 Hello and welcome to CMC markets on Friday the 30th of August and this quick look at the week ahead beginning the 2nd of September and certainly the end of this week looks fundamentally different To what we were looking at at the beginning of the week. We appear to have The makings of a new government in Italy We also have a bit of a ceasefire in the US China trade standoff But we do have the added wrinkle of a UK suspension of parliament and While that has impacted on the pound equity markets in general look to be finishing August and the week With a slightly more positive tone Then was likely or looked likely at the beginning of the week But it's important not to underestimate that while we're finishing the week or what? We look like we're going to finish the week on a positive note Fact remains that tariffs go up on Sunday the 1st of September So in essence while there has been a ceasefire in US China trade We're at a much more advanced stage in terms of higher tariffs than we were a month ago and it certainly I think making investors a little bit nervous of Further upside for stock markets going forward And I certainly think if you look at where stock markets have gone over the course of the past few days We're still pretty much below the resistance levels the key resistance levels that I'm targeting For any degree of confidence that we can go Significantly higher from where we are at the moment if we look at the FTSE 100 for example over the last three days We've come back off some low levels just above seven thousand and twenty seven thousand and thirty We really need to go back significantly above These highs around about seventy two forty seventy two fifty story really open up the possibility of Further gains towards the highs that we saw early on in August more importantly the S&P 500 is probably going to be a very key Arbiter of where we go to next and I think that's no better borne out I think with this daily chart this daily candle chart here. I've zoomed it in Quite closely so you can see the level that I'm talking about and it's essentially where the 50-day moving average is We've got this series of highs Through the middle of August which is around about 29 45 29 45 20 29 50 Also got this Key area of resistance through 29 60 so this window between the 50-day moving average and These previous lows that we saw throughout July in which we broke down through earlier this month in August It's likely to be a key Benchmark a key barometer of whether or not we can make further gains for US markets So this area between 29 45 29 sexy I'm going to be keeping a close eye on In the context of further equity market gains It's a similar sort of story for the German DAX. We have managed to break back above this series of highs through here Now the big question is is this potentially a bit of a reversal or box reversal or a triple bottom or what have you? Which suggests that we might see further gains on this break up through 11 8 8 50 We're certainly 100 points above that now at 11 9 56 Can we get back above the 50-day moving average again? 50-day moving average on the DAX 50-day moving average on the S&P 500 likely to be very key resistance levels in the days and weeks head so That sort of gives you an idea of where we are at the moment. I talked a little bit about the UK suspension of Parliament for four to five weeks and The fact that the pound has taken a little bit of a dip lower on the back of that news Certainly has introduced an element of downside risk now into the overall cable rally That we've seen throughout the first or through the middle through the middle days middle weeks of August and a key event in the next few days or a number of key events over the next few days with respect to Brexit Will be a series of court cases that are due to be held Over the course of Tuesday Wednesday and Thursday Where the suspension of the UK Parliament will be ruled upon by various courts now the interim injunction To stop the prorogation or suspension of Parliament has been rejected by a Scottish court There will be a full hearing on Tuesday or Wednesday in Edinburgh To discuss to consider the merits of the case and the judge has requested a formal affidavit From the Prime Minister on oath as to why he needs to suspend Parliament There will also be another case heard on Thursday in a case brought by Gina Miller and joined by John Major So those court cases all these court rulings could have a key Bearing on where the pound goes to next. I would be very surprised if the court rules against the Executives right to suspend Parliament It is unusual to request a delay of this length in terms of the suspension, but it's certainly not without precedent So watch this space with respect to how the pound performs over the course of the next few days What is clear is we still have this very big area of support between 11980 and 12020 so that remains a very very key support level going forward We do look a little bit overbought on the short-term chart Which would appear to suggest we could drift back down towards the lows But I don't think we're at a stage quite yet where we're likely to break those lows simply because The reversal that we've seen in Euro sterling at the moment shows no signs of Reversing itself you may recall that I talked a few weeks ago