 Okay, very good morning to you. It's Thursday the 16th of July going to talk to you a little bit about how the European Open is sentiment-wise a quick run through of the different asset classes on the charts And then we're going to talk about the ECB ahead of the interest rate decision later on today So without further ado, let's have a look at the charts and how things have fared in the close on Wall Street overnight in Asia and how we're set then Technically speaking for the market open here in Europe having just gone through 7 a.m. Now in London Looking at the equity markets firstly I've still got those markups from yesterday when we have had kind of the weekly price movement defined by The rolling back of some of the reopening plans for the state of California Which caused one of the big sell-offs earlier in the week however, then the somewhat recovery of that and the Moderna news that was positive this time yesterday that we were Discussing and the gap up in prices and then that idea as well at the time as I was saying Feeling a little bit more just generally bullish in a sense of the fact that downside could be relatively limited And yesterday's price action technically very sound to that point of the initial closing Kind of candlestick wick that we saw in futures trade in the S&P Two days ago, and we retested that so that's 3192 and three-quarters quite a key level here and the market also bouncing at around the respective s1 so far in the overnight session, which was also really xing out that initial dip that we had Just momentarily going post European close yesterday It's been a relatively good area of support here You can see we tested it early in the European morning yesterday had the slight breakthrough and at gap fill printed Shortly after Europe left the market, but then we've tested that again and that coinciding with the s1 today So some decent downside levels again of support and I'd keep an eye on in the S&P So first off being here if we did break down further then this next level at 81 And three-quarters. I'd probably be keeping an eye on you can see here where the market is reacted on some prior occasions As well as some of the reopening of trade here Of that initial pop hire that we had on the Moderna story And then below there studied to bring in then the previous highs that we've had so Good good areas of support here on the upside the pivot level which would Also signify the Asia-Pacific high end of the range So worth keeping an eye if you're looking at that range first of all though We've got to get above where we're at around the moment. Oh six and a half sevens If we did push higher then again quite a nice area of upside resistance To keep an eye on today. So relative to this here kind of keeping an eye on these spots 1529 on the upside then on the downside got a nice area of support 97 93s then any further breakdown down to 81 three-quarters Again from a Sentiment point of view. I don't really see too much this morning in the news that I'm reading I'm obviously going to run you through the stories But wouldn't be too surprising if you know xing out these levels if you're just looking at this market more broadly Well, then why not just have a bit of a range play going through these levels here for The rest of the session until something more definitive starts to break So that if you're looking at it a little bit more conservative would be the upper-end and lower boundaries That I'd be keeping an eye on the NASDAQ is a little bit lower in terms of its setup So you can see here in the center chart and just be keeping an eye on that s1 Could be quite critical because just below there is the low point that we had and around the same time of the European exit in the Futures yesterday and then in the DAX again from a technical perspective quite nice in terms of a cluster of areas of Relative support that have helped some of the price action of late You've got a bit of a bounce off the initial lows seen late in the Asia Pacific region and then here you can see Some areas from going back to beginning of the week on Monday where that s1 is placed in the future It's also encapsulates some of the lower bound of the price activity From yesterday morning and around a similar time to to now and also that closing price before the Moderna and The DAX following suit with the US indices popping higher in the futures market So again some nice lower levels of support if the price was to come a little bit lower here elsewhere gold Continues to kind of Play that range Overall, I mean, I haven't really looked at it too intently from a lower time frame But looking on a 30-minute candlestick from a conversation I was having with a couple of the traders on Monday We just identified basically the the upper and lower bound of this range that we've been trading since really last Thursday of Last week and you can see we respected that again yesterday On both the European morning and in toward the late US Trading hours as well. So for the moment coming back towards mid of that range And then in oil markets, obviously we had the OPEC JMMC meeting They followed through but that was absolutely as per expectations in regards to tapering back on the stringency of their supply cut Slightly offset to a certain degree of a few hundred thousand by the compensatory cuts to be made from the lights of Iraq, Kazakhstan, Nigeria, these types of countries who have been uncompliant in the past You'll have to now over comply to make up in order to adhere to the deal It was quite interesting actually Because some of our newer traders we got through to 2 p.m And that obviously is the traditional NYMEX pit opening hours and soon as the market opened the OPEC kind of news Had already come out before this markets just dropped fairly rapidly and a lot of the new traders were kind of like Oh, what's the headline? Where's the news? You know the point being is you just got to be aware of the structural kind of volume Profile of a day and you do tend to see then a lot of the the spiking movement add around these opens It's not just oil It would be the same or comics for gold for equities on an IZ for example No, so around then for any again new market participants if you're looking at markets for the first time It's not just about