 Okay, very good morning to you. It is Wednesday the 29th of July. Hope everyone is doing well I'm going to run you through some of the morning's headlines and kicking things off straight away with the general sentiment here at the European Open. It's just around 7 a.m. now here in London and We've got a little bit of a pullback in the dollar after what was the dollar index snapping a seven-day losing street yesterday Moving a little bit higher. The Dixie has actually backed down about one-tenth of one percent this morning and retesting about the lows In the Dixie of where we were trading About midday yesterday. So worth keeping an eye on any further extension Of course of that overall trend we've seen of late of dollar weakness going into of course the Fed tonight Could well help them underpinned support for these major currency pairs So Euro dollar and cable up a touch about 15 pips each respectively here in the top left-hand corner of my charts So euro just coming up and close to testing here around the high points that we were seeing from The session midday yesterday and also you can see that was a support point as well from late on Monday session So worth keeping an eye here on the euro any further extension Then you've got the R1 just above and then the weekly highs would be residing just below that 118 level In cable as well similar type of price movement the overnight Asia-Pacific high Would be the first line of potential resistance. You can see here if we continue to see an extension of some dollar weakness So 12942 in the futures and then the high that was seen yesterday evening Would be too far away about another 15 pips or so from the current price action equity index futures the US pretty flat overall minor positives in the Nasdaq and Basically unchanged in the S&P the DAX so little soft will have a look couple of earnings reports particularly BASF a Seen down Pre-market after their earnings report. We'll have a look at those in a moment Otherwise elsewhere T notes are unchanged very quiet price activity absolutely sideways in the overnight session Pretty minimal reaction seen in WTI crude to the API numbers we had last night But we'll recap those numbers in a moment and then gold will get that chart up again And look at that in a bit more detail few things to talk about obviously a big Bout of profit-taking I would say more than anything else given the momentum move that we've seen occur in gold Kind of capitulate almost on the breakthrough of those all-time highs in the last 48 hours or so But we're almost right back into that trend moving higher again this morning up another eight nine dollars Having reclaimed back to around a 1950 handle now having dropped down to around 1900 yesterday that's the general Theme of things at the moment one thing I'll say right now is do not forget to Join us later on this evening myself and a team. We're gonna be covering the FMC live So all we need to do is just like and subscribe to YouTube channel hit that bell Icon and then you'll get a notification as soon as we go live will go live about half an hour before the actual Fed Announcement in good time then that me and the team can run you through exactly how we're gonna cover it How we're gonna trade it and then we'll do the whole Announcement in real time and share everything with you so if you can join us then But let's just run through some of the headlines. What have we got now interestingly yesterday? Couple of things that were coming out. Obviously you had earnings seasons really picked up pace this week and You had a couple of big down components yesterday disappoint so worth of expected results and lots of McDonald's 3m, you know, these are sizable companies and there's more earnings reports, of course to come and the real big day Comes on Thursday after market when you get those mega cap tech names But a couple of other things as well. We've had the index of consumer confidence. We had yesterday obviously dropped Significantly on the onset of the pandemic But if you think about where we were generally with this very strong V shape recovery We've had in market prices People were kind of quite positive by what we were seeing with these big out performances and economic data You will remember about a month ago. I was commenting quite frequently on the city group surprise index and we were always Outperforming it's kind of the natural way of which human psychology tends to work is that when we're very depressed We're very depressed and so therefore the numbers come in and it was quite an easy Kind of beat almost because we were so down in the doldrums on the back of the severity of the health Pandemic situation So now those things are starting to change as the economy has Well has markets have stabilised and we've rebounded so sharply the bar has got kind of ever higher now for Expectations to be achieved and we started to see a couple of misses Accumulate and in the index of consumer confidence was no different yesterday coming in at 92.6. That's a fairly I mean, I know it. It's hard to look at it in context. It's just a sharp drop that we had With the pandemic but don't forget. We were at all-time highs here in this particular piece of data But a drop from 92.6 from 98.3 is pretty sizable and it was below, of course expectations of of 95 as well So largely a reflection, of course of obviously what's been happening in North America over the last four to six weeks Which is going to be really key for the Fed, of course is this whole development around the second phase If you like of the global Covid situation particularly