about the bearish reversal on the weekly charts We still look as if we're going to finish lower on the week for Euro sterling Despite some fairly hawkish noises from some ECB policy makers this week as to whether or not there will be a Significant stimulus measures brought forward for the ECB meeting which takes place on the 12th of September so in terms of the data coming up I've gone into slightly more detail that I intended to with respect to this video But it's also quite a data heavy week over the course of the next few days And against the backdrop of that we also have the uneasy truce between the US and China over trade never forgetting that We're only one tweet away from another sell-off in equity markets One thing hasn't changed though gold prices are still above the key support and breakout level that we identified at 1480 and The Chinese one still remains well above the 7th level that we broke out of A few weeks ago So while we're above these key support areas on the one and the gold price Then I still remain of the opinion that equity market equity markets remain in sell of the rally mode So next week's key events Against a backdrop of a Fed meeting next month is the latest US payrolls numbers and they're out on The 6th of September and I think the big question at the moment being asked by markets is where the bar is For a red for a Fed rate cut in September. Will it be 25 25 basis points? Well, it be 50 basis points now the upcoming weeks August payrolls report needs to continue the trend of Decent jobs growth of circa 100,000 numbers with wages growth of around about 3% So really dial back any expectation that the Fed will cut by more than 25 basis points now There's still a mixed range of views from Fed policymakers as to what Into whatever direction rates are likely to go despite pressure from President Trump for the Fed to be more aggressive The Fed is starting to push back on that You've seen a series of policymakers come out and push back against the need for Further rate cuts now So that's why the economic data is likely to be much more important will The weaker manufacturing data start to trickle down into weaker services data We've got ISM services data next week. We have got Manufacturing data next week. We've got the ADP employment report next week So there's a whole host of data next week pointing to the strength and the resilience or otherwise of the US economy We've also got other manufacturing and services PMIs from the rest of the world from China from Europe from the UK Those will also Be be key benchmarks in terms of what to expect from the ECB in September from the People's Bank of China in September from the Bank of England going forward no changes expected there before the Brexit day So We'll be looking for evidence in the services numbers as to whether or not we're going to get weakening there We've also got a Bank of Canada rate decision. We have an RBA rate decision It is a big week for data isn't a big week for central banks I think it's unlikely that the Bank of Canada will act on rates in the upcoming week I think it's unlikely that the RBA will act on rates this coming week I think it's more likely that they will wait for the Federal Reserve rate decision later in the month and then if needs be Act at the upcoming meetings in October I always think it's never a good idea to preempt the Fed because you might then have to act again in The following month, so I think it's very much a case of Wait-and-see the economy in Canada thus far appears to be holding up fairly well We also have a Canada payrolls report also on the Friday Join me for that and the US payrolls report on Friday. You can find that on the website and Register for that accordingly As I say the Bank of Canada I think is likely to hold fire wages growth continues to look fairly solid and this more than anything else is likely to keep Prompt a watching brief from the central bank ahead of the August payrolls report, which is again on the 6th of September in terms of Company reports next week. We're fairly light on that But I think there are a couple of noteworthy items that we might want to look at a couple of IPOs This year slack technologies Is reporting on its second quarter for 2020 on the 4th of September and zoom video communications Also, second quarter on the 5th of September. It's also a fairly I think there's also a decent chance that we could get a good insight into the UK retail sector consumer confidence in the UK Has slipped to a significantly low levels over the course of the past two days And we do have numbers from the restaurant group who recently bought wagon numbers chain of restaurants and Dunelm group not exactly a bellwether for UK retail Which to all intents and purposes has had a very difficult year that's far But I think if you're looking for a role model for a retailer Dunelm group is a good candidate for that because it's done very very well over the course of the last year or so They are due to report on the 4th of September wagon numbers Restaurant group on the 3rd of September. So all in all a fairly busy week for economic data an awful lot of macro events due out as well and Also a non-farm payrolls report out on Friday. So feel free to join me for that Until then it's Michael Houston talking to you from CMC markets