an economic calendar It's about knowing your products and knowing the kind of the structure of the ebb and flow Typically that you see on the day where volume peaks tend to happen at the open and close of these products and Yeah, a lot of people were losing faith at the time because we were we on the desk work We're quite bullish about the prospects for oil yesterday just given the long Longer term kind of set up of what we've been seeing from that kind of fateful OPEC failure that we had Back in March of this year and the kind of squeezing of the price activity into this 41 And obviously as you can see here on the shortest time frame We actually did break we saw a nice little break higher when we got above yesterday's R1 Which was that double top and the prices ran up to around 41 25 before we've really consolidated since then late yesterday And in the overnight session so it's going to be interesting now Does feel like we were somewhat knocking on the door of this key level Multiple times over the course of the last two weeks yesterday looked now that OPEC news is out of the way and Importantly in my mind the markets not moved lower in a consistent fashion That does open the prospect then for potentially a little move higher and technically speaking if we did move higher Then you know the nearest clearest targets, I'd be looking at would be Essentially up at this 43 32 you got 45 handle here You know absolutely would not see that as an impossible target in the near term And I know talking 41 to 45 sounds like a big leap. I'm not talking about necessarily an intraday move But just look at how far we've come in such a short period of time. I mean in the last three months We've effectively doubled price from 20 to 40 So the idea of then just going from 41 to 45. I think it's absolutely realistic Given the situation at the moment where I was reading yesterday Chinese imports at this point in time are back to record high levels They're in fact 15 percent above Chinese oil imports of where we were pre-pandemic And as we're going to see some data points I'm going to show you shortly Chinese GDP has bounced back into positive territory as well Albeit it's not an assured recovery and there's still uncertainties of course behind the COVID situation But the ongoing I think commitment of OPEC to still remain compliant The fact that there is this supply-cut deal the fact that the global economy has somewhat Relative stabilized comparative to where we were just a few months ago I don't see any reason why at some point this level doesn't break I Still think that at the moment. It's not a Fixed and definitive ceiling. I think we actually get above there I guess timing is just key though of when that happens So yeah, that's the overall mix on the charts the currency market Dixie's touch firmer this morning Just reversing some of the decent selling that was observed yesterday So Dixie up 0.1 percent just imparting some minor downside pressure onto the major currency pairs Euro top left here. Just keeping an eye as we come as into close proximity to yesterday morning's open level Which is around that 114 handle way in the future. You've also got the s1 All right. Well, look, let's get stuck into some headlines First of all, let's start chronologically then with the Chinese and Asia-Pacific session where generally in the region things were a little bit dampened Not not huge sell-offs, but just negative pretty much across the board the CSI 300 index so the biggest companies in China was down multiple percentage points at one point. It's kind of Pulled back a little bit, but still negative territory This would mark the first three-day loss in fact for that index in China since May now I know that sounds like a like a newswire statistic somewhat sensationalized because don't forget how How much we rallied over the course of the last several sessions or week and a half or so in China You know the local indices were ups, you know in excessive well into double-digit percentage gains So Rallying 13% and coming off three doesn't sound so frightening when you put it into context rather than just believing a One headline that you're reading this morning. So that doesn't really spook me too much to be honest From a data point of view, there are a few things that have come out notably you've had If I just jump to here This is GDP industrial output and retail sales. So just running you through these numbers GDP for Q2 came in at plus 3.2% in the three months into June from a year ago and that reversing of course The black line a heavy contraction of around six point eight percent that we had in Q1 So this GDP number at three point two percent for China was better than the expectations of two point four percent The industrial output rose four point eight percent But that was basically in line with expectations The retail sales number though was a disappointment for June that came in at minus one point eight percent against expectations of a plus 0.5 percent reading so if you read between these The kind of headline figures and you start looking at this a bit more intently essentially what it's telling us is that the recovery is still lovely Industry driven consumer sentiment those still somewhat fragile And I think this is a really important point here for for China generally and how to interpret this economic data Because what you're seeing at the moment is if you're tracking a lot of these mobility reports Yes, China has seen a degree of return of let's say normalizing in its behavioral patterns But we're still quite a fair way off Pre-pandemic kind of activity and you know consumer psyche certainly is it's such a fragile thing when you're talking about people Returning back to from a consumption point of view normal behavior in terms of dining outside Going to bars restaurants, but also shopping high streets Shopping centers these types of things and so that's not yet recovered And that's quite telling because then if an economy like China, which is heavily still dependent on Manufacturing activity and exports. Well, then you're reliant then on external customers buying your goods and importing and One of the things here though is that the rest of the world is in is still trying to find its feet and deal What is going to be a very