 Hi guys Tuesday the 11th of June First day back in the office since Thursday Obviously, we've had the peers on the briefings and I was watching them on on Friday for the non-farm payroll Preview and then yesterday and there's probably no one happier that the the non-farm number was as bad as as Donald Trump As of course everything seems fine again now Let's have a quick look over the markets before we come back to this guy on my right-hand side Boris who? Is well in the the lead of the the conservative leadership race We'll have a look what that means for for the pound as well going forward But having a quick look over the markets obviously just saying there how happy Trump must have been with the the poor Non-farm number S&P now. I mean it's I know where we're below yesterday's higher Percentage-wise from the all-time high It's about to give a tape. Yeah 2.3% on the futures, which is incredible Considering just how quickly we have pushed on and you can see that win streak coming to a brief end on the futures They say but one two three four five Days in a row before that has really helped push things up and the Dow Joneses is the same in that reaction higher Well the Nasdaq also so one to keep an eye on as we go through the the week and is this going to be Sustained and we do get another test of those highs has Trump had everyone in his back pocket As he you know plays around with these these trade deals And then last minute comes to the rescue only to see things going higher I was also looking at a tweet from from peers yesterday In the aftermath of the briefing and the last sentence there was the one that caught my eye free rate cuts in 2019. So if we go back to the ADP number last week and the result of that being the worst since 2010 then it was priced in that is going to be 63% chance of free rate cuts, which is obviously just Incredible how that was priced in having been only 2% a month ago But yeah free rate cuts come on. I think to cut to max and I would agree more So with with peers there, but with this being priced in and See the the Mexico and US deal Or the increase in tariffs was sponed. It's all helping here stocks recover You know briefly above 2900 yesterday on the futures headlines overnight Now well, you had the the well really the the aftermath of the weekend where everything gapped higher That continued and markets in in Asia continued their relief rally If you like or just the correction of the down move pricing in these negative trade headlines Chinese stocks were boosted by the prospect of fresh government stimulus The CSI 300 was up 2.3% so a really big recovery there the hang saying naught point seven and the australia's S&P ASX 200 gained 1.2 percent toco's topics just up half a percent just and of course that followed through To wall street yesterday and we finished although relatively fat We did push higher in the morning obviously helps by this rally in Asia worth obviously keeping an eye on in nine minutes or so the cash open for European equities which Likewise with the US have seen a nice recovery going back to the 31 at the end of Last month in the beginning of this month where we have pushed on we have a look at some levels more technically speaking shortly You can see just where we're trading now is is a Well, it's just I guess made that gap close So this was a level we were looking at at the back end back end I should say of last week and we finally Not too long ago filled that gap and you can see the first test of it acting as a strong resistance level Definitely one to keep a close eye on should we push back above there in nine minutes or so If we go back to to the Mexico trade I'm sure, you know, this was was covered throughout the day yesterday as well Really that delay which, you know, certainly the New York Times and other Publications were suggesting that the the idea to delay this was all put back into March anyway, which Obviously Donald Trump came out and vigorously denied But those terrorists which of course were meant to be put in place on wet on Monday So yesterday they consisted of five percent tax on all imported Mexican goods And it would have risen at regular intervals to 25 percent if we did have this Certainly Navarro the back-end of last week suggesting it was going to be delayed and Trump coming out as well certainly all over Friday When I was you know on the on the plane he was very much You know on the plane to where I was going on holiday He was saying how it was going to be delayed and they were they had promised to step it up and Again last minute Trump saves the day. Well, that's what he will obviously want you guys to think But I do still stand by what I've said before that I do feel he has this stock market just in the palm of his hand You know, it's gonna pick up into You know caught a free and for of this year with the presidential campaign It would look very very bad especially with you know the amount of imports coming from Mexico That if there was no deal and it would effectively would still you know hurt the the American Household, I think there was a study done that would be about $900 a year Well, that might not seem too much ahead of a presidential campaign that would always hurt him So I think it was inevitable that this one was gonna get sorted as will the one with China And he just wanted to buy it a bit of time because I think if stocks had continued to go higher from their all-time highs That we had well, let's just bring up the chart again. See we peeked if you like on stocks back in First of May if we continue to go on and on and on well, there's gonna have to be a pretty big room Recovery of that push higher or correction if you like and last thing Trump is gonna want is that to be in October November December when you know this market then actually would have to come back down and if we had had what we had here Back then or in the future then we'll see that's not gonna look too favorably on the Don himself Interestingly just pushing away from here the dollar just trying to strengthen a touch and that is weighing on gold a bit here Which has just come to test the low of yesterday We can see that gap lower as money flying into risk or out of safe havens and that has just Led to the gold push down But also this dollar strength perhaps is weighing on on things a touch You can see obviously the reaction following the weak non-farm number pushing things higher only to snap back down So we're keeping an eye for any gold traders just on those lows equities not really Batting an eyelid yet, but of course keeping an eye on the Dax around eight o'clock for how that that comes along So with the the Mexico and US deal if you like post Agreed or the tariffs