 Good afternoon and welcome to this week's Monday market webinar on the 4th of December and This quick preview of the week ahead and we've got fairly fairly busy week Coming up a whole host of stuff to get through before I embark upon that. Let's first and foremost Go through the obligatory risk warnings Just to get the just to get the housekeeping out of the way And then we can really crack on and start to look at what's been moving the markets and what's continuing to move the markets Likely to continue to move the markets over the course of the next few days Now European markets did finish the end of last week on a slightly downbeat note on the back of those revelations that Michael Flynn President Trump's ex-national security advisor that pleaded guilty to lying to the FBI and Had Said that he was prepared to just testify that the president had Directed him to make contact with the Russians in the lead-up to last year's presidential elections. Obviously that's raised Some concerns that the president may well be at risk of impeachment, but even if he is It's unlikely that that particular story will play out Particularly quickly so on that point You know, we did get a little bit of a downbeat reaction for the markets, but that was more than offset by the Senate passing those revised tax reforms Which now go on to the next stage now to judge by the market reaction that we've seen thus far You would suspect that Some form of tax reform is a done deal that remains far from the case because ultimately the two tax reform plans differ between the Senate and Congress so The the two houses now have to put their heads together Put together a plan that they can both agree on and then send forward to President Trump for him to sign off So while the details may change The headline figure still remains pretty much the same ultimately that the US corporate tax rate If these reforms are passed Should come down from 35 percent to somewhere in the region of 20 percent And that's really where the mark why markets are trading higher at the moment the trading higher on an expectation That we will see some form of tax reform by the end of the year But what they conveniently forget to neglect is the fact that ultimately while we may get tax reform some form of tax reform We still have the thorny issue of the raising of the debt ceiling and that is something that hasn't as yet been agreed by either side and That could in effect Cause a few a little cause a few problems over the course of the coming days But certainly I think in the context of what we've seen thus far if we look at this little Little graphic that I've got in front of you right now This is why we've seen a significant move higher in the pre-market for US equities If you look at the potential potentially Taxable cash held oversees from an awful lot of the tech companies There is an expectation that a lower corporate tax rate could actually bring back a significant amount of US dollars and that's why the US dollars higher That is why stock markets in the US are higher and that is also why there's an expectation That we could see the Dow Jones Head towards the 25,000 level By the end of this year, but that's that is all presupposing of course That we get a ratification Of the tax reform program That was agreed at the weekend and as I've highlighted previously There still remains a little bit of divergence between what Congress signed off and what the Senate signed off so It's important to put that in in the context of where we go to next with respect to tax reform also We've had a significant a number of It's also a big day for the pound Theresa May flying to Brussels For dinner or lunch working lunch working dinner probably a working lunch that turns into a working dinner Who knows but Theresa May is supposed to be meeting Jean-Claude Yonker to iron out define the details of The Brexit negotiations and to try and get sign off to move on to trade Now certainly I think the politics are probably more interesting than the economics, but certainly I think If we look at the reaction of the pound Over the past two hours We can see that there's a high degree of expectation That the stars are lining up to move on to trade talks when European Leaders meet later this month around about the 14th or 15th of December, which is next week sometime next week and To move on to trade talks, but ultimately I think if you're talking about the Irish border and you're talking about trade talks The two are complete that the two are interlinked So ultimately it's going to be very very difficult to get any sort of agreement on trade You know Without without obviously some sort of some sort of agreement to iron out the final details on the Irish border at a later stage You're not going to get a final agreement on the Irish border before you start trade talks So the key word has been Regulatory alignment or continued regulatory alignment. Now that is likely to mean different things to different people Certainly, it's hard to see how the DUP Democratic Union is so likely to go for that But that being said we're seeing a significant move higher in the pound Has seen a significant move higher in the pound over the course of the past couple of hours And it's brought us back to the highs that we saw at the end of last week So at the moment if we look at this particular move in the pound We can see that we're approaching some very very key levels Certainly in terms of the economic data that we've seen thus far We do appear to be the economy does appear to be holding up fairly well manufacturing PMIs on Friday last Friday Came in at a four-year high of fifty eight point two Certainly in terms of new orders and investment Order books look fairly resilient Construction PMI this morning also came in at a five month high That's fifty three point one now a large part of that game was down to the house building sector civil engineering and On the public sector so big civil projects still remain Fairly fairly weak. So there's a concern there that will act as a lag But certainly in the context of where we are at the moment the risk I think with