deep recession and so if China doesn't see this? Internal consumption starts to increase and consumers really start to step up to the plate then it's hard really to see any real further Improvement on what's just happened at the moment and obviously you'll be eyeing what type of consistency this Chinese Economic recovery can have if it is then dependent on external forces when those as such in the case of the U.S. And elsewhere globally are relatively weak at this point in time So yeah quite interested to see how that plays out Otherwise on the U.S. China trade front It's been a couple of new developments President Trump has indicated to aides that he does not want to further escalate tensions with Beijing Is the latest from overnight? He's ruled out additional sanctions on top officials for now according to people familiar with the matter This comes on the back of some reports that his administration is Considering a sweeping ban on travel to the u.s. My Chinese Communist Party members So again, I do feel like this trade war. It's not really having too much of an impact on prices at the moment I almost feel like Trump He's kind of falling a little bit into the boy who cried wolf as far as the market's perception is concerned and the more He kind of talks about it the lesser impact that he's now having so I think he's just reigning in a touch Again anything that's coming out at this point. It's not really that market moving that we're hearing So yeah, I would disregard that for the time being that that doesn't mean that we still don't remain somewhat vigilant for any further updates So on that front Moving on then the main thing that we're looking out for here is the ECB of course this is the the kind of decision-day guide of what we're looking out for and The really the the summary here is they're expected to keep their major policy tools unchanged Remember it's just the last meeting where they did a slightly bigger increase top-up to the The pandemic emergency purchase program in order to kind of get ahead of then what was a slightly Worse economic development in the eurozone that they previously foresaw So there's no real need for them to take any further action at this point However, that does not mean that we'll be closely monitoring Christine Lagarde's press conference as usual It's going a little bit more of a feel and an insight of where their heads at right now about the current context But also about what they feel about whether their current level of policy That's being implemented and it's available is going to be sufficient or is there going to be need to be more in future So the forward guidance essentially you can expect her as well to say things like The further renewed call on governments to step up to the plate with a joint fiscal stimulus This kind of puts the pressure on then from a timings perspective on the EU leaders gathering Which of course happens on Friday going into Saturday when they're looking to get some more concrete definitive confirmation on this European wide recovery fund which as far as ECB is concerned is Pivotal to complement The monetary stimulus to safeguard the economic recovery of the euro area As per usual, I did tweet this yesterday. My handle is here if you want to check it out in more detail This is that really great crib sheet that the chaps at ing put together It's the most easiest way that I can express them trying to prepare for a monetary policy decision Which is rather than get too bogged down in the complexities of Monetary policy and the nuances of its language. I mean it is a very high-level Way of looking at markets and trying to understand things I think simplicity is key when you're trying to trade you kind of want to eliminate Those complexities and make it as actionable as possible and you can't really get much more than that than what they've created here in this crib sheet So if you're new to this and you haven't seen it before and they basically defined Eurozone policy into four distinct categories Inflation growth outlooks and then more kind of the tools that would create then policy that being interest rate and QE and this On-top then emergency pandemic kind of bond buying program And then what you have here is their base case in orange their then potential targets for any euro dollar type post reaction that you might see and so Anything north of the base case would be dovish. I the euro dollar pair getting weaker euro weakness Anything south would be a more hawkish interpretation and then each one of these boxes would be the suggested change To then the current fixed language in orange What would need to be said in order to create this more hawkish or dovish type reaction? So it really is a great matrix. Now here then what is the base case? So currently the inflation and growth outlooks are probably the two things that might see some subtle changes Rather than on the right-hand side the guidance around rates and the PEPP program They're unlikely to be changed. So what are we looking out for was current inflation outlook is Surrounded by exceptional degree of uncertainty is what they said last time What I'm just suggesting is that the recent data suggests the CPI pickup will take longer. So here Rather than just sort of saying nothing and just talking about uncertainties they're refining it a little bit and in taking quite a dovish stance to be supportive then to markets that they're willing to do as They have done as much as possible to support a recovery So that that I think is a reasonable Assessment and assumption on the growth outlook they previously says activity is expected to rebound in the third quarter and ING looking for them to say recent data suggests significant slowdown in activity So if anything what they're suggesting is from where we were before to where we are now And I think that will make sense is that they become a little bit more kind of downbeat in their rhetoric But that doesn't yet Become downbeat enough that they need to be making immediate changes to what they've already implemented Which they need to see like the fruits of their laborer if you like for what they've already unveiled It's on the more kind of dovish end if they start talking about You know inflation pickup is far too slow to hit our target Recent