delayed You know Mexico have agreed to deploy more National Guard troops So before previously only a thousand now we're looking more at six thousand or the pledging to do so So Trump is happy enough with this for now And I think for the time being it's almost a case of okay You know that story is now gonna start to become old news keep an eye on on maybe some Trump rhetoric If he starts getting a bit more hawkish and aggressive on the situation in a few weeks You know, maybe they haven't done what they promised, etc. etc Then there could be some good trading opportunities none more so than the peso which of course get higher over the weekend Really big cat here. You can see this is the clothes that we had back on Friday and then the cloak of the open on Sunday evening Really big push higher. So if that was to you know deteriorate if you like Well, what an opportunity that would be for a reversal and of course in stocks and safe havens As that risk move would obviously have to unwind as well But the the peso another positive start to this morning You can see just coming up almost to the higher clothes that we had back on yesterday As well, I'm sure you have else have seen it this morning And you know talk of it over the weekend and the overnight as well Trump saying he will raise tariffs If she fails to meet him at the G20 That's meeting taking place what we'd now the 11th so taking place in 17 days June the 28th and 29th There has been no real public indication that that G Is Intending to avoid Trump at the summit But again just with the the way these things go and any tweets from Donald Trump Surrounding this issue just worth keeping an eye on but at the moment It's not in it's not looking like he is going to avoid. However, if that was to develop, you know, you would look to be short in Certainly US equities and Chinese equities or equities in general and then perhaps looking to get long Government bonds again, which I can see have come off a tiny bit from Monday But just as we're looking at the charts now or I am I should say the bund is on the higher the day as is T-notes both with their pivot levels acting as a bit of resistance as we come into the European Open so yet Trump's threatening to slap tariffs on another 300 billion dollars worth of Chinese Exports if there is no meeting at that G20 In Japan in typical Trump fashion He came out with all these these comments here if he initially did a phone interview and then was tweeting it as he does I think he will go and I think we're scheduled to have a meeting I think he'll go Trump said in the phone interview with CNBC or on Monday. I would be surprised if he didn't go I think he's going I haven't heard that he's not were expected to meet And if we don't that's fine and if we do that's fine So classic Trump and he did go on to to make more comments about how they need a deal and and all of this stuff as well And I posted this this article in the morning research But you can see here another comment if we don't have a deal and don't make a deal will be raising tariffs putting tariffs on more than We only taxed 35% to 40% of what they said and they had another 60% that will be tech so The room for more hawkish comments is there I think that's only gonna really follow through should there be any indication that Xi is not going to attend but I think for now he's he's going to they're gonna have a chat But that could be a good opportunity into the back end of the month how that develops Does Trump necessarily want to? To get this deal over the line just yet or maybe as we come into the heat of the presidential election for 2020 Well, that's when he really starts to step it up finds that last-minute deal just as we come into voting and Timing that stock push above these all-time highs could be the trade To do just a quick look over as well at that that non-farm really you can see 75,000 Was what came in? Yes, it's bad, but In terms of stock markets is it was a good thing. It was always a tricky one to trade stocks on non-farms anyway The the bad number does this mean where the economy isn't doing well and surely we should start coming down Or if it's bad news, well really it is good news and you can see here 130. That's the reaction We got we came lower But the idea that actually now surely we are gonna start pricing in these rate cuts for real What an opportunity it was to buy gap higher over the weekend and you can see from the non-farm payroll Release or the low of that following the 130 on Friday. We're up 1.7% so decent recovery and I did see a couple of Donald Trump tweets regarding the Dow Jones having the best week or something of the year or the second best week of the year I guess that wouldn't be too hard when we did have the the push lower from me But he seems happy enough at the moment and certainly for the remainder of the week just having a look at the the calendar for the remainder of it I Would I would favor still stocks to to push on I don't see Right now though and then necessarily having a bad end to it. I know we're still early on Tuesday But as things have progressed. Yes, we got the Wednesday Inflation numbers, which will of course be worth keeping an eye on and then we've got the conservative leadership race First round on Thursday, but that's not really gonna have an impact on risk. I would say in less Well, I'd say that would be more down the line As we move on To Friday, you can see the US retail sales as well and the manufacturing production I think even if they're they're bad again You're just gonna see a case of yes stocks come lower only to go higher So negative trade talks will be the reason if there is any for us to to come lower But for now, it does certainly seem like following the weekend. The only way is is that Shall we say elsewhere? Brexit obviously the the right wing Touries you may have heard this I've got an article here on FX Street and obviously ran Ranskork in there They've run down they mentioned it's that's worth keeping an eye on the right wing Tories 92 group hustings Recently held non-binding votes to gauge the popularity of the UK's 10 Prime Minister candidates Of course over the weekend these candidates I've put their their name in the hat or withdrew if they didn't have enough support So we came down to these 10 and the outcome is no different than general market consensus That favours ex-foreign minister Boris Johnson to become the next PM he's odds on with the bookies It is worth noting though However, the you know the last few leadership races whoever's been the initial favourite actually hasn't won But it does seem that it's pretty much nailed on for Boris to To to get the get the nod and of this this poll you can see he got 