respect to the pound is evenly split between the upside and the downside though I would suggest it's probably a higher degree a Higher risk of a bit of a correction back down to this trend line support that I've drawn in from the lows We've seen earlier this year There is big big resistance. However coming up between 136 60 which was the highest earlier this year and also the 138 30 area which was the reaction lows of 2016 before we got the rally back to 150 prior to the Brexit vote but also There's a significant retracement level from the 2014 highs at 170 190 172 those levels seem a long time ago now, but certainly if we look at the move from 172 to 1951 1980 there is a significant area of resistance coming into play now between 136 60 and 139 Let's not also forget how important this 136 137 level was on a historical basis When we look back to all the way back to 1985 if we look at this in an even longer term If we look at this on an even longer term basis We can see that these were the 2008 lows Around about 136 50. They were also the lows all the way back in 2002 as well And the break of those levels those 99 those those levels to around 1985 levels Would appear to suggest that there's gonna. It's gonna. We're going to need a significantly positive catalyst to take us back to the 140 level which I still think is fairly probable in The shorter in the slightly longer term simply on the basis that ultimately the dollar It still remains fairly each way bet when it comes to where we go to next if we look at the dollar index We do appear To be in a little bit of a holding pan with respect to where we go to next and we can see that It's highlighted by this particular with it by this particular chart here and Certainly in the context of the overall downtrend for the dollar We can see this in this dollar index chart on my Bloomberg here These are the lows that we saw in September If we look at the trend for the dollar over the course of the last few weeks and months It's still in a downward trend There is some evidence that we could have there was there was some evidence that we might have seen a little bit of a reversal That's been unwound Having broken below this this this key level that I highlighted and have highlighted in previous In previous in previous webinars. We can see this here We did look as if we were building up to a little bit of an inverse Head and shoulders reversal when we broke above here. I talked about it a little bit in the context of the euro dollar When we broke below that 116 area 117 116 area There was a there was a prospect that we're probably going to move down to around about 112 that hasn't happened We've come back through here But what we haven't done thus far on the dollar index is broken below This 92 50 level and that's really the next level on the dollar index that I'm looking for on The downside if we get further downside on the dollar index below 92 50 then obviously euro dollars probably going to head back to around about 121 2121 but at the moment while this right shoulder left shoulder Play through here holds Then I think the range that we've been in over the course of the past few weeks is likely to hold sway Certainly with respect to euro dollar particularly if we translate that into Looking at the euro dollar chart in the round if we turn if we turn the dollar index And and then look at it in the context of euro dollar We can see that there's a little bit of resistance just below 120 around about 190 it's not an exact match up we can see that from here we got the 92 50 area here and 92 50 area from here if we marry that up with the left shoulder here. It's around about 119 10 it's slightly higher on the euro dollar here around about 119 70 but ultimately what we've got at the moment is The prospect of 120 on the top side if we break through 120 then obviously we're looking to head back to work around about 121 But when we flip these over the reason I look at the dollar index and the euro dollar on a Correlative basis is there tends to be usually a fairly decent match up between the two So what I'm looking for for further euro gains is Is for a break in the dollar index below 92 50 here if we don't get that Then you're likely to get a false breakout on the top side on euro dollar because 57% of the dollar index is made up of the euro and that's why it's extremely important from my point of view That for the euro to go higher We need this the dollar index to break below this 92 50 area that I've highlighted on this particular chart here So it's very very important in the context of correlation that we look not only when we look at euro dollar We also look at the dollar index So for the interim at the moment while this 92 50 level holds on dollar index around below 120 You're really looking to sort of sell the rally in euro dollar For a move back to around about 1 16 70 at the moment and also the oscillator is starting to look as if it's about to roll over So again, I think as long as we're below 1 960 then the likelihood is The euro is probably going to be reluctant to move much above the current highs that we've seen over the past couple of months That could change obviously with respect to this week's non-farm payrolls Which are likely to be a significant driver of sentiment in the latter part of the week Got a whole host of US economic data coming out Irrespective of the tax reform debate, which is obviously pushing the dollar higher at the moment It's also pushing US yields higher So we're going to look now 5th of December, we've got a whole host of services PMIs Which are due out tomorrow not only from the US, but also from Germany, France Italy and Spain and they have been broadly positive French and German readings have been you know in excess of around about 60 70 I'm being asked about dolly and sterling Aussie. I will certainly be looking at both of them As we go on particularly Sterling Aussie in the context of the RBA rate decision that we've got coming out Tuesday morning Certainly in the context of the Aussie dollar that is a very interesting chart So let's look at dolly end because I think with