 Good morning and welcome to the Monday market update with me David Madden. Today's date is Monday the 13th of January 2020 and the time has just gone 1130 GMT and it's been a fairly positive but subdued start to the training session here in Europe today. Essentially traders are very much looking ahead to Wednesday when the US and China Will sign phase one of the trade deal which is brokered at the back end of last year so it's likely that we could see a bit of the optimism continue between now and then and The picture is probably going to remain positive seeing as the it's kind of a it's a finalizing of that agreement But the US China trade story is far from over At some point the two sides are going to have to start discussing phase two of the trade deal And this is going to include topics which are much more complicated such as Beijing government funding private businesses in China And on top of that a very important issue for the United States government is the issue of intellectual property rights Business areas that are going to be much more complicated much more drawn out and given that China could play the long game. I don't particularly I don't foresee Beijing being overly Soft of president Trump and actually conceding loads So I think a lot of 2020 a good chunk of it in kind of in the first quarter towards the kind of middle of the year Or towards the third quarter. We're going to see a lot of US China trade kind of jostling because president Trump Will be seeking re-election in November and he want to be seen to kind of be fighting the you know The economic fight for America putting America first at the same time, you know We probably see a similar to what we saw this year were by ebbing of flows and more You know a better deal was given for the US But at the same time every time kind of hurdles and progress was made and then it looks like things are improving Coincidentally, US stock markets are hitting all time eyes also benefiting president Trump from a political point of view So I think in the near term, we're going to seek attenuation of the positive sentiment Between the US and China, but at some point we're gonna have to talk about phase two and that's really good turn of its hour now It does work remembering we had a fairly lackluster or mid of the road job support from the US and Friday just gone in December 145,000 jobs were created and as we were expecting 166,000 to be created so I came below expect margin below expectations. It wasn't a particularly hot number the previous month's number the very strong November number of 266,000 out revised down slightly to to 256,000 so still a good number We average at the two reports over those over the two months Unemployment in the US remains at a joint 50 year low 3.5 percent But the wage growth figure cooled from 3.1 percent to 2.9 percent So it wasn't particularly impressive job support number. That being said the Dow Jones so down to here a briefly hit a record high on Friday overall things are looking red Okay, in terms of the actual from a sentiment from a economic indicators point of view First the US goes this morning with some not so hot economic indicators out of the out of the UK There was an estimated that on a monthly on a month basis The US the UK economy Contracted in November, but that is particularly the context of the three-month estimate The three months running up to just November which estimated that growth increased marginally by zero point one percent Industrial no manufacturing manufacturing production and industrial production both show that losses in the month of November Which is hardly a surprise seeing as obviously the UK was supposed to leave The European Union in late October that was that would extend it and then of course and it's a general election It's called which was set for which was set for you know mid-December. So uncertainty It's already surprised, but what this has done This has ramped up the talk that the bank that the bank of England are going to look to cut interest rates Now we've already heard in advance of these not so hot numbers of the UK today We already had chatter our commentary from a number of policy makers at the bank of England talking about veering towards an interest rate Caught already in some cases body for one Now some of that chatter speculation has increased. So we're seeing downward pressure on the British pound on the back of that So what I do now is I take a quick look at some of the big Economic announcements corpus stories of the week ahead The week ahead articles can be found on our website CMCmarkets.com under insights. You'll see news analysis. This is where you find Our update so obviously the US and Iranian tensions are still ongoing from a political point of view But as far as the financial markets are concerned a lot of both sides don't appear to be On the verge of war which they're clearly not that is that that story has From a financial markets point of view Quickly become old news as I mentioned a few minutes ago. We've a disappointing industrial production and industrial and manufacturing production numbers on the UK this morning Looking here to tomorrow boo-hoo the fashionable online fashion house. They have their third quarter figures out Looking to the middle of the week. We will enter banking US Voting season and really kicking things off with some of the major banks The likes of JPMorgan Chase city group Goldman Sachs out one area or about one kind of common thing we've novice in in the US banking sector in particular Has been that a move away from trade the financial markets, you know Very previously a very key metric used to be a thick fixed incomes Currencies of commodities and the and the revenue that is derived from those training activities Nowadays more banks are looking to seek Take on less risk and actually earned their money earned their crossed from wealth management fees and investment banking fees and Burgers and acquisition of Isaac ease six gets a keep an eye for that on Thursday. Sorry