 All right, very good morning to you and welcome to the second half of 2021. I can't believe it's flown by this quickly, but as usual then we'll have a bit of a quick review of how the first six months have gone and despite a lot of the tension more recently about this idea of what more sticky inflation could mean, the Delta variant and the new spread that we're seeing that could jeopardize the global economic recovery. The S&P 500 has actually put in its second best start of the year since 1998 and a few other stats the gauge now has notched its longer streak of quarterly gains since 2017, having rallied already some 14% this year. So as you can see here now off to a really strong start and looking at one of the other things here is the overall year-to-date performance of some of the individual sectors that we've seen and looking at individual companies and you can see despite a bit of an idea of earlier in the year a rotation out of some of these growth big mega cap tech names and into other value areas. In fact, yes everything has gone up but growth the show is not over just yet and so even though they're talking about rate rises again don't forget they're talking about another two years out on the time horizon and so the likes of Google you know I just said the S&P was up on the year 14%. Google's up 40% on the the year-to-date. Microsoft up 21%, Facebook is tracking up about 27%, some really sharp gains but the fact that the rates market is anticipating to increase over time, one yields are moving higher, a lot of those banks have also seen some really sharp moves while Fargo up around 50%, Bank of America up around 36% and in the capital market space some of those big banks as well GS up 43%, MS up 34% so all in all the gravy train continues for the time being and yeah and looking at the performance from what we had yesterday there's a couple of individual sweet spots talking of Wednesday session you can see here Walmart just glowing green they finished it there for about 2.7% that came after they reported they would start selling prescription only insulin analogue and there's some other hotspots GE they got added to Goldman's top idea on their stock pick list and they were up about 3% Boeing as well which is a fairly sizeable firm we also saw some pretty decent gains yesterday after a German defense ministry announced a military or maritime control aircraft order and that came after United Airlines unveiled its largest ever order for new planes as well from the firm so a couple of things there just helping as well because if you actually look at where we closed yesterday you know we're still right up there the S&P 500 of course has traded at record all-time highs again as far as the overnight session is concerned and I was talking to this or about this move yesterday to a couple of the traders and we were looking at that that kind of trend channel that we were observing in yesterday's briefing and the fact that that was that horizontal key line the daily pivot yesterday and for me that breakdown was purely technical and we were talking about it when we were down and around the S1 as you know this this is often the mechanics of how markets work it doesn't always need to be a news catalyst for sure and a technical breacher levels can add then to whether you're trading the kind of breakout or momentum strategy and then fundamentally though very unlikely we were saying at the time that that move would be sustained given the fact that there isn't any real new fundamental rash amount to keep price suppressed to keep moving lower and when we're trading up at all-time high levels it's not uncommon to see a little bit of profit-taking as well so with the technical trigger for the downside I think a lot of people just used that as an opportunity to re-enter short-term to push us back up to all-time highs again of which obviously we busted through in late in the Wall Street close and then that's acted now as a bit of a platform for price to continue to push on up during the APAC session and so for now just keeping an eye on these prices at these most elevated levels once again a couple of bigger things as well coming out we'll look at the calendar for the day ahead in a moment but of course non-fond parallels as well looming on Friday in the FX market while I'm on the I'm on the charts in terms of the six-month performance with the beginning of this year the dollar has been seeing a really good performance of late within that period and in fact the dollar had its best month in June since March of 2020 and you'll remember March 2020 after some initial volatility that was when the dollar really rallied on the back of the notion of it being the global reserve currency when we went through the worst part of the equity sell-off when we had the onset of the global pandemic so that was the last time when the dollar put in a type of performance that it's seen since June and just having a look at the euro dollar currency pair here on a daily chart you can really see how the narrative has changed and you'll remember this here is June 16th was the initiation of this first candlestick here and you guys remember what that was of course that was the hawkish fmc 2 dot indication for 2023 rate rise and the idea the admission that they see inflation a little larger and hanging around a little longer than previously anticipated in their projections and as such that's really being the major