 Good morning and welcome to CMC markets on Friday the 14th of June and this quick look at the week ahead beginning 17th of June It's been a fairly In different week for equity markets. We still look as if we might finish The week in positive territory, but upside has been tempered somewhat by concerns about China trade It's also been tempered by concerns about rising geopolitical risk in the Arabian Gulf and the attack on The oil tankers in the Straits of Hormuz but despite this and a brief rebound in the oil price in the wake of those attacks oil prices still look as if they're going to finish the week sharply lower and you would have thought that a rising of the temperature in In the Gulf would push oil prices up, but there is concern that Global demand is likely to be much lower than expected and as such I think that appears to be Dominating the price action more than any raising or political risk despite the geopolitical risk despite the fact that the US appears determined to be blaming Iran for the attack on those tankers and Given the fact that tension between the two is unlikely to be dialed down any time soon That is still likely to remain a key concern But if we look at this oil price chart, we can see that unless we get back above This key resistance area here or these highs here around about 65 dollars a barrel The direction of travel notwithstanding any spikes higher Is likely to be towards the downside and if we break below 60 dollars a barrel We could well see further losses. So the key levels on on on Brent crude $65 on the upside $60 on the downside and see how we react around that It's also been a bit strange With respect to further upside in stock markets is the rise in the gold price Because in a risk-on environment gold generally doesn't tend to go up And that's basically what we've seen in the past few days gold prices have gone very well bid on the back of a slightly weaker dollar, but also I think rising perceptions that investors are starting to Price a little bit for a much more turbulent Next few weeks and months the key level I think on gold prices is a series of highs back in 2018 between 1370 or 1380 but I certainly think investors are now starting in or starting out to price in a much more Risk-off scenario when it comes to their asset mix That's also borne out in treasury prices in US Treasury yields US Treasury yields are back down towards the lows as investors start to price in the prospect of two to three bed rate cuts this year and It's on that note that I think we can start to look forward to the next few days because one of the key Items that I'll be paying particular attention to this upcoming week beginning the 17th of June is the Fed rate decision on the 19th of June and while the dollar has been strengthening Pretty much a get across the board against the euro against the pound and against the yen US Treasury yields do appear or bond markets in particular do appear to be pricing in the increasing Prospect that we could see a rate cut not only in September and December, but also one in July if we look at interest rate expectations for the July meeting they are pricing in pretty much a US rate cut as a done deal and 88% probability Well that for me. I think still remains way too overpriced That being said that does appear to be where bond prices Are taking us in terms of what to expect so this week's Fed meeting is going to be very very important In the overall picture and the direction of travel do Fed policy makers Start to dial back market expectations of a Fed rate cut in July because let's face it Just over six months ago Fed officials were talking about the prospect of at least two rate Fed rate rises this year Even after the rise in rates we saw at the December meeting So in the space of six months market expectations have gone from plus two to minus three and I think given the direction of travel for US data That is a really distinct Move from one side of the pendulum to the other and I think the reality is probably somewhere in the middle Even allowing for the week may payrolls report. This is an incredible turnaround unemployment is still at multi-year lows Well wages are growing at three point one percent a year And jobless claims Or be at our five month, you know five week high. They are still at their lowest levels in 40 years So I think the big risk as we head towards the Fed rate decision this week is we could see Fed officials Tempor market expectations a rate cut in July or September will be tantamount to admitting They erred in December and while no one should be afraid to admit a mistake It could do more harm than good if the Fed were to rush into cutting rates So soon after raising them So we could see a significant repricing in the days ahead with respect to the Federal Reserve We've also got a Bank of England rate decision as well so in terms of the key levels on the pound against the dollar as I'm the pantomime of the conservative party leadership contest Gets underway. That's going to be a key. That's going to that could be a key Determinant of where the pound moves with Boris Johnson Taking making the early running in the Conservative Party leadership