in North America where if anything it's got materially worse over that period of time and that's obviously dented and fed through into Lowering of consumer confidence. The other thing then is what we had last night and there was some news out from the Fed They've almost front-run a little portion if you like of what we're going to hear probably later on tonight and they have gone ahead and Basically, they've extended most of its emergency lending programs by a period of three months That'll take it through then to the end of the year the remainder of this year. The extension applies to Seven programs The municipal liquidity facility that was already set to expire at the end of the year The commercial paper funding facility was due to end in March of 2021 But to give you some context that there's about 11 emergency facilities ongoing at the moment Here's just a kind of overview of a couple of the main ones and as you can see The blue lines here with the black line the black line actually indicates then The amount of usage that that facility has actually had so the only one that's seen any degree of significant usage Has been the paycheck protection program liquidity the PPP LF But you can see even that has only been used to a fraction of actually the amount of which it has Signed off capacity for So the idea here, it's almost like the Fed in my mind Are conscious of the fact that we're at a bit of a tipping point here where things have if anything Got materially worse on probably one of the most fundamental risks to the economy that being Covid and we're likely to hear a somewhat then reflected in a dovish tone from the Fed generally tonight more Repetition of that will do whatever it takes to support the economy type vibe But to me this extension is kind of like the the arm over the markets. It's like look all these facilities are here I'm just reminding you I got your back. Don't worry things might get worse As we go into the winter, you know as as things develop But it's okay because we're going to extend this out and whether there's a fiscal package We're pushing for that whether there's not we're here to support the market So I think the Fed have always you know, no one can say that the Fed have not Have under delivered they've over delivered in almost every single step that they've taken You know, they were the first to to take the emergency Intermeeting cuts of rates globally. They were the first to deploy a lot of these different programs And these programs cumulatively account for trillions of dollars worth of potential support to the economy of which I has only been used to a fraction. So I think this is quite a Yes, there's a there's a function to what they've done by extending a lot of these emergency programs But don't forget hardly any of them have really been used So this to me is more of a tactical move To deploy now in order to alleviate any forthcoming tensions, which don't it really exist right now But it's to offset it in the future Just to remind the markets that look we're here as I said, so I think a good move by the Fed and Wonder certainly We'll be looking out for more information when power speaks of course in the follow-up to the statement from the Fed later on tonight On that point, you know, what are we expecting from the FMC? Well, as I said, we're going to cover this all live So all you need to do as I said subscribe to the channel Just hit that bell icon and you'll know as soon as we go live We're going to go over things in full but to give you a general overview of generally what people are talking about I mean the markets for one Are as I said functioning relatively well at this point in time Longer dated yields remaining at such low levels The Fed has little need really to alter too much its language or stance at this time There's a lot of things that people are looking at any Tweaks to the balance sheet this idea of yield curve control this idea about their inflation Kind of monetary targeting or forward guidance But the things I've read would indicate that most people on the street are looking at that any of these types of changes If happening at all in the future are more likely to happen when we get back into September because at the moment it's one of those things isn't it where As long as everything is okay, is there much need to keep offering more and more substantial policy? Changes you really want to keep that ammunition back to deploy it later on when then Things if they materially change you've got an ability to adapt and help support the market further If you fire all of your bullets now and things do materially worsen over the period of the next two Three four months as we go into the autumn then then where do you go? So I think that the the feds Move to extend the emergency lending programs Was that to a certain degree but a soft kind of level of that remember these are more Mechanical more functional for liquidity in the system what the The monetary policy changes is different different side of things and that I don't think that they'll want to do anything more And I don't think they should do anything more just yet. So a few few points here The committee will discuss changes to its forward guidance for interest rates and asset purchases as well as framework for monetary policy decisions So they'll discuss it, but it's likelihood then any final decisions of any potential changes will not come Most people are thinking till September Powel likely to reinforce his message the usual kind of rhetoric will do whatever it takes We'll use a full range of tools repeating a call