respect to dolly end I look at dolly end and I struggle to see much in the way of upside I think with respect to the dolly end we're in a little bit of a range at the moment We're pushing up against the upper cloud that we're seeing on the kumo chart here It also coincides with this series of highs all the way through All the way through here. We can see that at around about 113 20 If we look at 113 20 through these peaks here It also coincides with this resistance level here if we break if we break through 113 20 113 30 Then we're back towards the highs that we saw in July and we also saw in November And I think it also suits The Bank of Japan if the euro if the dolly end stays in the range that we've been in and have been in pretty much For the last six to seven months So at the moment dolly ends looking a little bit toppy between 113 10 and 113 30 If we break through 113 30, then we should probably get a run up to around about 130 the 114 10 114 20 area as designated by these series of peaks Through here. Let me zoom that all the way out and you can see it much more clearly There's a big big barrier between 114 30 and 114 40 But at the moment the kumo cloud resistance on dolly end Should keep a cap on dolly end in the short term could see a drift back to around about 112 60 112 70 but at the moment we do look as if we could squeeze a little bit higher So around about 113 20 113 30 We can see that We can see that much better on a four hour chart and this particular This particular chart here. We can see this moving average here is Acting as a little bit of a resistance and has acted as support in the past as well So that's this is the 200 event for our chart Which is acting as a bit of a barrier in the short term at the moment Which also coincides with our daily resistance as well on the kumo chart So that's dolly end obviously that will also be driven by the Wages data and the non farm payrolls data, which is due out on friday We are hosting a webinar for that event which my colleague david madden will be hosting at 115 on friday the 8th of december. I unfortunately will be Away I will be in Dublin Hosting hosting a client event there So my colleague david will be covering the non farm payrolls webinar on friday at 115 and you can sign up for that you can sign up for that event on the website On the cmc markets website So moving on to The other key events this week. Obviously, we've got a couple of central bank rate decisions Rba is due tomorrow We'll start with the Aussie dollar because I think that Is going to be a very key event in the context of Where We are at the moment and we are approaching some very key support levels On the Aussie dollar now we've seen a little bit of a rebound today and friday On the back of slightly weaker dollar, but also we've seen a rebound in commodity prices So seeing a rebound in commodity prices helps the australian dollar We've seen a rebound in iron ore prices. They're back about 70 dollars a ton We've also seen a decent rebound in copper prices Or say a decent rebound we've seen a rebound Off the lows in copper prices over the course of the past few days But again here we're trading in a little bit of a range in copper prices. Let me just remove these lines here And that should give you an indication of what we're looking at next If I draw a line through these highs here, let's forming a little bit of a wedge In copper prices We can see that through here. So the solid support around about 300 Resistance coming in here If we get a break to the top side, which I suspect we might Given the fact that we've been in an uptrend and have been in a consistent uptrend since may Then that should be broadly supportive of the australian dollar as should as should iron or as should iron ore prices as well Which have which have enjoyed a decent rebound in the past few days and we can see that From this particular chart here, which i'm about to pull on to the screen Right now Here we go There's your iron ore prices enjoyed a decent rebound since the lows in october november And it's important also to remember that later this week we do have China trade data so That's broadly the chinese economic data that we've seen in recent months has been broadly positive And that is also helping to support commodity prices in general particularly when you look at also Palladian prices and platinum prices more broadly so if we look at um We look we look at sterling ozzie on the back of the potential for the rba rate meeting Coming out tomorrow Let's just get rid of that now with respect to um sterling ozzie a little bit Little bit less than enthusiastic about being long of sterling ozzie given where the australian dollar is Currently trading at the moment it's trading the ozzie dollar is trading at the bottom end of its recent range Near the lows from november So in terms of risk reward and the fact that we're trading near a very long-term support line You'd have to think that maybe we'd do a little bit of a rebound in the ozzie If you also think that ultimately sterling is looking a little bit expensive And the fact that we've seen a bearish engulfing day here on the sterling ozzie Then ultimately maybe now is a good time to take a little bit of profit If you're long sterling ozzie with a stop loss above the highs of the past couple of days This is potentially a key day reversal We've seen a new high We've then closed lower on the previous day and we've made a marginal new low We are at the moment currently correcting a little bit higher So we're getting a little bit of a pullback In sterling ozzie, but as long as we stay below 179 Then this key day reversal could then precipitate a little bit of a correction back to around about 176 or 175 Certainly, I think if you're looking at trade if you're looking at trading sterling ozzie at the moment And you have a long position Then it might be worth might be worth taking a little bit of a profit because at the moment it's looking a little bit Overbought we're getting a little bit of Negative divergence on the oscillator and we've posted a key day reversal on the daily charts Looking at