trigger point over the last couple of weeks in a few different asset classes and for sure euro dollar you can see here this quite a key moment today about where we close you can see we've bounced on three occasions from this level in the euro but we are getting a bit of a divergence of course in the fundamental dynamics here between the ever more increasingly sounding hawkish fed against at the moment a much more passive more dovish sounding ECB because they're just not making the same kind of hawkish noises to any degree of what the fed are and that's because obviously the eurozone a lot more fractured in terms of the general national economic performances of the different nations and also it is dealing at this present point in time with the latest outbreak and the uptick in the delta variant as well which is seen as a considerable risk and that's likely to keep the ECB's hand steady for the foreseeable future whereas in the US of course we're talking every day about you know when are we going to start talking about tapering when are we going to start hinting towards more rate rises and so on so here technically I think it looks interesting for the euro because if we continue this type of situation at the moment fundamentally it's in play that divergence which plays favorable for further downside technically now is where it's at and technically it does look vulnerable and any further movement lower the 118 kind of 1118 handle would be the next obvious target and we're looking about 50 pips low from where we're trading at the moment of course similarly then the the pound is doing the same kind of thing there's been the eventual grace period extensions on some of the brexit protocol around northern island and trade but you remember what we were saying a few weeks ago that was never going to go any other way in our opinion so I don't think it's really that that important to be quite honest but looking at the daily on the pound here at the moment it really is that again the fact that the dollar is putting in the performance at the moment and that's weighing on these counterparty currencies and so here 138 handle has been a key milestone of support going back to late April and also back when the dollar was appreciating this was here this was the base this red candle of the hawkish bullard comment initiated by here this candle so this moved from 131 to 138 was on the back of the hawkish fed week in the fed and the bullard comments and we're right back at that era at the moment so when you're looking at the euro as well at least this potential for that momentum you know if cable starts to also see a bit of head of steam on the breakthrough 38 then all the more conviction you might have to hold then for that euro moves down to those lower bound levels we just looked at so some key levels then the effects markets to have a have a look at and so eyes will be on a dollar and obviously if it doesn't happen today tomorrow is going to be a really key one these are key technical levels that we're sitting at at the minute on a higher time frame and so if the payron number comes out tomorrow and it's a strong one so we start talking about a million plus type job figure and robustness within the actual overall report well then could that fuel further belief of the more hawkish rhetoric and then therefore appreciation further of the US dollar and with these those pairs sitting at fairly technically support vulnerable levels that could be a nice trigger for for continuation of those short positions otherwise elsewhere gold you know we looked at this yesterday and there was a really key area we've been looking at this week and again same top-level macro narrative it's all about the Fed and the US and the hawkish rhetoric so here you can see gold the same gold's just been a really nice kind of tracker of the inverse relationship with the currency the dollar at the moment and so as the dollars appreciated just like those major pairs gold's come under considerable pressure since the FMC meeting on the 16th of June and earlier this week so this is going back two days ago on Tuesday we traded through and we did yesterday trade through that key area that I've been keeping an eye on around the 62 mark in gold futures but we closed at that level so we haven't closed below it and so now technically I think that's just given a bit of light relief here for the yellow metal we've just traded back up a little bit on the upside this morning and we're currently up six bucks trading at 77 having got down from as low as around 50 in the last two sessions so I think technically this is looking a little bit more supportive now having failed to breach that mark so far this this week but again payrolls might well dictate that dollar movement and subsequently move then will be the next kind of catalyst for movement in in gold all right quick look at then a few different things obviously a lot of people talking about OPEC at the moment a familiar dynamic is really opening up with the alliance with Russia Kazakhstan proposing boosts which they've kind of done before we've been here before it's very familiar territory Saudi Arabia and the Gulf Arab allies favoring a more cautious approach this is according to delegates in Bloomberg or who Bloomberg were talking to last night while the group is expected to return some barrels to the market in August obviously nervousness is still present on the back of the latest outbreak