 Good morning. Welcome to CMC Markets on Friday the 5th of April and this quick look at the week ahead beginning the 8th of April and we're coming off the back of yet another positive week for global equities. Economic data has by and large been of the mixed variety. Manufacturing PMIs have pretty much continued to fall off a cliff. German factory orders have been abysmal but which when you actually look at services data that has started to show decent signs of improvement and ultimately has remained fairly resilient and I think that's what's helped I think drive equity markets higher in general. There's also the prospect that at some point we will get a resolution to the US-China trade deal. The big question I think there is when we'll get a summit and we'll get the details ultimately transpire as to what type of agreement the US and China have come to but ultimately it's a case of procrastination on a part of the US the deadline for an announcement continues to get pushed out and all the while the US economic data continues to hold up fairly well. There's really no incentive for equity markets to go anywhere other than higher given the fact that central banks are likely to remain accommodative over concerns about a slowdown in the global economy. You look at the ECB, you look at the Federal Reserve, it's going to be a big week for both of those central banks in the coming few days on the 10th of April on the Wednesday, not a Thursday on the Wednesday we've got the latest rate decision from the European Central Bank and at the last meeting they announced they would be introducing a new TL-TRO later this year starting in September over concerns that both growth and inflation were likely to come in below expectations well certainly if you're looking at the manufacturing numbers that is plainly clearly obvious that has been fairly disappointing. Services PMIs have been by and large fairly decent unemployment data continues to hold up fairly well if you choose to take Italy out of the equation but once again inflationary data or inflation data continues to slide back the latest EU inflation numbers have continued to decline with core prices in the EU now at 0.8% just above a three year low so the reality is I think for the ECB at the upcoming meeting on Wednesday is whether or not they flesh out the detail in terms of the type of TL-TROs they could be looking to roll out in September it's been pretty obvious with respect to what this prospect of easier monetary policy is likely to have on equity markets we've broken above the 200 day moving average in the DAX we've broken quite a bit higher and I think there's a good chance that we could ultimately head up towards this trend line resistance from the peaks that we saw at the beginning of 2018 certainly the direction of travel does appear to be positive the 50 day moving average is starting to point upwards it's supporting the price action underneath this trend line and there's a decent probability we could well continue to push higher if we can gain a foothold above the 12,000 level if we look at the S&P 500 it's a similar type of story the data is looking positive we've got a golden cross where the 50 day has crossed above the 200 day moving average is there a possibility that we could retest the 2900 level and the previous all-time highs in October I certainly wouldn't rule it out we've got the latest Fed minutes also due out on the 10th and I think the biggest surprise to come out of that meeting in March wasn't so much about the fact that policy makers said they would be patient on future rate rises that had been well telegraphed it was a dovishness of the overall message so soon after the central bank raising rates again at the end of last year we've gone from the prospect of three rate rises this year to no rate rises at all and the balance sheet run off to the end by September in the space of 10 weeks the Fed also downgrading its growth forecast not too much of a surprise but certainly I think if you look at the PMIs we've got non-farm payrolls coming out later today we had a very poor number in the February number I would be very surprised if that was replicated in the March numbers because I think that could have been well distorted by the US government shutdown so I think what the Fed minutes would I think I think the key take away I think with respect to the Fed minutes is what they will tell us in the context of how instructive they are with respect to why the sudden about turn in policy why go from why did the Fed go from Uber hawkish at the end of last year to Uber dovish and how much consensus was there around this change in perceptions so with respect to the S&P still looks fairly well supported 2900 remains the next target the US dollar continues to trade sideways still very very big top but around about 97, 80, 98 which translates into a fairly decent area of support 111, 80 in Euro dollar so let's pay particular attention to that because this is not just so much about dollar strength or weakness it's also about Euro strength and Euro weakness and at the moment with the push pull of what's going on with respect to Euro dollar the Euro has remained fairly resilient and I think there is a certain element to or a certain school of thought that suggests that the Euro is starting to turn a little bit like the Japanese yen in terms of the fact it doesn't matter what the data does it's really a question of how how how it interacts with perceptions of what monetary policy is going to do and whether or not it's actually going to start to turn into a little bit of a carry trade given that German yields are hovering in and out between negative territory now you may have noticed that I haven't actually as yet mentioned Brexit well you should be so unlucky because I'm going to mention it now it's been pretty much as you were nothing has changed still pretty much deadlock across the board with respect to what the likely outcome will be obviously we've seen the EU grant an extension until the 12th of April which is this coming Friday we have had some developments on the politics front and ultimately Theresa May has reached out to the Labour Party and Jeremy Corbyn to try and get some form of agreement across the line the EU may or may not offer an extension beyond the 12th of April as I record this video Theresa May has sent a letter to Donald Tusk president of the European Council asking for an extension to the 30th of June I think she just copied and pasted the last one highly original I think not but nonetheless I think it's quite likely that we'll get a much longer extension to that and it will be contingent on the UK holding European elections which is likely to be anathema to Brexiteers nonetheless the default position still remains for no deal even though MPs have voted to take no deal off the table they cannot do that because EU law surpasses UK law and the European Council can extend article 50 if they so choose to avoid damaging consequences to the Irish economy because if they don't grant an extension they're more or less throwing Ireland underneath a bus and there will be obviously negative spillovers to the French economy which is suffering at the moment because of the Gillesian protests so looking at cable big big support around about 129.60, 129.80 I think as long as we hold above that the likelihood is we're probably going to trade 129.60, 132.50 but beware for a little bit of fireworks as the politics continues to drive this particular currency pair what is more interesting I think with respect to the pound is the fact that it continues to strengthen against the euro very much in a downtrend found decent support in and around the 84.60, 70 area if we do get a break below this trend line here we could we'll see further sterling gains and further euro weakness but at the moment it looks a little bit toppy around 86, 20, 30 we'll support it around about 84.60, 70 so we've got an EU summit on the 10th of April and obviously we have the new Brexit deadline on the 12th of April it should become apparent probably around about the 9th of April as to what may happen next so at the moment the default position is the UK could well leave the EU without a deal unless we get some form of agreement or a promise of progress on talks otherwise it could be quite a choppy week other things to watch out for in the coming week are the start of US earnings seasons we've got JP Morgan's first quarter earnings, Wells Fargo first quarter earnings, we've got four year earnings from Tesco's and first half numbers from ASOS in the context of US bank earnings I will be particularly interested in how well the investment banking divisions have been doing in the context of a flattening yield curve and very low volatility trading conditions just going to finish off with a quick look at the UK the FTSE 100 pushing up against some very key resistance on this daily chart here keep an eye on that resistance around about 74.50 area we could well see further gains towards 7600 if we break above that key level there okay so that's pretty much it for this week once again thank you very much for listening it's Michael Houston talking to you from CMC Markets