 Welcome traders to the weekly market outlook for a week commencing the 17th of May with me, Patrick Munley. The second quarter of 2021 was always going to be a tricky period for asset markets, where inflation was set to spike and the Fed's dovish policy would come into question. So far, markets have coped reasonably well with the April US inflation pushing above 4%, and the DXY, surprisingly to some, is barely 1% above the loads of the year. On paper, the weak hedge should not interfere with this benign trend. The US data calendar is light, just April housing starts and new home sales, and the highlight will probably be Wednesday's release of FOMC, minutes from the 28th of April meeting. Perhaps the key takeaway from Powell's press conference that day were the words, now is not the time to talk tapering. With that in mind, expect the markets to absorb in their stride any suggestions that a few participants were a little less dovish. The weak hedge will also see China release April retail sales and industrial production. Markets will also be watching whether any Chinese official concern over commodity increases has any follow on through selling in that complex. Traders should also keep an eye on US big tech shares. These have been suffering at the hands of higher inflation. It could be a better week for this sector, given the US price story should be quieter. So from a technical perspective, we are still looking at the potential for this way for high in place in the dollar. And so we're looking now for a breach of last week's lows at $89.94 to take us into the $89.65 through there into the prior lows $89.26. Expect the potential for a small bounce there, but ultimately now I'm looking for a test of monthly range support down to $88.55 before we see any more meaningful correction. The only risk to that is that we get a sharp reverse along Monday. That could take us up into the monthly pivot for a test before we see the next leg lower. But if we don't see these any buyers early in the week, then I anticipate a slow grind lower. In Eurozone, the Euro dollar, actually whether the first batch of strong US days are relatively well. Keeping Euro supported is a couple of factors. Firstly, the Fed committed to looking through the inflation spike and keeping US rates very negative. And secondly, confidence growing in the Eurozone recovery and traders starting to ask questions of the ECB whether Euro real rates are right to be as equally negative. In other words, with the ECB have less tolerance of higher inflation than the Fed. Contributing to that debate in the week ahead will be a variety of speeches from ECB big hitters such as Lagarde and Lane. We'll also see the first revision to first quarter Eurozone GDP seen at minus 0.6% quarter over quarter. More important will be the first look at flash BMI's for May coming Friday, expected to stay strong as economy starts reopen after third wave lockdowns. German elections may drift into the markets radar this week when candidates to replace Angela Merkel debate on Thursday. Latest opinion polls show the Greens still with a slight lead over the CD UCSU making the case for a green representation in any new coalition government. Green policies of slightly looser fiscal settings and greater European integration are seen as Euro positive. From a technical perspective, Euro dollar held the trendline test at 1247. Nice outside reversal day on Friday. With all momentum looking bullish at the moment, look for follow through through Friday's highs to initially test the 12240. You may see a bit of back and feeling there, but ultimately now I look for a test of the sending trendline resistance up towards 123. Again, similar to the dollar story, only a sharp reversal on Monday really would see us pull back to test the monthly pivot before extending higher. In terms of the yen, once again, it was one of the pairs to be impacted the most by the US CPI print. Most understandably, are convinced that US rates are too low at this stage in cycle and that it's only a matter of time for US 10 year yields pushed towards 1.92% area. Dust expectations of building that the dollar yen will exit its 108 to 111 range to the top side. This view does require a jump in US real rates, however, and so far there has been little sign of the Fed preparing to play ball by offering a less dovish setting. That's why not as bullish as some really in terms of the dollar yen. We'll talk about the technicals in a minute. Away from the US calendar, we'll get our first look at first quarter 21 Japanese GDP this week. This is expected at minus 1.2% quarter over a quarter. BOJ has actually been revising up its growth estimates recently, so GDP data should provide some insights on whether they were right to do so. We'll also see the April trade balance this week and April CPI, expected still at minus 0.2% year over here on the core measure. We're also hearing a little more about traders wanting to rotate into Japanese equities, especially after the recent dip. Let's see how resilient foreign interest is when the weekly Ministry of Finance portfolio transaction data is released on Thursday. So from a technical perspective, once we hold the swing low here at 108.34, we're looking for an equality objective at 110.51. Really only a loss of the trend line support down to 108.60 would concern this bullish view, opening the door for a deeper corrective move to test towards the monthly range support at 106.60. Cable took out 140, and even the material upside surprise to the US April CPI was not enough to bring the cross below the psychological level. See the impact of the recent US CPI spike on cable as a one-off and temporary and look for further trend higher. Domestically, although the spread of the Indian COVID variants is rising concern, this is so far being linked only to specific regions. Importantly, the vaccine seems to be working against the variants. As a result, the general reopening story should therefore go ahead and the improving UK economic data should continue to support sterling. The UK data points this week should be positive and help GDP too. On Tuesday, look for another decline in unemployment. Wednesday's April CPI should age higher to 1.5% year over year and is to exceed 2% later in the year. On Friday, April regal tail sales should rise, linked to the reopening of shops in April, and May PMI should be encouraging the economic outlook is improving. So from a technical perspective, once we hold 140, we now look to retest the prior cycle highs here at 142.40. Through there we can start to think about the monthly R3 at 143.31 and then on to the yearly R1 at 144.30. At this juncture, any pullbacks into the ascending trendline support here at 139.17 should be well supported and look for bullish reversal patterns to add to long positions looking for new highs in this cycle. Finally, in Australia, so far a supporting factor for the Aussie has rapidly turned into a negative one. Iron ore prices experience a fierce sell-off late in the week after China took steps to control the surge in commodity prices. On Friday, Tangxian City banned steel makers from fabricating or spreading price high confirmation. We should now see these levels of iron ore prices look unsustainable of late and a resilience in Chinese demand inflates them. Now any signs that demand could shrink could set to see a corrective move in iron ore prices. The iron ore market is the one to watch next week for the Aussie, although the April jobs report in Australia will also be in focus. The recovery and employment should have continued in April, although likely at a lighter pace. Any market impact of the release may be relatively contained, considering any hawkish term by the result back of Australia is unlikely to be imminent, considering weak inflation. The minutes of May's RBA meeting should reiterate how low inflation continues to make a case for lower for longer. So from a technical perspective, held the monthly pivot at 76.90, a nice bullish reversal pattern there, so I look for a move through Friday's highs now to certainly retest this 78, 80, 79 zone and if we can continue to support there, we look for monthly range resistance 79.60 and then on to the price cycle highs above 80. Really at this stage, only a loss of the 76.80 would concern the bullish view, setting a move to test monthly range support to 76.10. So that concludes the weekly market outlook for week commencing 17th of May. As always traders, I wish you all the best for the week ahead. Thanks very much. Goodbye.