of the Delta variant which is at the moment seeing an increasing global spread for the time being the balance being there is our people our nations who are large energy consumers like the US for example have they been inoculated enough and is the economy really fast enough that would constitute then one way or the other to add some more supply or keep it as it is is the is the debate possible supply hikes are being discussed for August and September according to Kazakhstan's energy minister not that that person is particularly important but obviously they are very closely aligned with Russia and last time they were giving a bit of a pass to increase just fractionally by a few hundred thousand bowels per day collectively Russia and Kazakhstan kind of go as a two they're appearing in that sense so I put a little bit of weight in those comments as ever the usual rules of engagement I would say with OPEC news you're going to get further intensification of rumors and hearsay that might add to a little bit of the choppiness intraday for oil and as ever you're not going to have to wait for a formal decision you're probably going to get more clarity as we go through the next 24 hours of whatever end outcome decision will be as far as oil is trading at the moment it's just wait and see we're pretty much in a range at the minute between really 72 and the higher 74 price point and so till we get more that more information on this I just think we're going to respect that range for the time being some other things though to be aware of well this this is oil over the first six months I just wanted to quickly flash this given the fact that we talked about equities we talked about the dollar this is looking at WCI crude and Brent futures and yeah quite a quite a phenomenal story actually over the last six months if you take where we were and going back to the base from October November time to where we're trading at from the year to date which was around as far as WCI is concerned sub 50 and we're up obviously up near 75 at the moment so yeah really solid performance there we've seen in WCI crude and in fact in terms of the streak it's the best half for WCI crude we've seen since 2009 and again it's all really simplifying it is based on the reopening trade other other thing to mention on oil was what I thought was quite interesting was this so in the US over the last four weeks total stockpiles including the strategic petroleum reserve the SPR have fallen at a rate of 1.15 million bounce per day marking the largest four week decline on a rolling basis in the EIA's data going back to 1982 so again just to make that clear so stockpiling on a four week basis in America is being drawn down at its fastest pace that we've had in a very very long time which again goes goes to show this overall tightening in the market on the back of the the faster acceleration in the pickup in demand comparative to the very static situation on the supply side and hence the reason the price is trading up at a multi-year high up at around the 75 region but again this is the balancing act between the decisions that that mainly dynamic between Saudi and Russia need to play the Saudis generally more cautious let's keep it as it is whereas the Russians for kind of similar reasons to this are saying we should demand is adequate we should be we should be relaxed relaxing the supply a little bit and why not I think if I was in Russia's situation and I was at a negotiating table I would know that I can manage my budget at a much more lower price I know the Saudis can't because of their quest for general diversification in the period ahead and so therefore I would hold their feet to the fire they will bulk and I'll get a few extra 100,000 barrels over the line I don't think necessarily from a trading point of view that's going to move the price to a great deal because I think a lot of it is baked in in terms of the 500,000 if you don't get the 500,000 or anything shorter that well I think we could we could definitely push up and start retesting hitting highs again so if I was the Russians I'd be doing exactly the same type of thing causing a headache rolling over meetings the Saudis will roll over and and they will concede and they will give you what you need which is a few more 100,000 per day and and then you just keep the supply packed intact but you've got away with a little bit more of a concession that you were in the day before so that's kind of what I'm expecting in that regard the other thing here is a word that gets mentioned is Iran and this is another key component that's in focus with determining the price of oil at the moment negotiations over Iran's nuclear program are facing the prospect of renewed delays is what we heard yesterday and so the likelihood of a quick return of the nation's supplies are being kind of paired back and remember there's a lot of debate about how quickly can Iran in actuality given the distinct lack of investment that they've had the infrastructure it's not like they just turn a tap and the nation starts pumping out an extra couple of million it's a lot more gradual than that however they do have quite a large strategic stockpile offshore which they could start to bring back in albeit I'd see OPEC having a big problem with that if they ever considered that being the case but again just the connection here being that a breakdown in dialogue meaning that the further away the deal