sterling yen Quickly in response to another question and Similar sort of story here. We're pushing against some resistance levels september highs We saw a key day reversal back in september that that prompted a little bit of a move lower Obviously, we haven't Tested aggressively lower, but what we did do is we did drop around about 400 or 500 points in the aftermath Of that key day reversal. So we'll pull that out of the way. We haven't seen that today We've seen a marginal new high On the the highs that we saw last week The important thing to establish here is whether or not We've made a significant new high and we've made a little bit of a new high But we haven't put we haven't busted out particularly aggressively. So 153 I think if we trade above 153 On sterling yen, we could see a few stops get taken out So certainly sterling yen is looking a little bit squeaky In terms of the fact if you're short because if you're if you're short if you have a short position Any shorts are likely to be above 153 and if we do get triggered to 153 I think the next resistance really is around about These these peaks that we saw in the middle of 2016 around about 160 And obviously that that particular peak there Was the just prior to the brexit the brexit vote So sterling yen is back to almost Not quite, but it's but it's approaching the levels just last seen around about the brexit vote. So Certainly sterling is approaching some very key resistance levels Which means that you need to be very very cautious of people about being aggressively long of the pound Particularly these sorts of levels Um sterling kiwi another question on that so quite happy to look at that as well It's probably going to tell us a different pretty similar story And it's actually quite similar to what we've seen With sterling ozzy not quite a key day reversal It's more dark cloud cover On the candle charts We go back a little bit further. So it's a slightly weaker signal But if we look at the 200 week moving average We're certainly pushing back against it. So there is a significant amount of resistance And we're coming close to a significant amount of resistance on the weekly chart Just below the two level Around about one around about the peaks that we saw Here around about 198 40 190 850 at the end of last week Change that to a daily chart And we can see that the highs last week Are again if you're going to be short sterling kiwi then your stop loss needs to be above last week Highs Which is still quite some wire way when you actually look at where it is now 196 18 so looking a little bit A little bit overbought so the warning signs are there now that doesn't necessarily mean that we're definitely not definitely not going to go higher But certainly the market is starting to look a little bit stretched Certainly in the context of where we've come from Over the course of the past few months So any disappointment With respect to any of the headlines out of brussels Is going to prompt a significant sell-off in in sterling and and its crosses So you really do need to be aware of that sterling is very susceptible at this moment in time To event risk and as such you need to be very very careful and very very cautious About trading it certainly from the long side at this at this moment in time Okay, so we've looked at euro dollar. We've looked at your we've looked at sterling dollar. Let's look at euro sterling because I think that is looking particularly interesting in the context of the past A few days and we can see straight away from this chart here. We've got a massive area of support around about a 740 The these lows here in july the lows in september the lows in early november and we're now approaching those lows again, so It's important. I think I think it's quite notable of when we look at all the sterling related charts How very close we are to significant resistance levels on sterling On a whole host of different crosses sterling yen sterling kiwi sterling Aussie euro sterling and sterling dollar, so Yeah, if you're longer sterling Be very cautious at this point in time because the potential for a little bit of a sell-off On the pound remains high at these levels But I think that's probably because sentiment has been so bearish on the pound And if we do get any any indication of a positive surprise Then these levels are going to go and they're going to go in a fairly big way And you're going to get a correction down Particularly if you if 87 if 87 gets given On euro sterling, you're probably going to see a very sharp run down to around about 86. So I'll be very very cautious about sterling at this point in time We've also got this week the bank of canada rate decision now Hopefully I've covered everything sterling related Um, and if you have any other questions on any other asset more than happy to answer those questions We've got the bank of canada rate decision later this week as well. That's due out on the six Uh, same day as the adp employment report, but I was looking at dollar canada earlier this morning and This is a very very interesting chart and I talked about it on my weekly video And we've seen a big big correction lower on the daily chart on the dollar CAD Big resistance around about 129 30 Is it likely that the bank of canada will move on rates this week? I think it's highly unlikely. We've already seen two rate rises this year And it's quite likely that um, the they will hold pat Despite the fact the oil price has rebounded quite strongly which has helped Despite the fact that the canada has weakened just seen a just seen a headline on bloomberg the dup disputes No rule of divergence deal claim according to the daily telegraph Uh, the dup's wilson says rule convergence is not deliverable The pound hasn't really reacted to that so That would suggest that for all those claims about no regulatory divergence The dup are probably going to push back on that which could complicate matters if that starts to hit the wires Well, it already has hit the wires. So the pound hasn't really reacted to that particular um that particular headline on bloomberg so It's in I think I think