 Hello and welcome to CMC Markets on Thursday the 23rd of August and this quick look at the week beginning the 27th of August and looks like another positive week for US and European equity markets albeit very very very gradualist approach higher we've seen another all-time high for the S&P 500 which is the chart that we're looking at right now does appear to be that we have a great stone dogey on this chart but nonetheless the market still appears to be wanting to push towards the top side as expected we've seen the beginning of another 16 billion dollars of US tariffs on Chinese goods which has obviously prompted an retaliation on the part of China so now we have the situation whereby both countries have 50 billion dollars worth of goods of tariffs rather on each other's goods preliminary trade talks that began in Washington on Wednesday have continued today Thursday I think it's unlikely that we'll see much in the way of progress given President Trump's political problems and the conviction of his lawyer Michael Cohen as well as Paul Manafort so I think the likelihood is we could well see a ratcheting up of rhetoric with respect to trade towards the European Union as well as China as we look ahead to the week ahead and what have we got to look for in terms of the week ahead well we've just come off the back of the Fed minutes and it seems quite likely that we will see another Federal Reserve rate rise in September we have got to get Jackson Hole the Central Bank's symposium out of the way at the time of recording I have no visibility on what Jerome Powell has said or will be saying with respect to the prospects for the risks of further trade disruptions and whether or not events in emerging markets are or could impact the Fed's policy going forward we've also seen the US president criticize the Federal Reserve for their policy of raising rates which has prompted some pushback on the on the part of some US policy makers Esther George being a case in point that anything that President Trump says on rate rises won't influence her vote and I think that's really the way that we have to look at things while President Trump may make an awful lot of noise about the strength of the dollar and the fact that the US is raising rates ultimately anything that he says is likely to go over policy makers heads now whether or not that will affect us bond yields is another matter the two year and the 10-year Treasury yield curve continues to flatten out and we have seen a bit of a sell-off in the dollar over the course of the past few days and I think that has changed the dynamic with respect to euro dollar and I think that's really what I'm going to focus on in the short to medium term over the course of the next week or so keep an eye on the S&P 500 the all-time highs around about 2875 2028 80 I think if we could get a concerted move through there then we could we'll see a move towards 2900 I am a little bit concerned by the fact that the Dow Jones hasn't got anywhere near its previous all-time highs so we're not seeing in what I would call Dow theory confirmation with respect to this move higher in the S&P now on the subject of currencies we've seen a nice little move higher in euro dollar which has negated our triangle breakout of a couple of weeks ago we did find support around about 112 90 113 we've come back above 115 we're currently below the 50-day moving average and that's acting as a little bit of a barrier at the moment but we still remain below this trend line resistance from the June highs so in that context I think it's going to be very important in the context of the EU and US inflation data that we've got coming out next week I think as long as the inflation data in the US remains fairly resilient well above 2% and we've got core PCE coming out in the middle of next week from the US we also have the latest Q2 GDP numbers from the US the latest revision now that first preliminary reading of US Q2 GDP showed an economy surging ahead with an expansion of 4.1% now that has been due to some extent by the tax cut the tax cuts there are announced at the beginning of the year and the rise was primarily driven by personal consumption with the Q1 GDP number also being revised higher the data that we've seen thus far in Q3 would appear to suggest that 4% rate could well be sustained into the third quarter and if that is the case then not only are we likely to see a rate rise in September which still remains a more or less done deal but the focus will start to shift as to whether or not we will see one in December so looking for a revision for the Q2 GDP on the 29th of August that's expected to come in unchanged at 4.1% also keep an eye out for personal income personal spending data out of the US again keep an eye out for the US consumer if the US consumer continues to spend money then that's likely to be positive for the US economy and the rally that we've seen in the euro could come to a abrupt halt if as I suspect the German iPhone numbers that are due out on the Monday are in any way on the weak side and the EU inflation data is also on the weak side we have seen a bit of a rebound in the euro I think on the back of slightly higher than expected wages data which is obviously causing an awful which is causing a little bit of speculation as to whether or not the ECB will be able to wait until the third quarter of 2019 to even think about raising rates but nonetheless we have seen a nice little pullback in euro dollar the big question will be is whether we can sustain that pullback above the 50-day moving average more importantly above that trend line resistance that comes in from the highs in June other things to keep an eye out for next week in what is likely to be a fairly data light week are the UK the latest lending data for the UK economy and as a result of the weaker dollar that we've seen this week on the back of those comments by President Trump we have seen the pound head back towards 129 again we're likely to find resistance coming in around about the 50-day moving average on this chart here which at the moment sits above the 130 level in the short-term support on the cable is likely to come in around about that 127 80 area and below that around about 127 30 so we could see a little bit of buying interest come in and around about this series of highs through here which is just just below which is just above 127 50 between 127 70 and 127 80 earnings announcements to keep an eye out for this week our first-half numbers from the restaurant group Bunzel old mutual and we also have the latest quarterly update from US consumer and electrical retailer the largest electrical retailer best buy we've seen some decent numbers from target we've seen some decent numbers from Walmart and obviously Amazon has done very well as well will best buy follow in that tradition so that's it for this week for those of you in the UK have a great bank holiday weekend until next week this is Michael Houston talking to you from CMC markets