 Okay, very good morning to everyone is Wednesday 9th of October a little bit later than normal had a few There's technical issues to deal with but what I'm going to do now is run through all of the major headlines So we've had this morning going from Brexit to the Boris's hopes of this Delivery of a deal or threat of no deal and where we're at with that at the moment and how that's influencing the pound I'm gonna talk a little bit about the trade war still undeniably the main story in town moving global markets Then we can look at Trump an impeachment Jerome Powell a key speech he delivered last night And then we look at the calendar ahead and then Sam will have a quick run through of some levels as well So I'll try and keep this as as brief and concise as possible First off just having a look at the charts this morning. You can see that equity index futures I've managed to just claw back some of the losses following a lower close on Wall Street last night The Dow closed down about 113 points a significant loss that was seen in global indices actually in the last 24 hours and and all of this is derived from the renewed fallout between China in the US and this of course comes ahead of high-level talks About trade which are taking place in Washington starting tomorrow and also on Friday So with that kind of risk-off feel that lower close on Wall Street kind of fed through into the Asia Pacific session Slight about turn to get things underway as Europe has come in But as they say we're just mildly positive now an index stock futures But gold remains elevated albeit at a technically relevant area of resistance Which has held the price action from yesterday and just running into that same level resistance around 1515 And then elsewhere Bottom-right you can see the US 10 year has seen I already put a lips around it from a conversation earlier when I came in here Some exaggerated price movement last night at around hopper 7 PM London time on the back of drone power who did speak and made some significant comments And we're going to that as well. So let's jump straight in with Brexit. Where are we at the moment and? Brexit talks go on hold as leaders focus on pinning blame You probably saw the tweet from the European Commission president yesterday Donald Tusk Basically just direct. This is the the new format of diplomacy, of course in in global politics Twitter and Directing this squarely at Boris Johnson Talking about this isn't about winning some stupid blame game It's about the future and security of both our nations and what do you want basically? So high criticism this of course comes after Boris told Angela Merkel yesterday That the deal is essentially impossible according to a source Merkel according to other Unidentified people apparently told the Prime Minister that he would have to accept the Northern Ireland would stay in the customs union forever And so Germany which was relatively open it seemed amongst the senior Officials within Europe to potentially looking to Construct some kind of concession or deal has now called a fallen back into line with the European fold And has now distanced themselves from any deal being cut What has this led to well? Few different things. I just want to quickly get up to speed on This is in the Guardian this morning and basically their sources are indicating that basically the EU officials are going to be Discussing and have been at the moment about the EU summit, which is taking place next week on Thursday and Friday. This was supposed to be the key one of which While the initial plans of the government was that a deal was going to be ratified so that then they could you know Push on with proceedings with Brexit But what's actually sources are saying is that the EU are now going to offer an extension to Brexit till the summer of 2020 So as much as I think that that's I don't think we'd get anywhere near that at least in the interim period without some kind of Significant political shake-up. I don't think Boris would survive that long if it was to be drawn out for that extended period But we know what Boris is planning and Boris knew all along from mid September When UK legislation changed with the Ben Bill that it was no way he was going to get no deal done and Brexit was going to get extended and The solution he has for Northern Ireland was never going to get over the line for many different reasons I'll say for a different video. So Brexit is getting delayed as far as I'm concerned And what does that mean? Well? I'm not the only one thinking this and I don't just make these kind of rash judgments of putting my neck on the Line without actually letting the market be my guide and actually if you look at the options market and you're looking at pound dollar One-week risk reversals Basically, you're seeing a large divergence between option positioning and the actual spot price of cable Now we haven't had this type of divergence to this magnitude You can see since August and what happened then after this period of when the options market did this the pound rallied against the dollar 2% and I think that this is exactly the same sort of thing. Well, actually hold on Headlines just come out. Are you ready to make a major concession by allowing a double majority in the Northern Irish Assembly to leave new Irish Backstop after