 Very good morning to everyone. It is Thursday 22nd of August. Hope you are well We're going to cover a couple things this morning But before I even begin I just want to make you aware that there's some very important economic data coming out Momentarily, so while I'm on the mic what I'll try and do is cover this off as we go through things But you've got the Eurozone flash manufacturing and service PMIs these will be very important for European prices this morning I would be anticipating Reactions in things like Euro European equities so the DAX the Euro stocks and the Bund so do keep an eye out for that It's coming up the French figure first at 815 followed by the German figure 830 the latter of which will be particularly important why because this is a look at the graphic of German manufacturing PMI in the last reading Marked the steepest decline in overall manufacturing conditions in Germany since mid 2012 as New export orders dropped the most in 10 years Falling sales to China slump in all the automotive sector more concerns about the ramifications of Hard no-deal Brexit and so on and so what we've been seeing is quite a severe Contraction deterioration Consistently in German manufacturing, which is obviously very key for their overall economic output But not just for them, but for the overall Eurozone area and so this is going to be particularly important The number for Germany on the manufacturing side just so we're all up to speed is expected at 43 So actually a slight further deterioration from what we had last month Which was point two above that expected figure the range? 41.5 to 44.5 if we get a 41 print, where does that put us? Well gonna have to start looking at a at a 10-year chart That puts us through the trough that we had in the height of the European sovereign crisis With the multiple bailouts of some of those countries like Ireland, Greece and Portugal that puts us back down to levels We really haven't seen in the best part of a decade Since the severity and fallout of the financial crisis So definitely keep an eye out for that That's coming out as I said at Hopper State. The French figure will come before In about three or four minutes time the manufacturing from France expected at 49.5 So right on the cusp minor contraction the service sector To remain in slight expansion expectations 52.5 So that's coming out and I will cover those when they are released But otherwise looking at the the overall broader markets this morning across different asset classes things fairly quiet and I've been looking at you know, just various Volume profiles and this whole week has been relatively tame particularly in the fixed income market for the US This is all because everyone is waiting for Friday's Very important speech from Jerome Powell as you can see from the charts There really wasn't any and definitely no sustained reaction other than a momentary blip in prices on the back of the FMC minutes last night Now just a quick look and the reason why these are the kind of headlines that people are running this morning if I just transition so Three reasons for cutting in July. Remember the reason one of the main reasons That people didn't really react to the minutes is not just because power speaking on Friday But the dates of those minutes was from 30th to the 31st of July So there are about 23 days old those discussions and obviously the world has moved on in those 23 days There's been new emphasis on the inversion at the yield curve. There's been new economic data that's come out new speeches that have been made so Essentially rendering those minutes just redundant. They just really weren't that interesting at all The only one thing I think that was potentially slightly surprising was that there were two Members who wanted actually to go for 50 basis points not 25, but that in itself not enough really to move markets So not going to dwell on the the minutes really Gonna move on talk about a few other things one thing you can see on the charts here is dollar index pretty Flat there's no real dollar strength. Let's say for the moment albeit It's holding on to the gains that were seen last night. One thing is you are seeing a little bit of Pound weakness cable just edging through you know some of the low points that were seen yesterday afternoon So cables down about 16 still Relatively moderate in its losses though nothing sizable, but obviously Lot of the talk at the moment is in the run-up to the G7 happening in Barrett's in France at the weekend and you had Boris Johnson doing the European rounds. He was in Germany yesterday meeting with Angela Merkel And what came out of that was some fairly positive noises actually EU officials though pessimistic said there was still time for a deal Interestingly Merkel said it's up to the UK to put forward a workable alternative to the backstop The UK Prime Minister agreed He said the onus is on us to solve the border issue though He pointed to measures that have already been dismissed for the last three years of Brexit talks included the Truster trader program electronic pre-clearing of goods. So Essentially this kind of technological solution in order to keep an open border Like without checkpoints and so on which could then invoke the memories of the or breaking the risk of breaking the peace agreement broken in the late 90s, so Problem being I guess with that last point although Merkel has been relatively