 Okay, very good morning. It is now 1st of August. So obviously the aftermath of the FMC announcement from last night So definitely going to wrap that up. What exactly happened? Quick overview of how markets react and importantly What do we think about now going forward? I've also got the Bank of England today, of course We're looking out for the quarterly inflation report We'll look at that as well in more detail particularly awkward time I guess for the Bank of England to put out forward-looking Economic projections with such political uncertainty at the moment But getting straight into the charts. Let's have a look how things reside at the moment as per usual. I'll run through really those two Topics at the main focal point and then I'll hand you over to Sam who can look at the charts more technically so Everything's at the moment reacting to the aftermath of what has been this idea of a more hawkish cut and in that sense as we'll look at the Fed delivered with their rate cut We knew that was going to be the case. They did not opt for 50 basis points I as I've been saying for a number of weeks I can't really see the reason why anyone would think they would have done 50 given how explicit the communication had been Rolling back that idea about 50 basis point cut So that was the first knee-jerk reaction that we saw in markets But then ultimately as more details came out even though we saw an initial knee-jerk reaction one way It did bounce after the Fed ended their balance sheet runoff. They brought that forward i.e. keeping more QE in the system Then what they were going to end which was September, but then when the press conference got underway There was one distinctive comment that pal made and really this is where the moves really started to build up in its momentum He said quote. We are thinking of it as essentially in the nature of a mid-cycle adjustment to policy and That was really the trigger point now looking at a couple of the major charts this morning Equity index futures still quite sharply lower Or be it off the worst levels we were looking at last night the S&Ps I've still got all my markups from the technical levels of significance where the market was reacting yesterday as we broke Through very quickly that trend line that we had on before the Dow really did respond nicely on the on a long-term Technical level of support great call by Sam at the moment of when we were about a hundred points away from that level And he was looking at this previous high in April May the support point of what we had in early July And we we hit that pretty much to the tick before we saw a 200 point pullback So yeah excellent call there and Managing to get some of that move Otherwise in the currency markets obviously prevailing dollar strength the Dixie up Still another four tenths of a percent this morning and just check out Euro dollar. I mean that's that a really Really interesting long-term level if I just adjust my chart a little bit so you can see But Euro dollar has broken through Very important technical area of support in around the late May period and you can see when we were talking about this last night We were saying that if it breaks that level well There's definitely going to be opportunity for more downside technically and the target now really in the futures is still a run Lower by a good 30 40 pips from where we are at the moment Don't really see any reason why we wouldn't get down to a closer test to one-tenth 36 in the Euro futures which starts to bring in then that previous high that we had at the beginning of May as the next logical target here So obviously Trump not happy about this From the point of view from the how a weaker euro He's been obviously criticising the likes of Germany and so on about how they're how Mario D is Artificially weakening the euro is the benefit of their exporters and so on but number one in the firing line obviously It's not so much Mario D. He's in the line. It's of course Jerome Powell Who's gonna be in the firing line? So with that let's have a look at a couple of the headlines here now for one This idea about the Fed thinking of what happened last night this idea of an insurance cut Think of it of essentially in the nature of a mid-cycle policy adjustment. What does he mean by that? Well Bloomberg put out an interesting graphic this morning and this is looking back basically to Powell's remarks raising comparisons to an era of the mid 90s 95 96 and 98 Specifically so rather than the the cutting cycle that we had after the episode of the dot-com bubble or the global financial crisis In the last 10 years what they're looking at here in the mid 90s was when there was just a Small adjustment and what otherwise was keeping rates relatively constant at that time That's how the market seems to have perceived here what Powell has communicated So as we've seen here the Asian financial crisis the Russian ruble crisis And so on one of the hedge funds LTCM was near collapse at that point required a cut Only then though for rates to remain constant if anything go back up at that point at around this kind of six percent region Very different from a cutting cycle like what we saw from rates Well north of five percent going all the way down to where you were at zero More recently in the in the subprime crisis. So yeah, that's what's kind of spooked the markets to some degree, but personally I do think I think Powell's played it pretty well I think that because I think that there's enough to warrant the Fed moving to a more accommodative Stance and that warrants then a rate cut given certain Economic elements that are materializing in the economy They want to show that there's a reasoning behind their loosening policy with the options that if things deteriorate further They'll cut again and I think that's absolutely appropriate one thing that one person who obviously does not agree with me is Donald Trump Donald Trump We know his stance and what he views of drone pal Basically, he said last night via Twitter pretty much straight after the event Pows led us down again China and Europe are gonna pull away He ended quantitative tightening Which he shouldn't have started in the first place anyway. We're not getting any help from the Fed usual kind of tone from the president now My actual thoughts on this are I really don't think Trump really has much of a personal problem with power I think all of this is Absolutely PR management of the situation my interpretation of Donald Trump is that he's done an absolutely awesome job Might have to throw me the Trump hat in the second here, but I think Trump has done