 Hello and welcome to CMC Markets on Tuesday the 1st of September and the weekly market update. And it's an interesting week this week. Data heavy on both sides of the Atlantic, Europe, the US and also we've had some very important Chinese data as well. Given that, we've come off the worst monthly performance for European markets and equity markets in general since 2011. And there's two factors I think at play with respect to the uncertainty that we're seeing in markets right now. Number one is obviously concerns about the Chinese economy, a significant slow down there. We've had further easing from Chinese authorities and yet we continue to find that Chinese equity markets are under pressure at a time when Chinese authorities seem quite intent on easing policy further. Now that's having a ripple out effect on European markets. We're seeing declines renew once again early this week and this on the back of some significant volatility last week. And looking at that volatility it does, I think it does give the impression that markets and investors in particular are extremely uncertain as to the direction of the markets over the course of the next few weeks. Namely we're gearing up to the FOMC meeting on the 16th and 17th of this month. Now before that we've got a whole host of US data to get through, had a very good GDP number at the end of last week and that has once again put the prospect of a US rate rise back on the table. Now towards the end of last week I think there was a perception that maybe some of the policy makers on the FOMC were starting to cool off a little bit on the prospect of a US rate rise in the September meeting. Namely Dennis Lockhart, the Atlanta Fed, who actually suggested that the bar was very high to not raising rates has gone a little bit cool on that and allied with Bill Dudley. There was also the fact that he was saying that the prospect of a US rate rise was less compelling than it was a few weeks ago. So I think there was a perception maybe that policy makers, Fed policy makers were starting to cool on the idea of moving on rates in September until Stanley Fisher, Deputy Chairman of the Fed, suggested that a Fed rate rise was still on the table and that I think along with concerns about China is weighing on European markets this week. So what does that mean going forward? Well we're going to have to focus intensely on US economic data. That continues to come in fairly patchy, services fairly good, manufacturing continues to main a little bit of a drag. So we're going to look at the S&P 500, look at the key levels there, look at the Russell 2000, the Small Cap 2000. Also going to be looking at crude oil prices and that massive rebound that we saw at the end of the last week, a 25% rebound in three days raises the question has crude oil bottomed out and could we be seeing the beginnings of a potential rebound there and also look at dollar CAD and the effect of a potential oil rebound on the recent weakness that we've seen in the dollar-Canada exchange rate. So we're going to start off with the S&P 500 and we're going to look at a weekly chart. Now that weekly chart in any other time or place would be a hammer. It's a significantly long shadow on last week's candle. We closed in positive territory, despite the fact that we posted the lowest levels since November last year. However, we've slid back lower again. And the fact that we've slid back lower does appear to suggest that potentially we could revisit the lows that we saw at the beginning of last week. So for me, we've rebounded back round about 50% of the entire down move from the highs that we saw this year to the lows that we've seen this year. And that 50% level is around about the 2000 level. So we need to keep an eye on that 2000 level, which was obviously last week's highs and this week's highs as well. So that's the key resistance level on the top side. On the downside, we've got last week's lows at 1834. I mean, more importantly for close with respect to that, let's have a look at the US small cap index. Now this particular chart is a daily chart. And again, we've got a significant support level. What we've also done is we've actually rebounded off the break of the uptrend line that we saw from the 2011 lows. And that's the purple line that we pushed up against at the end of last week. We're coming lower again. And once again, I think keep an eye on that resistance level last week's highs to establish whether or not we've hit a near-term peak and are looking to actually trade back lower again. One interesting thing about the small cap index is that we've been trending lower since we peaked in June. And as such, I think the mere fact that we've struggled to rally on the small cap index does appear to suggest that potentially the weaker side for US markets is the downside and not the upside. But an awful lot of that will depend, I think, on expectations of what the Fed does in the next couple of weeks. So we're going to move on to crude oil prices. And for several weeks now, a lot of analysts, including me, have been calling for significantly lower oil prices. Now we've seen a move below $40 a barrel in WTI last week. What I wasn't prepared for was the extent of the snapback that we saw at the end of last week. And this is no better illustrated in this daily chart here in front of you. We can see from the May and June highs, we've more or less retraced just slightly below 50% of the entire down move from the May and June highs to the lows that we saw last week around about $37.40. Now, we haven't quite come back to the $50 a barrel mark, but that for me I think is a key line in the sand. And more importantly, I think in terms of the weekly chart, I think there's evidence that potentially we may have seen a near-term base. And why do I say that? Quite simple. You get a 25% rebound or if you put it more succinctly, you've seen oil prices rally 25% in the past three days. What does that do for the weekly chart? Let's have a look. As you can see from the weekly chart here, we've got a bullish engulfing week. Now, that's a potential reversal pattern. And we've continued to make those gains so far in prices this week. What we need to do is get above that resistance level that I put in on the weekly chart, just above $50 a barrel. If we can break through there, then there's certainly potential for us to revisit the highs that we've seen earlier this year around about $60 a barrel. So, I think there is an argument irrespective of the fundamentals, whether or not you think OPEC will come to an agreement to cut production or agree prices or what have you. There is potential that we could well have seen the base in oil prices. And that could have a significant effect on dollar Canada. So, why will that affect dollar Canada? Well, quite simply, Canada is a significant oil exporter. The weaker oil price has really hurt the Canadian dollar. And that can be seen from this daily chart that I'm putting up in front of you right now. We've been trading in an up channel, but there does appear to be some evidence that maybe we could start to see a resurgence of Canadian dollar strength and a little bit of US dollar weakness. What could confirm that? Further strength in oil prices. So, keep an eye on the trend line support that I've drawn in, this channel support from the lows at the end of July. Keep an eye around about $1.30 and a half, $1.31. If we break below there, then we could well see further Canadian dollar gains and further US dollar declines. Okay, so that's pretty much it for this week. All that's left for me to do is remind you for those who don't know that we have a traders event in Birmingham later this week on Thursday evening. You can sign up for details for that on a link here. And also on Friday, we have our monthly non-farm payrolls webinar where me and my colleague Colin Szczenski will talk you through the latest US jobs report. So, that's it for this week. Thanks again for listening. This is Michael Houston talking to you from CMC Markets.