for fiscal aid from Congress Putting the pressure on the politicians particularly sensitive right now given the looming expirations of Several of those programs we've been discussing this week on Friday Since the last meeting obviously the COVID situation as I as mentioned has got worse and perhaps even more uncertain So be really interested to see what their updates are on that point and on balance then does that open up if anything? Reasons to be even a little bit more downbeat in your assessment of overall things and if so That probably explains already some of the dollar weakness and the yield movement that we've had But does that extend again when we get confirmation of that later on tonight will be interesting? the Fed has discussed linking its rate path to reaching or Importantly overshooting its 2% inflation goal goal or to an unemployment rate objective A lot they've been talking about this particularly about refining their forward guidance kind of technique The idea then that they could allow inflation to overshoot and that wouldn't then require them to what is Currently the process to start lifting rates that in itself then has been one of the reasons to be pressuring yields Even lower because the Fed might well be more open to flexibility on that inflation target Which if anything then means that there's a way higher bar then if they're to raise interest rates in the future Meaning that they are likely to do it for an incredibly long period of time so The Bloomberg survey though of economists has suggested that nothing on that is likely to materialize until September and then Fed officials are repeatedly suggested that I'm not close to Targeting rates on treasuries. So this is that framework which would come under the kind of title of yield control That we've seen adopted elsewhere and by us some of the other central banks at the Bank of Japan Pow and June said that they were studying it There was an early-stage thing, but again the latest Bloomberg Economist survey suggests now that no one expects that to happen your curve control At all to be adopted So yeah a couple things there as I said, I'll be there to kind of guide you through I'll recap a lot of these things later on tonight when we talk about it in more detail Now interestingly then as I just said yields have been declining the US five-year real yield And the gold price have have basically been Seeing a clear divergence here, and that's been one of the underlying kind of reasoning why The gold market has been you know someone fire of late and on that note. Let's just have a look at the gold charts because certainly You know for any new traders it's It's so tempting obviously to to get involved in an asset that's showing such phenomenal movement but the problem that you have then is that The an asset when it starts breaking all-time highs like what we saw in this period here Starts to trade them quite from a behavioral point of view And that being on the notion that there's no really historical technical reference point And so you get a lot of this momentum move and particularly in a product like gold You get these big flushes of price movement and yesterday then What we had was after that massive big push-up What I can just Encapsulate into nothing other than really profit-taking And at that point then I mean we already had these these are the two rectangles We had marked up from from yesterday's briefing and we were looking at really two key areas and one was that that trend line Which obviously got broken through but that was the pivot in yesterday's price session and also those respective lows here So that was a key level and you can see them how the market reacted here And this is why the technicals are so important when an asset's moving in kind of a momentum based situation Because it acts as a trigger point then for the secondary flush in price And so here then after we came back you can see we bounced very aggressively first of all off that exact technical level that we were looking at And then broke through right into those areas where we were kind of looking at these highs here, which was Then the 1900 level and it basically in the futures at least it bounced all the way Literally to the tick to 1900 and this is very common then of that again that momentum ignition kind of move Where people were targeting key technicals and key psychological levels and very evident yesterday with that 1900 being targeted then almost immediately bouncing straight back up 25 bucks and then again that pivot floor Seen late yesterday afternoon and we pushed all the way back up in the overnight Asia Pacific session north of 1950 where we trade again today so here near-term price levels of Significance obviously that overnight Asia high will be key I definitely think we should also mark up higher levels such as the all-time new high which we printed yesterday's Asia session so 1974 then Here on the downside the pivot of 1941 42 is actually quite a nice level on the downside now again you've got to be Familiar or what or just aware of the the ability though if you're nursing these trades You've got to keep it relatively tight because if you get on the wrong side obviously you can see quite a big snap lower And so you want to have the ability to just get stopped out on that trade if then it doesn't respond to that long positioning playing that Range kind of low to get that long again On the downside if we start triggering back down lower again, well, then I'd be looking Basically here and then that previous low again So the key three areas of support I would see in