Unspecified number of years the Times has just reported So just seen just putting the pound cable chart here on a one minute. You've just had a pop Just as I've been talking You just had a pop of 50 pips in cable in the last two three minutes So yeah, just to go over this again You ready to make a major concession by allowing a double majority in the Northern Irish Assembly to leave new Irish Backstop After as yet unspecified number of years because before it was a it's a four-year period Again a lot of this I'm not going to pass judgment on what does this mean and my interpretation of it without really reading more into it Because it does get quite complicated, but nonetheless just trade what you see and in that case the pound Accelerating to the upside adding to what already was a bit tone being seen so perhaps then Let's just have a look at the actual times article that's just come out Let me see if I can get it up for you guys now while I'm on the mic One moment This is the article that people have just put out is this one here The EU throws Boris Johnson a lifeline over the Irish backstop Just came out well actually came out nine o'clock But I guess Bloomberg probably snapped the headline which is why you've had such a more violent reaction the last three or four minutes So the Times has learned that the EU is ready to make major concession on Brexit deal by providing a mechanism for the Northern Irish Assembly to leave a new Irish backstop After a set number of years the diplomatic sources closer talk said European governments are prepared to concede a unilateral Revocation of the withdrawal treaty by storm and after a period of time And so on so yeah That's the latest Yeah, we'll see I'll have to have a speak to a couple people about their interpretation on the back of this But one of the things here that I was just going into and just to conclude my conversation here Is that the way of which the markets are sitting at the moment would be indicative that? expectations are that Either there's a deal or there's a delay the idea of a no-deal Brexit is not Priced into markets at all at this point So if you did have for whatever means that a no-deal Brexit there would be a significant and severe move in the market Now the other thing that a lot of people are looking at is this and this looks at the pounds terms structure and volatility surface This is what this is looking at and it's basically you're looking at various different things, but it gives you an indicative idea of the cost of ensuring against undue swings in a currency and It's the highest as you can see from the red part of this curve here And on a two-month horizon which would be indicative that people are not expecting there to be massive disruption at the end of the month They are expecting though disruption to happen In two months time so what that would be pricing in of course is the risk of a new general election happening Just realized as well. I've got Sam's name on the on under my face So I've just changed that now just to make make that clear So, yeah, that that's the ultimate part with with brexit at the moment I'm not going to spend more on this in terms of the the final parts on the subject is the any hope of a deal Particularly Northern Ireland, of course has been still is and will remain the main sticking point You've obviously just had this times article about potential EU concession about how to deal with the mechanisms on the backstop and Johnson meets with his Irish counterpart veradka on Thursday and Friday of this week So probably more to come I'm sure the other point here though Just to be aware of that I was stressing to the other guys is that Boris has got some internal pressures happening if he does pursue a no deal even though he just tweeted that exact Mantra about five minutes ago from his account Is that Johnson is now facing an internal cabinet revolt over no deal? And so the people in question here being the culture Secretary probably the biggest hitters are the actual northern Irish minister Junien Smith the health minister Hancock and of course attorney general Jeffery Cox Jeffrey Cox are all on the resignation watch list if he continues down that road The reason why they're unhappy is that they feel that the person driving the government ship at the moment From a strategic or strategy point of view is basically an appointed advisor i.e. dominant Cummings And not MPs or the cabinet as should be the democratic case And they are so dissatisfied with that that they're threatening to resign All right, few other headlines just so you're aware china Obviously, this is still the main focal point for markets and I would expect more source comments to come As we go through the day because we're one day away from the recommencements of the face-to-face high-level talks in Washington But china says stay tuned for retaliation over u.s. Tech Blacklist now what has happened this morning is that china have come out and said they may restrict u.s. Visas with anti-chinese links and strongly opposed the u.s. Opposition in position of visa restrictions that they did about the The way of which certain muslims are being treated In one province of china in a in a break of human rights issues. And so that's the latest One thing I want you to think about though with this is that nearly every