhaps come back to test what was the, the previous high of the day. So 29.28 could be a little opportunity opportunity to, to get into this further push, not necessarily wanting to be too aggressive at the moment for, for this market. Having a look over at gold, uh, pretty small range really yesterday in the afternoon. The, the higher points were defined initially by previous lows of yesterday and then the early Asian session low that we had overnight. On, on yesterday. That actually— there's the final resistance that's put us back down to towards its lower point now. And S1, a pretty key level, not just because of the, the pivot area, you've got the 1400 just below, but the support that we've had from the beginning of the week. So that's the, the low of the week is basically on S1, so quite a key level when and, uh, gauge a sentiment that if we were to get below there, then sure, we can maybe get a faster move down below there. And 1400, if that holds like it is this morning, well, we could start to see a further push to the upside. And, and as with these markets that perhaps look like they're changing a trend, the trend lines are always quite useful just to have marked up. And if we were to get your third test of that, then a break above here could be the option to wait and see above there, or perhaps back down towards the, the S1 again. If we were to break, obviously, the pivot, which has acted as good resistance early this morning, and then those key levels from yesterday, also R1, up towards the overnight low from Tuesday, and then Wednesday high as well, all around that area. So some key levels in gold, probably not worth getting too involved if you're looking for a more, uh, longer duration trade, unless we were to get back above this potential trend line or back down to the S1. I'd say anywhere between 0.03 and at the moment, uh, 10, probably not worth getting too involved in. Oil, um, unbelievable draw yesterday and I guess the, the reaction, a bit limited to be honest. But obviously API did, uh, signal that we were going to have a big draw regardless, so a bit of that might have been priced in. You can see here on the, the longer chart, uh, why did we, other than the pivot level, find resistance? Was also the high you can see here from the 30th of May, really, really key level. Uh, we've got 2 days left, we've got 2 days including today left of the, the trading week. So where we finish up will be obviously quite key, would be an area people would be certainly looking to have taken profit on a more medium-term trade. Above here I'd be looking at 6046 on the, on the daily chart, sick from May low, which obviously could offer up a bit of resistance here as well. Looking, uh, shorter term Today, I know we didn't quite get down to the pivot yesterday, but should we get any kind of sell-off— I really, as in the pivot from yesterday— I do quite like the look of a long from 58.22. So we'll keep an eye on that. Also a trend line which could offer you a bit of a line in the sand, just from this break here. We had a false break early morning, but it's still offering a bit of support for now. And if that was to hold, then we might go higher, but a break, see that push to the downside. To the upside, relatively small range so far for oil. And again, just like with gold, just trying to see is there any trend lines that are worth having on just for a gauge of sentiment. Not that great at the moment, so it might just be worth saying, well, okay, a close below here in $59 or, or up towards the pivot, maybe the, the opportunities to come in the morning session at least. Anyway, Aussie dollar, we talked about the potential for a long if it came back to any of those previous highs. The R1, yes, and what would have been yesterday's, yesterday's high looked quite good and worked quite well. Didn't quite make the, the Asian session high before the Kiwi dragged it on for 0.6987. 7 would still be somewhere I'd have marked up. We've also got a bit of a trend line that would come into the 70 handle, the low of the day as well. Probably could argue probably comes in, you know, all around that area. So it looks quite, quite a good point. Trend line, low of the day, and the handle. Yeah, looks, looks to be a pretty good area. You could argue this is your, your line in the line in the sand here for the Aussie. Above here and looking for those longs, and below there you might see a bit of an unwind. However, there is a fair bit of support below there, obviously pivot and that previous low from yesterday afternoon as well. So Aussie, I think you're still going to favor the upside unless we were to really get below the pivot. The, the US dollar at the moment, just for, for the day, up a tiny bit but pretty much flat. Having a look elsewhere, euro is in a relatively tight range, uh, and that range-bound trade early this morning would have been a good one. The second test that coming at 6 o'clock, so obviously if you were at your, your desk at that time, really nice opportunity. S1, yesterday's low, and the low from the 25th offering a good level of support. We are perhaps just consolidating a bit. The high of yesterday, however, was, you know, technically really nice. That spike that we had on Tuesday, that matches up today with the R1. Whether you'd want to get too involved with the pivot, uh, I think maybe more so the, the what is the high of the day in the pivot. It's not a bad area perhaps to, to see it hold. However, um, just looking at the ease that it did break through those, those, uh, those previous lows I'll just be a bit wary. I hope that they just had some, uh, yeah, the data. Yeah, I mean, we've got a bit of European data to come. I'll just be a bit careful about getting in, in the euro unless we were to really hold here. And I would say get back below 1.1438 and just be a bit careful on that. As with the pound, which had been pushing higher this morning, uh, quite range-bound like the euro, uh, S S1 for, you know, an area to get long and R1 for that short. Didn't quite make the pivot yesterday, uh, and I wonder if that's the, the test there coming in at 51, uh, whether that's the opportunity gone to, to get short. So if we were to come up to that point, just like the euro, just being a bit careful about maybe getting too aggressive into that. However, it does look like a good opportunity technically anyway. For these markets, uh, you know, with the pound and the, the euro to get short a bit higher up. However, just be slightly more careful with the euro. I'm sure anyone reading the news overnight and, uh, this morning would have heard about Bitcoin and its move in these, you know, this is a 15-minute chart here. I'm just gonna bring up the percentage move of that this 15-minute candle. So nearly 14%, one 15-minute, and then the rebound was to the upside, nearly 9%, which is absolutely bonkers just how violently this can move. I don't know if anyone here is still, you know, in trading this on an intraday point of view, but you can see this move coming around 9:30 yesterday. It was pretty, pretty violent. And to put that in to say context of gold, and this is now a weekly chart. If we were to have a 15% move to the downside from where we're trading now— 14%, I should say— we would be back at 1210, 1210, which was last traded on the low of the 26th of November. In 15 minutes, if that was to happen, well, I know obviously they're different percentages would be different size moves, but still, uh, just quite remarkable how much that can, uh, move there for Bitcoin in such a short time period. Having a quick look over the last 30 minutes on the European Open, the DAX testing up near those highs again. First test of yesterday's high, as you'd expect, a bit of resistance there and a pretty key level along with the R1. Previous high of the morning offered a good enough level of support, so a bit be keeping an eye for another test of these highs for your gauge of sentiment. If that was to go, S&P and the NASDAQ, which are just struggling around the R1s, may also get that breakthrough. Any questions, as usual, please do let us know. But I hope you have a great morning and good rest of the trading day.