is well then that just puts off any notion of Iran bringing more oil back to market anytime soon is the basic premise envoys negotiating a bit Iran's nuclear program will not reconvene as planned in vienna this week and apparently the talk is that they aren't even sure when the seventh round of diplomacy will be scheduled according to four people from livid that discussion who chose not to be identified and we're close to those talks so it's off for the moment timing is quite key though I would say that's not that surprising given timing of the OPEC meeting I still think that it'll be interested to monitor Iran through July before the inauguration of Rahisi the new president elect comes in in Iran because I think tactically that does play true I think if they are going to sign up back to this 2015 nuclear accord with the US and western powers that it's better to do so between July and August before the inauguration to pass off any concessions to Rahini to to maintain your political kind of capitals the new president elect coming in so it's something to watch going forward but for now it's it's delayed the other thing that is China a quick mention overnight you do have some Chinese data again I do not think that this is a factor for the market open this morning but to make you aware the K-Shin manufacturing PMI for June came in at 51.3 that was a touch softer than expected and so as the headline suggests then factory activity expanding at a slightly softer pace in June the research of the COVID-19 cases in the export province of Guangdong as well as supply chain woes drove output growth to its lowest of 15 months is what Reuters had reported overnight and also though on the geopolitical side you might have seen some of these shots from last night quite remarkable scenes actually coming out of Beijing last night and it's because President Xi Jinping warned against foreign bullying and China were marking their party centenary overnight Xi pledged to build up China's military committed to the reunification of Taiwan is a very contentious issue of course and said that social stability would be ensured in Hong Kong now separate news that you've seen but definitely related to this is that the US and Japan have been conducting war games and joint military exercises in the event of a conflict with China over Taiwan now this stuff is definitely not a coincidence obviously the Chinese party having this centenary event is a big kind of domestic deal it's a chance for them to really galvanize the public on their the mission that China has and particularly on that one China policy of which they see the sovereignty of Taiwan and so the US and Japan conducting war games at the time of which they're celebrating their centenary it's all absolutely calculated in terms of why they're doing this you know does this bring us any closer towards new levels of confrontation no this is just how politics is done in my opinion in that region and so I wouldn't get too nervous about it but just wanted to bring to people's attention who are not used to looking at this type of news flow that these things are not happening in isolation they're all happening at this particular one point in time for the same reason which is there's a lot of political capital on the line and there's an ongoing more top-level discussion and friction at the minute between the US and China and all of this feeds into that kind of narrative okay quick look at the the day ahead what have we got on the agenda it's this morning we have the final manufacturing PMI data points so not anticipating too much out of those to be honest the OPEC meeting yeah I'd be looking out for news and tweets and so forth as we go throughout the session I definitely don't think you're going to have to need to wait till 3.30 and 5 for more definitive confirmation that's rarely the case but those are the timings if you need to be aware of them if you're trading the energy market otherwise in the US session you've got the initial jobless claims expected to fall back down to 390 from 411 and then you've got the ISM manufacturing PMI which is expected to remain relatively unchanged from a headline suspected at 61 however keep an eye as ever on that employment constituent that's just hovering above expansionary territory of 50 last time out and of course people will be looking at that closely as a kind of a contributing factor to give better insight as to how the label report from the BLS might perform in NFP tomorrow as far as speakers couples actually to be aware of so coming up shortly ECB President Christine Lagarde speaking at a hearing on monetary affairs text to be released so keep an eye out for that 8 a.m. London time and the Bank of England Governor Andrew Bailey speaks at Mansion House with text to be released that'll be at 9 o'clock this morning so for any FX traders euros sterling with these key levels looking as I said fairly vulnerable at the moment amid just the ongoing dollar strength I'd definitely be keeping an eye out for some of these comments given that technical setup of those charts. Feds Bostick who is a voter speaking at seven and then supply out of Spain and France and the UK later on today but that is it so gonna let you guys go on with the day have a good one come on Andy it's only round two but yeah a little glimmer of the old Andy Murray came out last night which was great to see so good job Andy and yeah have a good day everyone