apologies Tuesday We have four quarter figures out from Delta Airlines I'm looking ahead to tomorrow the US we love the China trade balance and then on Wednesday We should have the signing of the US China trade deal Wednesday, we're also gonna have the US page books or an update of what's going on with the US economy on Wednesday, we also have fourth quarter figures on person the UK homebuilder on When apologies on Thursday through quarter numbers from with bread and then on Friday We have some economic indicators out of China retail sales and industrial production So what I'll do now is I'll take a look at what's going on some of the big markets covering The big indices a couple of currency pairs and some of the big commodities So the broad theme since for about a month now or even over a month on the foot 200 as I see pushing to the upside it had a multi-month high About about a five six month high in late in late December The things are looking quite positive market has managed to recoup most of the ground that was lost in this period here on the back of the US are ready intentions So these are looking looking to be still quite positive and the wider upper friends remains attacked If you can push on higher from here and take out the December high Because I'd be looking at targeting this zone here highs seen in July And that comes to the play in around 7,731 It's only really if you have a sizable sell off or take take out the recent lows the lows and on the back of the Iranian tensions and like them into play in around 7,740 so you really take off those lows could then we begin to think okay Maybe the recent Polish trend isn't as strong with the thought and even if that is the case We could find ourselves back this zone here in around 7400 there they're abouts which coincides with the 50-day moving average The German market is in a far better position not too long ago. We're basically at a two-year high there they're abouts On the German market and even though we're slightly off of the very recent highs So very much in an upward trend and if you look to press on higher from here We're currently trending in around 13,460. They're there abouts if you press on higher from here We could be getting a target. This is out here 13,600 a level last seen in late January 2018 And if you do happen to push a bit lower on the on the DAX We could see some fresh fires into the hole seeing as the market's been in an upward trend for the last few months Buying on the depth has been a very popular strategy So if we do manage to push a bit lower from here could fight some support coming to play at this area here It fit the moving average which comes into play in around 13,210 So the metric has been important past in terms of an active a support in a few occasions It makes it's more likely it will be important in the future, although there are no guarantees It's only really if you take out the lows of that mid-December here this line here that comes into play It's just south of 12,900 if it's only really if you take off you take off that because then we begin to think okay Maybe we go further ground to lose and I could set us back down towards 12,800 or perhaps even that down as long as 12,600 and 60 The US markets are in far better shape in their European counterparts. Like I said on Friday Even though the non-famperos figures weren't particularly impressive. They were okay. If anything a bit in the weak side You know, we still racked up a new all-time high on the Dow Jones So the trend is clearly to the upside We're expecting the Dow Jones to open around to open north of 12 of 28,900 So we'd all be looking for head towards the big psychological number of 29,000 a level which you did exceed on Friday and then of course if you go beyond that We'd be no we'll be looking to set further fresh records If you do see a bit of a pullback on the Dow Jones support could quit the play from this zone here down around 28,500 down to 20,400 that region there did I've seen a fair bit consolidation in recent weeks And even if you drop below that you could find support coming to play from this blue line here the fifth and moving average And that comes play at 28,120 it is a fairly similar picture on the S&P 500 not too far away from record highs to the So the market sentiment is clearly still quite bullish So if you do press on higher from here, we could be looking at targeting 3,280 90 and then beyond that the next big kind of psychological number will be 3,300 and even if you see a bit of a pullback in the market, you know would necessarily be anything to get overly shocked about mind If you do that to kind of push on lower from here, we could see support from this zone here in around 3,205 206 and even this zone here in around 3,200 itself but a consolidation in the region in mid-December. I saw in a really if you take out the early January lows of 3,181 there thereabouts could that would be the thing? Okay, we could be it for It could be it for for the losses from here. I should that be the case It could take us back down towards this line here in around 3,066 I'll take a look at a couple of currency pairs now as promised starting off in the pound versus US dollar So it's been a very interesting one for the pound the last few months I've had a decent move from the upside between early September through mid December This obviously was on the back of the election result the market give up some of the ground It bounced back and I'm purely pushing lower again pretty much on The 50 moving average which comes to the play Well, actually below it. We're currently just south of 130 one spot 30 big psychological level But on top of that it also coincides with a 50 moving average and if he can if he can get back above 130 we could have a chance I can Continuously more the more recent upward trend. I could take us to 132 and I could just put us on track towards the Highs achieved in late December But if you just lower from here and we take out the lows of It's before a Christmas week in