34 of those votes Dominic Robb not even a close second 18 and you can see is it trickles down to the bottom here These guys very much not in the race as it would seem We've we've gone over this This chart if you like from from Guido forks, I know if you don't follow him on on Twitter It's definitely worth giving Them a follow and this is just all the the PM the conserving PM's who have put their sort of backing behind each Nominee so far and you can see Boris Johnson and you might not be able to see because it is relatively small Let me zoom in on that Not able to Boris Johnson has many many more than the next In line, which is actually Michael Gove According to this he saw that 1992 group hastings, sorry Had Dominic Robb second these fourth on this list, but yeah Boris Johnson Way way in the front. We're backing of 67 6 oh well 63 of those MPs Michael Gove way down in second place on 30 So what does this mean for the pound? I've you know, we've had this recovery if you like over the last few days just because of the dollar weakness But hasn't got away from itself has it in in fact, it's only just back above The well, I suppose it's nicely above 126, but not by by much Of course that 126 on the the longer time frame you had the trendline that came into play You had the previous low of last year as well and let me just get that trendline on On the trend Here we go So as It does look like Boris is is gonna get the nod. What does this mean? Well, look if no deal really starts there to pick up. I think we still have to come lower I've been for certainly the beginning part of this year a pound bull however That has drastically turned and a lot of Boris you could say is priced in but are you really gonna want to do a deal with the the devil if you like we did see some Comments from the Guardian overnight saying EU sources Indicating that the idea of Boris Johnson in the European Council is likely abhorrent to some EU leaders With the source actually also critical of Dominic Robb So whether you you are even gonna change any deal or not remains to be seen But I think it is pretty pretty clear that it's gonna be a struggle either way whoever gets in And October the 31st may well again be pushed back the The conservative lawmakers just to go over the run through again Will hold the first found round of voting on Thursday to begin that narrowing of the field and of course yesterday we had the That's you know the leaders sort of proposing what they would do should they get into into charge and I actually got quite a few What's that messages from from my mates who they see me as the sort of go-to on on Brexit and markets and trade and all this and a lot of them are massively happy with with Boris Johnson with the idea of Increasing that that 40p tax bracket to you know above 50 to I think it's 80 Off the top of my head and I know they perhaps you know They were saying oh, I definitely vote for him and obviously while that's not the case it would be the concertive Members that would do so Certainly from the idea of public backing just doing that has helped Push him further. Maybe the you know the public image of him, which isn't that great You know might help sway things slightly for for the future But it seems like it's nailed on that Boris is gonna get the nod Where we go from here. We'll evidently come down to the no deal chance of that increasing or is there going to to be a deal as well Elsewhere, let's have a quick look at the The calendar for today. We do have some UK numbers out this morning yesterday the GDP weakened Which obviously helped weigh on the pound at a touch Following that 930 release however We did recover into the back end of the session and we're not too far away really from where we were Before that 930 yesterday usual slot as well today for the Unemployment unemployment rate employment change and the average weekly Earnings including an excellent in bonus. So that's always worth keeping an eye on but as usual as with recent times good or bad Unless it's catastrophic Focus is very much going to be on Brexit for pound related markets into the afternoon. We have May data from Peter from the US with a PPI final demand worth noting of course as well The UK data is from April so relatively old. So I think the reaction will be short lived Into the afternoon it gets relatively quiet from a data front Usually in historically. I mean when I started trading back in in 2014 I was always told don't really get too involved on a Monday and Tuesday post non farm payrolls coming in this morning reading the headlines choppy market conditions and Really, it looks like it's going to be a case similar to that in the FX markets where not too much is going to be Going on because of that aftermath from Friday and things will start to pick up inflation wise and retail sales Wednesday Thursday Friday This evening. We do have the API numbers out of The US for the crude oil so that be worth keeping an eye on around that time ahead of the DOE's tomorrow We've had a half decent recovery and oil, but The move lower has been significant But if we were to get a follow-through higher over the coming days, it's only going to help Stocks push on as well We do have some speakers mostly out in the morning or all out in the morning from a scheduled point of view Novotny has already come out. Nothing really of note We're keeping a knife certainly out of the the UK at 830 and a Bank of England Saunders at 10 o'clock as well and 10 raro speaking at monetary economics conference quick look over the charts to rack things up before I Let you crack on with your day the decks 10 minutes into the open choppy as usual You can see here. We went lower to come higher I'll just be keeping an eye on that high the way that that gap is above that you might get a relief Which is going to help stocks across the pond push on as well Gold which we talked about earlier in the briefing push and lower really level key level support We're keeping a night if we were to push on for those previous morning session lows to act as a potential level of resistance as well for now be keeping an eye on the decks to Lead the way Focusing then on US equities into the afternoon, but looking for areas to buy so looking at the S&P here should we get a retracement? Put this on the 15 minute You can see the previous high of yesterday evening and the pivot is worth keeping an eye on as is this low However, the amount it's been tested I'd be just a bit more cautious and any chance to get round to S1 And which would also be the gap fill on the futures I think would be in a great area to look to go long as it stands any questions as usual, please do let me know But I hope you'll have a great trading day