an intraday basis for gold would be down here 41 then that 25 again and then down at that sort of 1900 to 1904 type zone Would be quite key now on the gold front a couple of different things here I want to mention I Did put out a poll last night on Twitter. I'm always interested to To see where your guys heads are at we've got about 400 votes here. So decent amount relatively small those sample size, but I put out the question where do people think gold will be by year end Sub 1500 1500 to 2000 2000 to 2500 or above 2500 and you can see here the highest most popular call for the year-end price for gold is to be sat between 2000 and 2500 again higher than where we are today and of course breaching that psychological 2000 Level now on this point. Will and I had a conversation about gold yesterday morning I did share that on our YouTube channel So do you check that out good conversation with him because he's always You know gold's probably his most favored product to trade and he's been in it over the course of the last few years and he has got a nice interesting perspective really looking at how History has repeated itself in previous occasions We were looking back at when we initially hit the 1000 marker and then how the price activity was responding around those levels And when it breached how quickly it ran up to 1250 and then 1250 to 1500 and 1500 up to 1920 Which was the previous high So there's definitely some some lessons out of historical price movement and also his calls for why 2500 in gold Yeah, it's not an unrealistic target under these types of conditions that we're witnessing at the moment So yeah, check that out that video a good conversation Elsewhere then from an earnings perspective Some things that we do have Today pre-market the ones you need to really be aware of from the States is going to be Boeing General Electric And then aftermarket you've got Facebook. So one of the big tech names before the other big guns come out tomorrow On the European side of things Deutsche Bank you can see in pre-market here are up about 2.6 percent They're Q2 net revenues 6.3 billion above the expected 5.94 their thick trading revenues Above expectations They said they have strong capital position providing scope for growth revenues Anticipated to be essentially flat for the year versus previous view of slightly lower. So actually On the balance of things quite positive update from Deutsche And their shares are up about 2.6 percent ahead of cash open shortly BASF though one of the other big large weighted companies in the DAX They're on the right on the other end of the table They're down about an equal amount to how much Deutsche are up. So they're down about two and a half percent Their sales came in below expectations at 12.68 billion. They said negatively impacted by slightly lower price level Their adjusted EBIT came in basically in line with expectations. They said they cannot provide a full-year guidance Does not expect EBIT before special items to improve significantly versus their previous given seasonality effects as well. So a bit of a mixed bag there BASF down about two and a half But you can see Deutsche are still adding to some pre-market movement at the moment up about 3 percent Then the new oil market I don't think it's necessary for me to really get the price up There wasn't really too much reaction to this information last night But again, it acts as our reference point for the DOE's later on The crude figure in the API last night was a draw of 6.829 million Which was quite large comparative to expectations of a draw of just 1.2. Cushing though Was a build as was gasoline both to the tune of around 1.1 million distillers Was a build at about 187,000 Looking at the Canada for today It is actually quite quiet Mortgage approval data coming out the UK is not really a market move as far as Stirling is concerned Then we're going to the US afternoon. You don't have pending homes Sales you've also got the advanced goods trace balance number coming out of US And then the oil infantry numbers in the DOE and then detention though the main event will be the Fed So perhaps worth keeping that in mind if the calendar is quite light Exing out any potential kind of Trump rhetoric on China and You know barring no unsurprising comments from there It could well be that the market respects its relative near ranges And then we just kind of lead into the Fed And then the market will take its cue from what said there for later on for them to dictate Then some of the price movement through Thursday until we get those big mega cat earnings come out at the end of that day on Thursday The other final point is keep an eye on Capitol Hill They still really haven't Signed conclusively this deal yet. The latest is that the 1 trillion pandemic relief package That's been proposed by the Senate Republicans that we were talking about yesterday has been met with very intense resistance from the Democrats They're particularly unhappy with cutting the enhanced Unemployment benefits from six hundred to two hundred dollars the actual plan and itself has also Reportedly caused deep divisions within the Senate Republicans themselves about their own relief package So still quite a lot to play for here And that does carry an inherent risk to markets if they can't come to some Overall compromise and conclusion to push this thing forward Because the deadline of course is on Friday for some of these programs. So keep an eye on that as well All right, that is it from me gonna wish you a good day and hopefully I'll see you online later for the Fed Take it