what just north of one spot 29 in a one spot 2904 we could then be looking heading back towards this red line here the 20 moving average and that goes play at one spot 2690 and a move below that could take us back down towards one spot 26 Look at what's going on on the euro versus the US dollar It's been nuts particularly, you know, the euro has has been broadly pushing higher against green back down to months We can see here pushed a higher high in late October and we should kind of give a back some of that ground The highs of late December check out the highs of October but and we are we have We and the loads that we have produced recently have been higher than in the previous lows So it's still in the kind of upward trend higher highs and higher low stage, but it says actually carry things up We can see here that it's currently in around the one spot 1181 area One hand we're still just below the fifth maturity moving average, but on the other side We're holding above the fifthly moving average So if you continue to hold above this blue line here the fifthly moving average which comes to play in at one spot 1090 if you can get it to hold above that we could look at heading back up towards the this red line here The journey moving average which comes into play In at one spot 1140 and if you're gonna be on that we could really get traveling one one spot 12 And then be on that up towards one spot 12 49, but you can see to me It's not it's in an upward trend That's not particularly strong upward trend. It's only really if you have a decent break below say this this The one of the moving average in at one spot 1064 could that would be good to think okay Maybe the trip the the weakest of our trend has come to an end I should that be the case it could take us back down towards one spot 10 this zone down around here And if you take out the lows of late November, it could pull us back down towards the kind of one or nine district I take a look now what's going on on the oil market. Obviously oil was very very topical in recent weeks so after hitting After racking of very impressive gains in early January on the count of the fears surrounding Iran We don't manage to give up basically most of those gains. We've been moving aggressively lower the last few sessions On here on brain crude. We're still holding above the fifth and moving average and the tourty moving average, but it seems to me that we're other fears surrounding a potential Conflict between the US and Iran has tapered off and I think it could be in a similar scenario What we saw after the trolls fight in Saudi Arabia were by the markets initially had a jump in skyrocketed, but then About a bit of ground was given up. So we could look at heading back down towards With the journey moving average and the fifth and fifth a moving average notice other two Moving averages are basically an intersect with each other. So making that metric all the more important potentially So if we do drift lower from here We could see a fresh fires at the fold down around this zone in round 64 Spider 57 if you could hold above that metric We could see the kind of the wider trend of the last few months continue And that could look as much to take us back up towards the kind of 69 region If you do it on the other hand have a fairly size of break below this area That will be fairly significant thing is it's a couple important moving averages crossing at the same point It could take us back down towards this line here the water the moving average which comes in the play as 62 by 83 And if you do measure break below that it could take us back down for the kind of psychology for 60 bucks a barrel And that is on Brent. So I'll take a look what's going on on WTI Very similar position on WTI notice how the Notice how the 50 moving average this blue line here has acted as fairly decent support in the last couple of sessions So if you could hold above that metric We can likely to actually get it head back up towards 60 bucks a barrel And then if you go beyond that towards the kind of 62 region But also we're pointing out how the 50 moving average is comfortably above the true to moving average of Brent So the market does appear to be stronger. Sorry on WTI then Brent but like I said if you do manage to drop back below 50 move the average and We take out this red line here the eternity moving average in a 57 plus 75 We could find support from this line here to draw a line between the lows achieved in early October and mid-October You get this trend line here So while we hold above, you know, this this region could act as support should be of this move to the downside And then if you have a decent break from all that good good tickets backed up for this zone here down around 54 Lastly I should take a look at the gold market and then we look to wrap things up It's a gold. I would not to hate a fresh a Fresh multi-year high for a six-year high in January On the back of the arena fears markets have cooled off gave back some of the ground But as we can see that all we hold would be kind of building a bit of a base down around here We're well above the already moving average and also the 50 moving average on the on the on the Gold market we seem to be struggling to get a press on the head From this zone here in order to 1555 in around the kind of 1555 region, but While we hold above the low the lows here or achieve last Thursday in around 1540 We could see the market because slowly but surely kind of rebuild some of the ground or recoup some of the ground that lost race to me I should that be the case it could take us back up towards 1580 or up towards 1590 or possibly even deed the psychology important 1600 mark on the flip side if market does matters to turn over itself and we take off the lows Of last week in around 1540. We could take us back down towards 1530 And then it possibly even as low down as the psychology important 1500 Well, thank you for listening. That's all for me this week and please cheer next week. Thank you very much