 Hello and welcome to CMC Markets on Tuesday the 15th of July and the weekly market update. It's been a bit of a strange last few days. We've seen equity markets, particularly in Europe and the US, start to diverge. Last week we saw some very heavy declines towards the end of the week as concerns about the European banking sector once again reared their ugly heads. Hands up, anyone who thought we'd resolve that particular crisis. I didn't think so. Okay, so we're going to move on. We're going to look at the S&P 500 and look at the performance of that particular index in the context of the earnings season that we've got coming up this week. At the moment we still remain in the uptrend that we've been in since the beginning of April. But if you flip that round and actually look at European markets, particularly the DAX, the DAX posted its worst one week for since early March. So I think at the moment what we're seeing is a significant divergence now between European markets and US markets and we really do need to be aware of that when we start looking at the overall performance of equity markets over the next few months. So we're going to look at the S&P 500. We're also going to have a quick look at US Treasury chart and look at the prospect for US Treasury prices and yields. And I think more than anything else what's helping underpin US equity markets is not only a slight improvement in US economic data but the stubbornly dovish outlook from Fed officials and in particular Janet Yellen. I think it's highly unlikely that Mrs Yellen will be anything but dovish in her testimony this week to US lawmakers given the fairly weak retail sales numbers and consumer numbers that we've seen out of the US over the last quarter. And to highlight that I think if you look at the retail sales performance for Q1 we saw retail sales growth of 1.5% in Q2 we've actually seen less in terms of retail sales growth 1.3% and yet the weather has been significantly better. Then I'm going to finish off with two charts that I looked at last week namely the pound against the dollar and the outlook for further sterling strength in light of a slight deterioration in UK economic data and also Dollar Canada in the context of that weak employment report that we saw last week. So let's start with the S&P 500 and a Japanese candlestick daily chart. Now we can see from the chart on the screen that we tested that trend line support from the April lows when we saw those heavy declines last week and even though we did see a weekly decline we have in the space of two days pretty much reversed all of the losses of last week which really brings us now back to a potential retest of the highs that we saw earlier this month. We've already seen the Dow make new all time highs above 17,000 and it's really getting to the point where you sort of have to wonder what's going to cause a significant correction in US markets. Certainly we're seeing an awful lot of central bankers expressing their concern about how the markets seem very sanguine about any sorts of risks going forward. We can certainly see that born out in the bond markets when we look at the US 10 year treasury. Flipping to the similar daily candle chart on the US 10 year treasury we're pretty much in a fairly tight range at the moment with resistance at 12614. Now that roughly equates to around about two and a half percent on the yield curve so that's a significant resistance level. If we move above that then obviously yields will start to move lower back to the lows that we saw in May 2.4% and the highs in the price but we remain pretty much within that band of 2.4, 2.7. The lows that we saw in July the price lows are around about 124.60 and the highs at the moment 12614 which are the highs this month. Now last week I warned of the risks of a potential cable correction back to 169. Now we haven't actually seen that yet and I'm beginning to wonder whether or not we actually will. We did see a little bit of weakness back to the previous highs around about 170.55.60 but given the fairly strong inflation numbers that we saw earlier this week UK inflation came in, core inflation came in at 2% and that's raised expectations of a potential for a rate rise sometime this year. Now I continue to have my doubts about that. The main resistance level on the pound against the dollar chart remains at 171.80 and I think the rationale surrounding that is if we do break above 171.80 we could well see a move towards 173 but I think any further sterling strength is probably going to be predicated on US dollar weakness more than any expectations about a potential interest rate rise sometime this year. Why do I say that? Well I think for me it's fairly straightforward. If you've got core CPI at 2% and you've got average earnings growth of around about 0.5 and we'll find out a little bit more about that tomorrow when we get the latest data for average earnings. If you've got that gap of 1.5% further squeezing even squeezing consumer incomes then why would the Bank of England raise interest rates and potentially make that squeeze worse? If you won't raise interest rates when inflation is running at 5% why would you do it when inflation is actually running on target? So on that basis key levels still remain 170, 180 on the top side, 170, 50, 60 on the downside. So let's finish off with Dollar Canada. Now last week I showed you a daily chart with a significant Trend 9 support around about 106.20. We pretty much held that on the button. The week employment report on Friday pushed Dollar Canada higher and we also posted a potential weekly reversal on the weekly candle chart which you can see in front of you. What we now need to see is a move above 107.50 for its retest of the 108 level. So that's pretty much it for this week. Now you may have noticed in the background we had the German football team celebrating their World Cup victory. That's my presence to Ella who's currently sitting behind the camera basically luxuriating in the glow of a German World Cup win. So congratulations to you Ella and your German football team. All that really leaves me to say now is we do have one event later this week. It's based in Birmingham. You can sign up for that here if you're based in and around that area. Otherwise once again I would like to thank you for your company today. This is Michael Houston talking to you from CMC Markets.