 Hello and welcome to CMC Markets on Friday the 1st of December and this quick preview of the week beginning the 4th of December is quite a busy week. We've got an EU summit, we've got non-farm payrolls and we've got services PMIs as well as a couple of central bank rate decisions from the Reserve Bank of Australia and the Bank of Canada but before we get on to that we're having a quick look at US equity markets which have continued to go from strength to strength the Dow Jones above 24,000 we've also got the S&P 500 above 2,600 and the Nasdaq has also made new record highs and it's largely down to an expectation that we will get some form of tax reform over the coming days if we haven't already that's likely to be confirmed in the coming days at the moment US policymakers are struggling to come to an agreement on reducing the corporate tax rate from 35% to 20% so that's really driving expectations with respect to the US stock market so I think if there is some disappointment there then we could see a little bit of a sell-off there's also the thorny issue of the debt ceiling which has as yet is as yet unresolved and we've also got the Federal Reserve rate meeting later this month which is expected to push US interest rates up once more by 25 basis points we do know who the new head of the Fed is we've also heard announcements for new Fed policymakers Marvin Goodfrent will be joining the Fed board to take one of the vacant slots there so we should also get some clarity as well on his stance on US interest rates going forward because at the moment we've seen a little bit of a sell-off in the US dollar on an expectation that US rate rises next year may not be as many as the markets are pricing in that big said US 10 year yields around about 2.4% but short-term rates particularly two-year rates are heading up so the US yield curve is flattening out and I think that's why you're seeing the dollar come under pressure so let's have a quick look at this week because we've got some important rate decisions from the RBA and the Bank of Canada and what has been notable despite the fact that US markets have continued to be very very bullish is that commodity currencies have come under a significant amount of pressure so if we look at the dollar Canada for example despite a rising oil price Canada has been weakening and it's pushing against a very important resistance level as well as the 200 day moving average around about 120 to 130 so it'll be very interesting in the coming week what the Bank of Canada says with respect to its view on the Canadian economy particularly the housing market as well given the fact that we just had two rate rises this year from the Bank of Canada and the fact that the oil price is now around $60 a barrel which should be Canada positive but as far as been anything but so keep an eye on the dollar cat that's going to be very very interesting over the course of the next couple of days and the Aussie dollar as well because the Aussie dollar has also been on a slow downward decline and here again we're approaching some very very key support levels on the Aussie dollar if we look at a weekly chart we can see that the trend line from the 2016 lows comes in around about 75 cents so around about 80 points above that at the moment if we then change that to a daily chart we can also see that we we've got the November lows around about 75 30 75 20 so around about that 75 level very very key again very dependent on what the RBA's view of the Australian economy is what we have seen I think what is a little bit worrying is that some of the Chinese PMI that we've seen over the past few days has been a little bit on the weak side so maybe there's a few concerns about softening in the Chinese economy as we head into year-end also worth keeping on the pound this week we've had a two-month high against the dollar testing that 13650 area that we saw earlier this year I think what's particularly interesting about this particular chart is how resilient the pound has been particularly against the dollar but also I think against the euro now if we look back over a slightly longer time frame what I've done is I've taken the 2014 peaks of 170 190 seems a long time ago now but there it is and I've calculated some retracement from the lows around about 190 80 190 50 really depends on where you take your low from but ultimately I think if we look at the 38.2 percent retracement level we're looking at around about 138 40 between 1 and 139 50 so there's some very very key resistance levels starting to come into play over the course of the next few days and much will depend on the EU summit which is due on the 4th which is due to start on the 4th of December Theresa May we'll be looking to convince European leaders to give the green lights at the beginning of trade talks there has been some talk that there is an agreement on the divorce bill the thorny issue of the Irish border is the next issue to be resolved and it and it is proven to be a little bit more complicated than at first envisaged however at the moment I think there is an expectation that common sense will prevail and some form of compromise will be put together and the market is currently pricing that in if however we don't get that then expect the power to drop sharply back to this trend line support from the lows that we saw in March this year which currently comes in around about the low 131 132 also have non-farm payrolls this week again a very important number but less so now I think given the fact that we're expecting a rate rise later this month pay particular attention to wages because they were slightly disappointing in the October numbers dropped back to 2.4 percent we're expecting a move back to 2.7 percent if we do get a move back to 2.7 percent obviously that will be dollar positive and we could see a rebound in the dollar which has been on the decline over the course of the past two or three weeks expecting a number of around about 210,000 slightly lower from the October 261 we've also got global services PMIs later this week pretty much from all over the globe that has been one of the more positive areas for growth certainly in the European economy but also in the UK we've got construction PMI services PMI industrial production so very data heavy week this week but ultimately I think the main focus for me this week is likely to be on those rate decisions of the RBA in the Bank of Canada but also the EU summit and the US employment report and of course whether or not we get any form of tax reform now in that context the pound has actually been weighing on the FTSE 100 very very important level around about seventy two eighty that's a very key support level was the June lows the July lows the August lows we did dip below that briefly in September so if we do break below that then 7200 is a very very very important level but ultimately we're still in a range still likely to be within a range as we head towards Christmas I think the big question at the moment is one of the big questions of many is will we get a Santa Claus rally well given how far we've come this year you have to ask yourself the question whether or not that's feasible with the DAX we're in a bit of a channel range 13250 on the topside 12870 on the downside I think we will stay within that range I don't expect to see any new highs this year the same time I don't really expect markets to fall off a cliff either so that's it for this week thank you very much for listening Michael Houston talking to you from CMC markets