positive That's always been the case Germany definitely much of the mindset that they want to Just avoid at any cost really further disruption to whatever what already is an economic challenging period Just going to pause for one moment. The French numbers have just come out Just seeing a big pop in the euro on the back of that. So We just see if the score 51 spots eight. So it's all three there and beating on expectations manufacturing and expectably in expansionary to their entry and as such have seen ineptic in Eurodollar towards one at 1090 So just coming on a euro popping DAX popping Boom to the downside so a very positive number the French manufacturing PMI has just come out 51 that is way above the top end of the most optimistic Estimate on the street. So a media bid into the euro and DAX on the back of that certainly alleviating what has been very depressed Kind of sentiment around the growth happening in Europe at the moment. So particularly strong numbers. They're out of France The actual service number 53.3 also considerably higher than expected as far as the deviation from the mean for the PMI data So decent numbers Germany coming out obviously in 14 minutes now, but this is going to be quite interesting Given how much people have been panicking and obviously that's put emphasis on the fact that the ECB have got to do more They've got to cut the deposit rate. They've got to restart QE But if the PMIs have hit that low now and start rebounding that would be Definitely interested to see whether or not the euro then we'll start to in the medium term claw back some of its persistent losses all right just going back to What I was saying here the point I was going to make on the Brexit talks was That everyone is still at the same sticking point that Theresa Mayer's it's all to do with the Irish Border the backstop, but the problem is as much as Merkel has been favorable to potentially look we want to work to get a deal done Boris is only bringing forward things that have been discussed before which have already been dismissed So unless he comes forward with something new Some sort of maybe legal twist on the understanding of what this backstop means or entails Then I really don't see this changing the game at this point in time the one thing that's definitely going to be happening today, of course is that Macron quite good timing for Macron, of course the PMIs have just come out really strong and obviously one of the things that Boris would have been wanting to leverage is that look I'm going to threaten no deal your economy is suffering and so You know this put his data maybe is a nice little boost for Macron going into those face-to-face discussions later on this afternoon But all that aside France is an absolutely different beast to Germany France has been way more critical and definitely less Friendly in the idea of giving any type of concession to the UK the French government they said last night They expect the UK to leave the EU without a withdrawal agreement That is their baseline scenario that there will be no deal and so at the moment. He's not giving anything away So I think Merkel was of no surprise to hear kind of more conciliatory tone yesterday More interested in what Macron has to say and what then Boris and Trump do at the weekend when they meet up in France at the G7 very interesting comment though from Boris Johnson that he made In his own kind of usual fairly descriptive way. He said in my life I've watched a lot of European negotiations and believe me It looks at first as though it's an irresistible force and immovable object And what in my experience happens is people find a way through at the last possible moment And I absolutely agree with him. I really don't think from a trader's point of view You're gonna get this really big massive pops in the pound because you know, we're gonna come out of the G7 And I think that there's gonna be exactly where we are at the moment I want this they want this and there's no pressure of a deadline yet It's too far away for people to start cutting deals And making concessions so I would expect all of this to manifest into potentially medium terms and weight in the pound As we get closer to still the same status quo as we get through to the end of September into October Then it gets a little bit more interesting. Certainly if we retest the lower bound of those Historical low levels in cable All right a few other things just to quickly Go over but one thing quiz quickly back to the charts the DAX loving life now after that surprisingly strong French data just keeping an eye here on The previous range high from yesterday We've just moving the charts out here. I'm just gonna put it on a 60 minute You can see this is the top end at the moment of quite a considerable Range of resistance that we've been trading over the course of August for sure So if I just put a rectangle over some of the price action here and where we are in the near term as the first challenge You've got here 11 8 10 and 11 845 49 on the upside which would be the kind of the bound the price action that we've had here over the course of August So it's interesting levels. Certainly a surprise development there in France to see such Strong data the manufacturing one the standout services also exceeding expectations as we just saw Okay, wrap through the other headlines It's almost as if the market's gone quiet on the Chinese yuan So much