time we've gone into top-level talks between the u.s In china typically what happens is the u.s. Makes quite a firm posture by taking this type of proactive More more assertive approach to negotiating table very different here a little bit as china's retaliated But generally speaking what happens then is the markets in such a state of depressed expectations Just any glimmer of hope of any type of progression in talks tends to be met by quite a meaningful response And that's that trade war cycle that we refer to before and so definitely that might kick in again once more It would not be that surprising Um This is that article. So I've just mentioned that we'll skip over that The other thing with trump, of course at the moment is he is still facing an impeachment probe The one thing that's happening here that's most evident is that trump is just not playing ball or cooperating at all What can happen here? Well, congress does have various different powers House democrats could threaten to cut funding block new laws unless trump starts to cooperate with the impeachment inquiry Obviously trump doesn't want to Um cooperate because that would show some kind of implicit nature that he knows of what was going on and things like that So he's doing I guess has would be advised the right approach so far Because the democrats probably have very little political appetite to start start cutting funding And restricting the passage of new bills because that reflect bad on them going into a political campaigning period So that's the latest there. That's not so much a market mover right now The trade talks way out and supersedes this as a as a topic for for trading at the moment The other thing was juror in pow pow has Uh gave a major speech last night in summary said that the central bank will resume purchases of treasury securities In an effort to avoid a repeat of recent turmoil in money markets Now what he's referring to here is this This is the feds balance sheet of which hit its maximum Kind of swollen size at the end of the commencement of the active purchasing of the third round of quantitative easing That was when the the feds balance sheet in terms of total assets hit four and a half trillion That increments quantitative tightening through 2018-19 until we've had this latest episode of uh of economic downturn Which has put a block on that and then we've had these pomos which have been taking place to address them This is liquidity squeeze now. Obviously, there's lots of different things the timing of corporation tax being paid Um treasury government funding being settled in in the fixed income market But also the fact that they were withdrawing Overall some of the liquidity in the in terms of tightening of the balance sheet So what he's basically said is that they're actually going to start repurchasing um Repurchasing government securities, but they're going to be focused in treasury bills for those not familiar with terminology bills is very short-end duration In bonds so this would be typically Can be anything up to two years whereas anything two five seven ten 30-year bonds they would be notes And so specifically looking to address this repo issue which has Come to the forefront of market's attention of the last few weeks He was explicit to say this is not To be confused with large-scale asset purchases i.e qe And the other thing he did say was a quite a firm hint towards the probability or possibility of an interest rate cut at the end of the month And expectations now federal funds rate futures are priced at 86 for an october rate cut um final things to have a look at Um, this was that earlier article that we've just seen the use throwing that lifeline from a calendar perspective What we're looking out for today We had a mixed api infantry report last night basically conflicting signals between the headline crude and the gasoline figure The latter being quite a large drawdown But we'll go over that later as that's the main kind of figure scheduled release for today Given the lack of other than that real distinctive Points of interest until later this evening when we get the fmc minutes Powell is speaking again at 4 p.m. London time But i'd just be keeping an eye out for any rebuttal to the time source report We've just had on brexit and then any further and i would anticipate there to be the case more China-us related comments to come All right, let me hand you over to sam quickly. He can run over a couple of other points of interest as well from a technical perspective Yeah, hi guys Bring in the the pound to begin with I'm just pushing higher as you'd expect of that Initial comment. It's always a risk trading the pound after a spike like that because we always know With a comment Is usually the way it's been going anywhere the last few weeks a denial to come So just be a bit careful looking to to get long on Then this push to the upside already. We've just broken through this morning. We're talking earlier during the first part of the The briefing about this the importance of this pivot from a technical point of view and And you know the reaction we had there was was great and then obviously this is that spike that comes through So technically it has actually behaved itself quite well. We're now Through of course on the spike quite an important zone looking here