with respect to um the dup You're going to get this little headline risk at regular regular points throughout the day. So Just tweeting that now um But yeah from what we can see with respect to the the dollar cad Um, there's a decent area of support around about 126 60 It's also the 50 day moving average if we break below that Then we could see a significant correction back to around about 125 because it does appear to be trading in a little bit of a channel between 129 25 and one And this one 26 and a half area Here so certainly keeping on the 50 day moving average if we break below that then we could see a significant move lower Either in the next couple of days or in the aftermath Of the bank of canada rate decision on wednesday Let's have a quick look at the u.s. Mark is because they're likely to open significantly higher today um on the back of those uh um On the back of those weekend events that sign off you can see that I mean people are now talking about 25 000 on the Dow by the end of the year um I've learned to my cost Not to rule anything out with respect to u.s markets. They seem to have a mind of their own Uh, certainly a bit like bitcoin That has a mind of its own as well um, and Given the fact that we've gapped higher Today the likelihood is we're probably going to at least the markets are going to want to test that 24 500 level And they're after test 25 000 Um in the coming days and weeks. Let's not forget. We've also got fed meeting Next week that's likely to be a significant driver of risk particularly when it comes to um Fed policy makers attitude with respect to rate rises potential rate rises next year If we look at the short end of the us yield curve that is rising quite sharply In stark contrast to the 10-year which has been trading sideways for pretty much most of this year If you look at the if you look at the us two year yield that's That's pretty much Layed out in black and white With respect to With respect to Where the market Sees us short term rates So you can see from that chart there us short term rates have gone from 125 to 180 In the space of six months 10 year rates have basically traded between 2.3 and 2.4 You're getting a flattening effect On the yield curve and the what that means is that ultimately Um, that's why the dollar hasn't risen as sharply Um as it could have done over the course of the past Few weeks is basically because while short term rates have gone up long term rates haven't which suggests that The market is pricing in Higher short term rates, but as far as long term rates are concerned inflation The market's not pricing in a long term inflation. Now look, it's only really It's only really pricing in Maybe another two or three rate rises, but no more than that over the course of the next few years So that's the s and p probably going to close in around 2670 2680 Um, certainly that seems to be the next target for the markets the 2700 area Seminar sort of story when it comes to the NASDAQ. Let's look at the DAX because That continues to find really really strong support at around about the 2875 area Yeah, we did briefly break below that on friday, but as I talked about in my video on friday That remains a very very big support area. Why? simply Because it was the previous highs earlier this year and while there may be a little bit of overlap when it comes to where The market goes above or below it We really do need to close below 128 That 12870 area to really open up the downside at the moment. We're not really doing that So any rebound Needs to take out 13 250 we remain well short of that at the moment Which means that we're probably likely to continue to trade in the range that we've been in for the past three or four weeks Why? Because ultimately where we've been so far this year. We're up around about 14 It's unlikely given the fact that we don't have a german government yet And the political uncertainties still remain quite high with respect to The catalonian referendum in december. We also have italian elections The catalan elections. Sorry in december 21st of december. We also have the italian elections coming up early next year Political risk in the eu still remains fairly high. Yes, the economic data does still remain fairly positive But if that continues to push the euro up or underpin the euro It's going to be very very difficult For the dax to really push bill up beyond that 13 250 resistance area That i've been highlighting Over the course of the past two to three weeks So I think the dax is likely to remain in a little bit of a range If we do break it's likely probably to be towards the downside and then the upside As portfolio managers start to take a bit of profit on the gains that we've already seen thus far Year today, I think it's going to be very difficult to sustain any significant up moves in european markets In the same way that we were able to sustain any moves in us markets But we always have to be cognizant of the fact that we could have some disappointment When it comes to us tax reform obviously the debt ceiling and the federal reserve rate meeting next week Um quick look at gold Um got a bit of a boost On friday it's given up a lot of those gains already again Back in but we're still near a very very key support level on gold or in an uptrend Um, I don't see too much in the way of downside for gold But at the same time I don't see too much in the way of upside I think at the moment the risky asset of choice is bitcoin and most of those gold investors who normally would invest in gold appear to be dabbling in bitcoin because it I think there's a hell of a lot more upside in bitcoin than there was in gold prices at the moment. So Um, that's it for this week ladies and gentlemen Unless there are any more questions Just a reminder of um friday's non-farm payrolls webinar. Please tune in for that. We hosted by my colleague david madden otherwise, I'd like to wish you a successful week trading and um We'll speak to I will probably speak to you again. Um, probably Um in the next Well in my in my next week's preview video, which I use which normally gets released on friday