as if you know, we had such Well start from the beginning It's amazing how markets can be so blinkered at just looking at one subject at a time And I often mention this to people who are new to markets when I'm explaining How do you perceive kind of daily market sentiment and how do you? Assign a hierarchy to the macro themes that are in play But you remember about three four weeks ago The only thing that you needed to do to really trade the open was what was the fix for the Chinese yuan Now no one even mentions it. In fact The yuan fixed overnight at its weakest in 11 years and it's gone You know, we're moving further above seven at this point The only thing is is there's a trade war going on And then a headlines come out then there's an aversion of a yield curve and people start getting spooked about a recession But even that in itself has now almost dissipated and moved to the side. So we get the next thing So it's interesting how definitely I think to to manage the macro environment you've got to be quite agile to really pick up on your perception of how The basically the market is perceiving its value on these types of subjects interestingly now I think about this chart of the yuan is that people seem to have got over this Psychological symbolic level of seven which people were absolutely Panicking about that it would lead to mass capital outflows and so on that hasn't happened and the yuan continues to weaken Which has prompted state intervention through their state-owned banks overnight So definitely warrants continue to walk to watch if we obviously punch higher to seven point one We're not quite there yet. We've got close to it. I think we actually touched it last night If we start going higher and higher, yes, this will become a problem But at the moment the point being it's just quite interesting how this is a development that really hasn't changed But it's just that people have been distracted by other issues But quite like Italy for example it flares up and then it goes away The yuan issue is not resolved and we'll come back in time. I'm sure Okay That is it from me actually I'm gonna hand you over to Sam because we want to make sure you guys are all over the German PMI when it comes out shortly so in terms of a calendar for today Let me just bring that over to quickly run through my computer One of my pages is frozen. So let me just talk you through instead what it is that we've got So on the calendar, you've got the German figure coming up the eurozone manufacturing PMI is obviously the summation of these countries Will be at nine o'clock, but that's very much as confirmation rather than anything new of information at that point You've then got the ECB minutes. Do not forget about that. That is coming out at 12 30 That could be interesting particularly given the fact that Even though these data points have come out strong otherwise, it's been a fairly precarious situation for Europe and people are looking for hints of Near-term action from the ECB in the form of deposit rate cuts of 10 basis points and the potential Restarting of QE before year-end. So those minutes will be definitely of interest and market moving into the afternoon in the US weekly jobless claims You get the market service and manufacturing PMI is flash reading as well from the US at 245 European consumer confidence at 3 p.m. Jackson Hole Symposium does kick off actually today, but power doesn't speak to tomorrow So although we can share the agenda for who's on the docket really the big one is not until tomorrow afternoon And then of course French president Macron meets the UK PM Johnson. I believe that's happening later on this afternoon All right, I'm going to transition my screen hand you to Sam I will post the German numbers as they come out into the chat room see you're aware of them as soon as they're released Thanks very much guys Yeah, thanks, and I guess we start with the the euro here just as See we've got those numbers coming out in five minutes to the second now See you'd expect after seeing the good French numbers that the German and therefore the European ones as a whole are gonna be pretty good See just above where we're trading will be pretty important going back to yesterday We couldn't get above that couldn't get above there at all one eleven thirty and it's you know a bit above there You've got the Overall range that we were looking at from yesterday and talking about just how that could Hold price in and to the downside of see that double bottom as well bringing up this new mini range for the euro Back above what's been a pretty important line in the sand. You can still see we've got those rectangles drawn up from the previous Briefings and again yesterday that hold Pretty well again this morning So that's your line in the sand one eleven eleven Above there perhaps preferring to buy up towards the top end of these ranges and below there Well, we can start to drift down as well looking at this longer term. I don't know if this is Drawn up as such this daily chart one But you can just see looking at the last few trading days Just starting to perhaps look to get squeezed in both directions So where we get in this new Range Squeeze from the high and the low as well So, you know much like the pound in a bit of no man's land maybe the euro and the dollar side of things here Just waiting for a move either way for a test of the the yearly low, which of course