contest There will be some TV debates on the 18th of June Where basically he could blow up any chance that he hasn't become a Conservative Party leader if he performs particularly badly in them But we also have a Bank of England rate decision Coming up as well And we've heard increasingly loud noises from the Monetary Policy Committee Michael Saunders is warning about the prospect for higher rates As well as the chief economist warning about the prospect for higher rates quite simply Markets don't believe that the Bank of England is serious about the prospect of another rate rise and to be quite honest neither do I I think it's wishful thinking on those two's part when you consider And the GDP contraction that we saw in April. Yes wage growth is 3.4% and that is very good But inflation is starting to edge higher. So I think that could be part and parcel of why Policy makers are guiding towards the prospect of higher rates It's unlikely to happen before the Brexit deadline It's unlikely to happen also if the Federal Reserve Decides that it wants to cut rates or starts to guide towards cutting rates and with the ECB also in dovish mode The Bank of England is not going to be hiking rates if the Fed is cutting and the ECB is cutting and for anyone to suggest Otherwise, I think it's I think it's unlikely to happen We've also got UK inflation data coming out on the 19th as well same day as the Fed Bank of England's on the 20th And we did see a modest uptick in April for CPI That saw an uptick to 2.1% It's a six month high core prices. However still remain below the 2% level And the weaker pound and higher energy prices while not affecting core prices could push headline CP up towards 2.2 But that's still well within the confines of error when it comes to the Bank of England's inflation target also keeping an eye on Germany and France flash PMIs but look just before I get on to them the key level on the cable is 12750 on the upside if we break through there then we can go to 12830 and on the downside. Obviously those support levels at 125 50 so moving on to the PMI numbers Eurodollar still finding the very air very thin above 113 It's unlikely that is we're going to get a significant move above the 200-day moving average that's far on the PMIs Manufacturing activity has been abysmal Particularly in Germany where readings are a multi-year lows Services been slightly better, but not much so but even here It's looking softer than in recent months and with trade war concerns likely to continue to be a worry With the auto-sectoring acting as a significant drag. I think it's unlikely. We're going to see a significant pickup going forward So one 13 and a half on the upside Around 11220 on the downside and obviously the lows that we saw in April and May of 111 But I think the buyer still remains for a lower Euro-dollar also got the Bank of Japan rate decision again here likely to be dovish despite improving Japanese economy 0.6 expansion in Q1 still a lack of inflation which governor Koroda has suggested that We'll keep the bank on a very accommodated mode and he was it was a pains to point out in recent comments that The Bank of Japan has still has significant options when it comes to easing policy further the main corporate story of the week away from all of the macro is Whitbread and Whitbread share price has done fairly well over the course of the last few months The key question I think going forward is now shorn of its cost of coffee chain. It now has to stand or fall By the performance of its premier in hotel brand and here it's struggling a little bit It still has the luxury of a good proportion of the proceeds of 3.9 billion pounds that it got from Coca-Cola It's returning some of that to its shareholders, but it was rather puzzling I think the here and Whitbread CEO Alice and Britain give such a downbeat assessment of the outlook at the end of last year At the end of the last fiscal year the end of Q4 We saw sentiment of business confidence slip back revenue per room decline 4.4% now that could just be nearly a question of lowering the bar when it comes to Q1 I think with an awful lot more people Choosing to stay at home. I think it's incumbent on premier in to really start knocking it out of the park The company still remains on course to boost room capacity by another three to four thousand rooms I think the biggest concern is obviously its German unit which continues to be a little bit of a drag But revenues last year did show a rise of 2.1 percent with underlying profit before tax rising to 438 million pounds So I think what we're looking for here is a continued rise in revenues and a continued rise in profits as more people choose To stay at home other things to keep an eye out for this week It's the slack IPO or direct listing that is due out on the 20th And that should be interesting from an IPO point of view given the fact that Sentiment is now starting to look a little bit weaker And I might write a little something on the slack direct listing later in the week So keep an eye out for that. So that's it for this week. Thank you very much for listening It's Michael Houston talking to you from CMC markets