data doesn't suggest the sustained easing of risk I've risked are still clear and apparent that would be more dovish I it's going down an even more pessimistic Conclusion of the current offense that are unfolding on the flip side if they talk about you know risk to inflation Are balanced the economic outlook has become balanced if they start signaling The governing council of it on an increase to the PEPP a bit later on down the line For example, if there's no change or hint another easing of their look they're kind of Liquidity programs or their loan facilities like the teltrose then these could be quite quite hawkish overall though To keep things simple I'm not really expecting too much to be quite frank from this. I think this is one of those meeting as well. It's a little bit the kind of status quo She just needs to deliver a fairly calm and assured performance in order to just calm and alleviate Markets concerns at this point. There's no need to rock the boat too much So the Q&A will be key the initial as it's a two-part event the initial rate part at 1245 is Unlikely to be that exciting 130 is where the focus will be but again as we've just discussed here The likelihood of her saying something that I think it's going to really change and move the needle of market perception of The near-term changes of any policy I think are fairly limited that doesn't mean that we won't go into this marking out both levels on Euro-denominated assets, so we're best placed to take action accordingly proactively if that does materialize as a scenario From the calendar for today Few things to have a look out for Have seen some of the UK data already come out the average UK earnings 0.7% against expected 0.5 I did hear though the squawk were talking about I think this was more to do with the claim and count rate Which was particularly low, but the methodology of that number is somewhat impacted by the furlough schemes So I wouldn't read too much into any disconnect on those claiming count readings But as you can see no real impacts on the pound on that So looking further forward then there's not too much for the rest of the morning from a fixed data point till we get to The ECB part 1 1245 part 2 press conference at 130 the weekly jobless claims coming up the US I don't really think that's too much of a focal point We are continuing to hover just above that one million marker that we have been for the last couple of weeks The range here one at the low to 1.35 at the high and even a breach on either side of that I don't really see too much of a catalyst or really spark real Consistent directional movement for the rest of the session Fiddy Fed business index you got US retail sales report as well coming back And you know if you think about retail sales in America over this is the June reading if you think about it We had April May Now we're going to June so it's kind of like this V the first part of the V a massive bounce back You know meteoric rise last month and now we revert back to some type of normality to a certain degree so again Yeah, to be watched for sure I guess one thing I think that I think that we'll start seeing is that We went through a period because we were such a low base when we were at the bottom of the V kind of coming out of April I'm going into May data that we were seeing these Spectacular beats on US economic data that will in my mind start to fizzle out now as we go through the next month or so Just given the fact that a lot of that data was by default because we were coming from such a low starting point Speak wise there's quite a lot actually that you need to be aware of on the speaker slate You can see you've got Bank of England's Haldane is speaking at 1145 now He's particularly interesting of course because you remember he was the sole dissenting person on the Monetary Policy Committee at the Bank of England Who did not want to do QE so he is seen now as much more hawkish as far as the the group is concerned So he's speaking just before midday and then Bailey his boss If you like the governor is speaking on what appears to be a separate event That'll be Afterwards at 1215 Christine the guards press conference at 130 kind of the main event of the actual speeches for today Fence Williams a voting member at 4 p.m. Evans at a separate event, but non-voting member And then also just given the current state of the ongoing situation with China and this Hong Kong security law change that we've had Secretary of State Pompeo who is probably the most Tied toward that type of subject matter is going to be speaking at 7 p.m. So worth keeping an eye out for that speech as well for geopolitical news Fixed income just quickly a lot of supply coming out France and Spain this morning if you're trading those relatable products You've also got the WTI August options expiry At around the close this evening and then from the bank side Following on from the lights of GS who had a you know phenomenal performance in their fixed income trading division Their equity trading division and investment banking advisory fees were all up So that financial sector all going as per analyst expectations at the moment with the divergence between those investment banking more defined Banks comparative to the more kind of I guess Holistic financial services banks which includes things like lending which in a sense then they're going to have a high commitment for Bolstering their credit reserves given the ongoing situation of a pandemic at the moment and risks entailed towards Having greater credit provisions Otherwise J&J perhaps a bigger company of those banks MS Bank of America Abbott and Netflix obviously always quite an interesting one tends to see large price swings on the back of their earnings a Scene as one of those kind of fang stocks will probably generate some headline activity. All right. That is it So I'm going to wish you guys a good day Any questions at all just let me know in the chat And good luck for the ECB again, hopefully it will provide us with some opportunities But might well be a case of look prepare for every scenario But be fully willing to be disciplined that it could be a fairly calm event all things Going as per planned with expectations Okay, leave it at that. See you guys tomorrow. Thanks very much