we had at the beginning of August or back up towards some of the higher levels around 112 which was obviously so key going back just a few weeks ago Moving over to the pound and I've only really got one point marked up here Which was it? Well, you see Anthony's got it on as well around 121 20 was pretty important level going back to the last few days Certainly on Tuesday and Monday as a key point and previous days around there with price section as we perhaps just move up towards the Pivot as the dollar is weakened. Thanks to the euro there We are just Almost coming in to make maybe make the third test of that trend line higher the day so that would be quite quite key 121 50 but much like the euro as we said we are Perhaps in a bit of a choppy range and just drawing on these potential trend lines from that yearly low Any dollar strength looking for for those to break top end of the the range all important as well for this week around 121 89 so three key levels. I would say it's focused on the pivot Obviously the R1 and I guess they even size is as well 121 89 highs of the week and then that trend line from the low as well coming in Gold a market that as well as perhaps euro and pound getting getting squeezed from both ways and actually just as we Speak gold is coming to test. I believe I draw this trend on the lower part of that from that spike we had last week you can see just Tempting to break through that and then from the upside as well. You can see over the last few days As well not the necessarily the third test we're getting squeezed and gold is having a look at trying to Pop to the downside obviously equities pushing higher off there this European relief If you like some money just coming out of safe havens to all be it briefly So just keep an eye on there and go to see some key levels to the dam side around the s1 and the previous lows from the week Which should be obvious targets and then the top end of the range over the last couple of days around the R1 So a lot of markets just waiting perhaps for some impetus either way to really Get a move moving over to equities. You can see that spike in the s&p Really has come from the Dax and Eurostocks We're just now above that trend line that has been tested You can see over the last few sessions bit choppy on the way through overnight But where we obviously finish the day will be important Can we confirm a break above or is it a false break and actually start to drift lower? As well, it'll be interesting to see what happens there for the s&p above where we're trading obviously the higher the day But all important 2945 areas and key resistance around there around with 2956 We can close the week above 2950. I think the psychologically 3000 comes quite quickly As well as some of these previous lows that we had in the market before those breakdowns So really important end to the week can we get above that trend line? We're pretty much trading right on it now to the downside I think you you know for the bears to really get excited while for a fail break would be if we can get back down Really below. Yes, they You say sort of afternoons lows. It'd be pretty important those headline the figures have just come out So a quick look over at the euro to see how we have reacted As you can see they're already testing up to the R1 as they have come in better Than expected so worth keeping an eye just here obviously above a R1 You've got all those highs from yesterday And then if we were to get a pop through the real key level around the Important highs of the week so just keep a close eye on that that line in the sand You'd be happy staying long as long as it's above 1 11 11 really Not well the manufacturing coming in 43.6. So better than the expected the services also better 54.4 the expected 54 there so better than expected you expect the Eurozone ones at 9 o'clock to also be so quick look over at oil You can see yesterday the we did move lower and that trend line therefore has broken And I'm just going to continue this trend line on from where it has been drawn And you can see Pretty much will be messy break. We then did find resistance on that later on So still have that on maybe just to to drag a bit higher for any potential For it to come back and retest it broke both ways yesterday and both times on the first we test acted as good Well resistance and support so I still have that trend line on but perhaps your oil now Just looking a bit more bearish than it did 24 hours ago pivot looks very key today A lot of price action around there 56 14 to the downside the load that we have from the 20th and s1 also An important point to have on the Dax is loving life I'm now above yesterday's high and that's the highest It's been really going back to the levels we had marked up from the 13th which are massively Important here Euro stocks and Dax loving life likelihood is it's going to drag the s&p and the Dow and the nasdaq higher as well equities all over Gabrin pace as you have seen here gold Breaking lower T-notes lower and the bund of course the main mover to the downside so very much now a case of being risk on Following these positive European numbers. Can we get a confirmation in 30 minutes? If not Expect a reversal of these moves euro up to those highs and the high of the the week Of the last few days very much on the cards. Hope you'll have a good trading day. Good session and any questions, please do Let us know