between 84 and 89 So from a technical point of view, that's that's pretty significant The high that we got to was also a bit of support from yesterday early morning Is well, so some technical levels working quite well for the pound um Just be aware that of course if you do get the other side and denials of all of these Major concessions it has to come back down and below that pivot it starts getting relatively Ugly again, shall we say but it's important? You know areas to consider just above the spike from the the high also would be looking to get in You know a trend line around that mix which also comes in to today's high That's a break of that then. Yeah, we can push on a bit At its highest point. We were actually then, you know over the last two days actually up for the for the days However, we are just drifted down a bit from from the highest training now 123 another market which obviously would have spiked from that is the euro and at the time of the briefing as well We're talking about how that was finding some very strong resistance on one 10 16 you can see the significance of that that gets the break through And of course yesterday morning's lows as well Which in the mix sorry that this is the area we're talking about Which would behave pretty technically as well now also up at these highs the significance of this area Let's put this onto a 240 minute. You can see that low the what was the 24th morning Area of the 25th just so significant. So if we can you know at some point maybe today Try get a number you know test of all that area and break break through be pretty significant for the euro As well however, as we know this year any euro pushed against the dollar as we met with a decent break to The downside at some point So don't get too carry away is what I would say trend line from those highs worth mentioning Here as well, you can see that over the last few training sessions going back to the fourth Just above the high of the day got the r1 got some resistance from yesterday So pretty key level for it to get through before we start getting carried away around one 10 50 As well s and p worth bringing on here just on the daily chart that trend nine That we broke through but couldn't close The beginning of the week that again is coming to play Just bringing that here you can see almost reaching out in the early hours of this morning hitting the further september Loan we have pushed higher since then putting it back to a 60 minute chart and just putting the pivots on for a bit more Direction worth keeping an eye around the pivot just for Some nice support. We had there. Yes. They before that breakthrough above there as well 29 25 Which over the last few weeks has also been a key level And also to the upside if we were to have a super day 29 35 a level But what would really interest me to the downside is a break of the third of september low Yes, this morning's low and that trend line and getting a close and we could really push down As well just above 29 100 trading for now as well So for the moment stocks having a decent day after a bad one yesterday You can see the Dax which has broken through its resistance that we were struggling on during the briefing Earlier we now above that at that point as well. So I would say the next level For the Dax from a market point of view anyway around 12,056 So you could expect some resistance there also are one as a zone looks pretty important Again here looking on that 60 minute chart to the downside if stocks were to Push down in Europe. We mentioned that trend line in the s&p I'd also have one here for the Dax as well Can we potentially get to to that near that double bottom from overnight and this morning as well Below there and things could really go down as well quick look over at gold to to wrap it up You know, even though we saw a bit of effectively dollar weakness there as money flew into the euro gold couldn't quite push on We had this trend line drawn on earlier From yesterday's highs again, not quite making that today Also putting this onto a 240 you can see just the significance If we at any point come back down to 1492 every time we come to it. There's something going on Really is one of the best levels in markets at the moment to keep an eye on Actually lying in the sand for the gold quite significantly above there at the moment And also to the upside I probably have this as a bit of a zone as well 15 19 15 22 Some nice price action around there So more intraday taking it back to 60 minute A break above those trends a break above our one then fine You know that 1492 area looks quite distant Um, but if that was to to hold as resistance then obviously That could come into play 1500 obviously a key point as well before we would get there along with some of those loads from yesterday Afternoon, but certainly that's the key level going forward. We'll go through oil later on. Of course, do we's out In their usual slot 3 30 so we'll cover them as they come through just keep an eye obviously on the pound As we know these comments aren't a guarantee that price is going to continue In this case to the upside so to speak the way I have that score on you can see already from the high It's come down 22 Let's test my maths here around 40 50 ticks as well. Hope you'll have a good trading day And I catch you in the chat