 Hello and welcome to CMC Markets on Friday the 7th of September and this quick look at the week ahead beginning at the 10th of September. I'm becoming off the back of a fairly difficult week for not only European markets but US markets as well. We've seen that Accent for C100 both hit multi-month lows as investors start to lose confidence in the economic growth and earning story, I think on a combination of rising risks surrounding the implementation of further trade tariffs as well as turmoil in emerging markets. And I think one of the reasons that US markets are starting to turn around is that perversely the economic data shows no signs of deteriorating in the short term. Now as I'm recording this obviously I do not have sight of the US payrolls report but what we've seen thus far this week would appear to suggest that the US economy still appears to be doing fairly well. We've seen some fairly upbeat ISM reports, manufacturing and services and all the available metrics the numbers are going in the right direction. The only soft spot has really been prices paid which have shown a little bit of softening in August down from levels in July. It's only minus softening the levels are still fairly elevated. The trade story continues to be front and center, record US trade deficits with the European Union and China continue to foster a narrative that could see further escalations from the US in the form of new tariffs. Now as at the time of recording we don't have any visibility as to whether or not the US president will go and implement further tariffs on Chinese goods by the time you listen to this video he may well have fired the starting gun on a further $200 billion worth of tariffs on Chinese products. What we have seen though is that trade concerns are starting to weigh. On the German trade balance numbers we saw exports slide in July quite sharply by 0.9%. More importantly the trade surplus shrank from over 20 billion euros to around about 15. So what we're seeing at the moment is the potential for the divergence that we've been seeing between US markets and European markets potentially start to unwind. We can see the first indications of that on this NASDAQ chart here where we have seen some significant declines over the past two days despite another record high for Amazon and Apple. This could potentially could be a bearish weekly reversal on the NASDAQ. Not going to get too excited about that at this point simply because we saw a similar one back here at the beginning of the year and while we did see a very sharp sell off we also saw a very sharp rebound. So if we look at the daily chart on here we can see that I'm paying particular interest to the 50 day moving average because the 50 day moving average has really supported the NASDAQ for a good part of this year since we broke above it in early May and we can see that along with the trend line here we've also got this red line here which gives us a fairly decent degree of support around about 7,300 area. Keeping an eye on that we also have a look at the DAX, the Germany 30. We are still above the lows that we saw at the beginning of the year but more importantly we have broken below this key support level, these twin lows that we saw in the middle of the summer. The fact that we've broken below these key levels here would appear to suggest that we could well head back towards the lows that we saw at the beginning of the year having broken below this support level here around about 12,100. So while below 12,100 on the Germany 30 or the DAX then the bias is likely to be continued weakness going forward. It's a similar sort of story with the UK 100. We've broken below the 200 day moving average. We can see that here in the series of lows around about 7,490,7500. So once again even though we are looking oversold there is potential for further weakness but we could get rebounds back to the 200 day moving average and the support level that we saw again through the middle of June and at the end of July around about 7,500. So that's sort of an overview of the events of the last few days. Ultimately I think traders will continue to remain nervous about the prospect of emerging markets, further emerging market weakness and the strength or otherwise of the US dollar. A lot will depend on the non-farm payrolls report later this afternoon. Nonetheless I think even if we get a fairly weak US number in terms of wages I think the key focus is likely to be on this month's Federal Reserve rate meeting and ultimately we're still nailed on for a rate rise. It's really a question of whether or not we get another one in December. Strength of the dollar continues to be a factor. Trade concerns continue to be a factor. And I think the key data points for this particular week are likely to be on Chinese industrial production and retail sales. Is there further rising evidence that the threats of tariffs and the implementation of tariffs are starting to show in some of the most recent economic data out of China? To be fair it's been rather mixed but nonetheless it has been showing signs of a slowdown in the world's second biggest economy. Industrial sales growth dipped sharply in the last three months from the levels it was at the beginning of the year when it was around 10%. Industrial production has also been similarly weak though it hasn't as yet fallen below