 Welcome to CMC Markets on Friday the 26th of January and this quick preview of the key events for the week beginning the 29th of January The main events that I'll be particularly interested this week are going to be the FOMC meeting the Fed meeting and Janet Yellen's last meeting as Fed chair also the latest US jobs report for January and latest January wages data But also the latest flash CPI numbers from the European Union And I think those those numbers in particular those inflation numbers in particular are likely to be Extremely key going forward given last week's decision by the ECB to keep its interest rate policy unchanged amid significant speculation That we could see some form of move on interest rates By the end of the year now I don't think that is a very likely Simply because the recent rise in the euro that we've seen over the course of the past few weeks It's likely to place downward pressure on CPI That being said what we have seen over the past few days is Basically a continuation of the trend that's been in place over the past few weeks i.e. new record highs for the US stock market 26-year highs for the Nikkei 225 and New all-time highs for the German DAX something that we suggested might actually come into play in last week's video What we've also seen is though a little bit more weakness in the FTSE 100 and I talked about that in Last week's video where I highlighted that any decline or any further declines in the FTSE 100 would be constrained By the 7600 level Which was the previous highs from November and from June last year so far This particular support level has held and that will be key That level will be key in the context of whether the uptrend that's been in place Since the beginning of December is able to continue now one of the reasons for the weakness in the FTSE 100 I think has been the weakness of the dollar which has pushed the pound back to post-Brexit highs of around about 143.30 back close to 144 So the big question I think most people are looking at now given the weakness in the dollar And it looks like we're going to see a six successive weekly decline on the back of those comments by US trade secretary Steven Nukin the ultimately a week then the US is not particularly concerned about a week dollar because it's good for trade something that drew an awful lot of well a little bit of fire from ECB president Mario Draghi Who pushed back on those comments? Saying that those particular comments were outlined were outside the normal frames of reference when it came to talking about Currencies which is a little bit rich from the European Central Bank given the fact that they're heavy bomb buying program and negative interest rate policy Push the euro down from 140 in around about 2015 to that as low as 103 at the beginning of 2016 So I don't think they're really in a position to complain That being said The German DAX has made new record highs But has started to drift back on the back of the fact that the euro has pushed to its highest levels Since December 2014 above 125 So there does appear to be a little bit of resistance between 13,500 13,600 Whether or not we continue to see further gains again I think will depend on whether or not the at the euro is able to Continue its recent gains or whether we start to see a period of consolidation between 122 and 125-126 and I think it's really important to Focus on the weakness in the dollar because I think that's going to be key going forward as we look ahead to this particular week in the latest Fed meeting Not really going to Expect any surprises from this week's Fed meeting. This will be Janet Yellen's last meeting as Fed chief Before she is replaced by Jerome Powell. There are still a couple of vacancies still on the Fed board We do have a little bit of clarity with respect to who the new members are now We've got Randall Quiles, Marvin Goodfriend Bill Dudley who is also on the permanent board of governors will be leaving in the summer So there are still two to three vacancies yet to be filled by President Trump over the course of the past or of course of the next few months and ultimately I think One thing I do when I do look at the the Fed Policy makers this this year There's a slightly more hawkish tilt to the voting members And I think that's likely to be reflected in at the statement that's released on Wednesday Afternoon or Wednesday evening as we talk about it also looking ahead to US the late US non-farm Payrolls for January We had a little bit of a disappointing report in December in contrast to the ADP numbers Looking for a little bit of a recovery there to around about 188,000 jobs the unemployment rate is likely to remain unchanged at 4.1 percent And it's the wages numbers once again, and I think they're likely to dictate What Dictate expectations about the potential for three or four US rate rises this year at the moment the markets pricing in pretty much a 90% Probability we'll see a march rate rise from the Federal Reserve Certainly not being reflected in the performance of the dollar I think that's largely being weighed down by a little bit of an eye neglect But also concerns about a trade war between the US and China and the very aggressive and belligerent trade We've heard out of the president of the United States and Here's and it and his US government officials will be Ross for example the Commerce Secretary again Stephen Manukin as well key level on the dollar index is at 19 now that we've broken below that But 91 is the is that much tougher resistance level to crack If the dollar trend that's been in place over the course of the past few weeks is going to reverse Then we need to see a move back through 90 and back through 91 to confirm otherwise The policy of trading what you see is selling dollar rallies And you then have to translate that back into how that relates to euro dollar and the pound against the dollar And if we talk about that and purely euro dollar terms Then I think the next key resistance level for euro dollar is this 61.8 retracement level of the entire down move from the 2014 peaks to the lows and that's at 126 so 126 is the big big resistance level for euro dollar We fell just short of that earlier this week I'll be paying particular attention to that level over the course of the next few days as Will I be paying particular attention to 144 on cable? Why because it's the 200 week moving average and Was it was a decent decent resistor in 2015 so it's likely to be a real tough nut to crack As we head into 2018 it's also coincides with this trend line resistance from the 2015 peaks as well Well, I'm less concerned about that as I'm then I am about the 200 week moving average and this 50% retracement level of the entire down move from the 2014 peaks to the lows that we saw at the beginning of 2017. So that's 145 90 on the cable 144 on The 200 week moving average and an awful lot of that will be dependent on obviously how euro sterling behaves Because that's finding a decent base around about 86 80 86 90 To see further sterling strength help underpin the pounds up move against the dollar We really need to see euro sterling start to break lower and show a little bit of weakness there And at the moment after last week's rather hawkish ECB announcement that is starting to find a little bit of a base, but The peaks or the rallies are getting weaker. So that does suggest that we may well see a weaker euro And a stronger pound going forward. We've also got a host of PMI data out Later in the week UK data manufacturing is construction PMIs So a decent Q4 GDP number of not point five percent for Q4 Which means the UK economy has grown progressively at a faster rate throughout 2017 0.2 0.3 0.4 and 0.5 in successive quarters Q1 of 2018's probably going to get off to a slightly weaker start given the problems in the construction sector Corillian not withstanding but ultimately I think this coming week should determine as to whether or not The global economy as a whole has got off to a fairly decent start in 2018 so that's it for this week once again. Thanks very much for listening. It's Michael Houston talking to you from CMC markets