the 6% level that we last saw in 2015 when there were similar concerns about a sharp slowdown in the Chinese economy. So I think more worryingly fixed asset investment is also multi-month lows, multi-year lows at 5.5%, looking for signs of improvement across all of those metrics when the Chinese industrial production, retail sales and investment data comes out on the 14th of September. We've also got US retail sales on the same day. Again, the US consumer has been remarkably resilient over the last few months. Retail sales have been showing decent gains in the last two quarters and this week's numbers look set to post more gains for the sixth month in succession. So looking for evidence of a continued resilience in the US consumer against a backdrop of fairly decent consumer confidence. The other two items of note in the coming week are the Bank of England rate meeting and the ECB rate meeting. Now you may notice I've left these two last. You could argue that these are the most important. At the end of the day, I would argue the opposite. They're not really that important simply because we're not expecting any move from either central bank. First and foremost, starting with the Bank of England, we've also got the latest UK wages numbers and the latest UK unemployment numbers and Bank of England is on the Thursday and wages and unemployment are out on the Tuesday. And against the backdrop of speculation about Bank of England Governor Mark Carney's future and last month's rate rise, I think UK policymakers will need to assess some of the recent weakness in the latest PMI data for August while manufacturing construction were a little bit weaker than expected services managed to hold up fairly well. And that really I think feeds into a narrative of wage growth. Is wage growth going to start to show signs of moving up from the 2.7% level that it's been at for the past couple of months? We were up at 2.9% in March. We've seen unemployment remain around that 4% level, still near multi-year lows, but wage growth still remains fairly feeble. It's an ongoing global story. We may see a pick up in US wage growth on Friday on non-farm payrolls. The big question I think is will that start to filter through into the UK economy as well? Certainly looking at the pound against the dollar. What we're hoping to see or what I'm hoping to see is some evidence of a base in the cable. At the moment the oscillator is pointing to further weakness, but we do appear to have made a slightly higher low from the lows that we posted in August. What we really need to see now is a break of the 50-day moving average here, which is just above the 130 level and a break above these peaks from the end of August removed up to this top of this trend line here, which is around about 131.132. If we break below this series of lows through here, which is around about 127.60, 127.70, then we'll probably go and have a little bit of a retest of the lows that we saw in August. But I think there is some evidence that maybe the pound has bottomed out. We've seen it no better illustrated in this Euro sterling chart here, where we posted a bearish in golfing week. We have, as so far, not managed to get back above 90.40. That's really the key line in the sand for me. As long as we stay below 90.40 in these two peaks here on either side of this big candle here, then I think we could well see further weakness in the Euro and further strength in the pound. And that's what I'm really using as my barometer of sterling strength. Euro sterling, looking at that, as long as we stay below 90.40, then I think there's certainly potential for further sterling gains. Last but not least, and I know this is a long video, we're looking at the ECB rate meeting and we're going to go back to Euro dollar. And at its last meeting, European Central Bank officials confirmed they remained on course to exit their asset purchase program by the end of the year. While also stating, rates were unlikely to raise or to rise even before the end of the summer next year. Now, I'm not expecting that narrative to change despite some of the recent weakness that we've seen in European data. This week's meeting is likely to see the ECB outline. It remains on course to begin the tapering process at the end of this month, despite the current evidence that remain the inflation still remains subdued. We'll obviously get the latest update on European Central Bank economic projections against this backdrop of rising concerns about the imposition of tariff barriers, but ultimately doesn't really change the fact that Euro dollar has been doing pretty much nothing for the past few months. It's fairly well supported around about 115. That's a nice little pivot point there. If we break below that, we could well revisit the lows, but we're pretty well capped at 117.50. So I would expect, given the push-pull effect that we've been seeing with respect to the US dollar and the Euro for that to continue. 115, 117.50, potentially throw a blanket over the Euro dollar. It's really all about emerging market risk, rising trade tensions. Will we see further weakness in equity markets? And at the moment, given what I've just outlined in this video, the bias does appear to be towards the downside. So that's it for this week. Thank you very much for listening. This is Michael Huston talking to you from CMC Markets.