an excellent job at Basically safeguarding his political campaigning period of the next 18 months because by from day one Criticizing then the Fed it means that basically if pal reacts to Teriating economic conditions and cuts well then Trump gets what he wants and that hopefully can mitigate any severe downturn If pal doesn't do what he wants and the the economy collapses given how important a measurement that is For the vindication of the policies that he's been Deploying over the last few years. He can just go. It's not my fault. I told you it's power's fault And so he wins again. So I think this is just an insurance policy Strategy from Trump. I expect absolutely no different and I expect it to absolutely continue Going forward because he needs that ability to pass accountability to pal if things don't go right So, yeah, I don't think that's a surprise. I think pal did the right thing And I can't really you know when I when I see the press laying into pal's communication tactics Yeah, I can get I mean there was one comment here. Let me show you what he said, which is I guess he could have done better At the end of basically the Q&A session pal said let me be clear It's not the beginning of a long series of rate cuts, but then he added I didn't say that's just one I don't think that's possibly in hindsight. He could have could have improved that slightly But these guys are under such scrutiny and pal is up. Got his back against the wall against the president against the market I think he did a good job and I think his strategy is correct for the time being my personal view I think if they if the Fed needs to cut again, they will cut again But he gives him all the options available What is the what is the market now expecting if we look at the federal funds futures? Well, what are we pricing in now? Well rates currently now obviously the Fed funds banned is two to two and a quarter given the cut last night and by the end of the year the market's baseline pricing is For rates to decrease only one more time And I think that's probably appropriate for the moment The one thing I would say is that and I had a question from one of the traders here Who is that what data Anthony do I need to look out for what's going to be the really important data to define Then the decision-making and actually I think they're all kind of top-level tier one data now takes on a kind of renewed element of importance Because the market now is trying or if we're to understand correctly of what power was trying to stress yesterday I think the the monitoring of data is going to be on on a balance It's going to be very important. So it's not just inflation now. It's everything its growth its retail sales It's industrial production all of these elements For their overall decision-making of the health of the economy and does it warrant then further action in the future And of course, we've got non farm payrolls tomorrow, which could be able again be an interesting interesting release to have a look at Moving on from the Fed though. Let's look at something else. Let's look at the Bank of England This I'm afraid to say is not going to be Probably anywhere near as exciting as last night last night was particularly interesting particularly the second half of the event markets Really started to sell off quite aggressively in the equity space And and so on in other assets, but with the Bank of England. Here's a couple of things that I'd be looking at Obviously given that we're in August So February May August and November of the quarterly inflation report Releases so this one typically a little bit more interesting because we get those forward-looking Forecasts over growth and inflation and so on as well as the rate decision now a few different graphs I can show you so the last time they released the QIR was in May Now if you go back to May, that's that orange line the Market was looking at the fact that interest rates if anything you remember back in May The Bank of England was being viewed as a bank So when everyone else was talking dovishly, they were the one remaining more neutral possibly slightly hawkish central bank Given the fact that UK unemployment is tracking roughly at its lowest level since about 1974 UK wage growth is the best it's been ever since pre financial crisis. They're going back to what 2008 type of era That's meant that well actually there's been quite a nice development of people's wages going up in respect to fairly constant and lower inflation which is a net benefit for the consumer in that sense so Reason to be hawkish on those elements of course, but the thing that's been happening here is that there's been a significant deterioration in in other areas of the economy in the UK Namely we saw with the PMI data what a week and a half ago You saw construction had its biggest fall since 2009 You've got Manufacturing at its weakest in about six years and you've got stagnation in terms of the important service sector Importantly this graphic here is UK GDP now UK GDP was pretty robust Actually in Q1 But remember the reasoning a lot of people have reasoning behind the strength of that was built on infantry building in order to get ahead of the impending Potential disruption that could have come from the initial end deadline of Brexit and risk of a no deal on the end of March That of course did not materialize, but that's left us in a state of Now there's very little demand and so actually growth expectations for the next quarter in the UK is basically zero So that has obviously Shaken things up a little bit. You've got Boris Johnson obviously now in the helm the idea of a higher probability of a no deal a non-transitional more disruptive Brexit process Means that we've seen a number of the MPC members sounding increasingly more dovish and the most important one Michael Saunders who's the most hawkish Turned dovish about a week ago saying that basically our forecasts are out of date And that doesn't mean that we have to deliver on what they were saying. So we're looking out for quite You know quite a dovish turn here overall from the Bank of England hard really to see how How dovish that is one thing I'd like to be clear on the Forecasts that they will release will not have the Boris premium given the cut-off date So when these forecasts were created it means then that basically It wouldn't have encapsulated the understanding that the confirmation of Boris being in So given that if it doesn't have to Boris premium given the cut-off date, it will underestimate inflation path They cannot formally make no deal a central case because it's not the government's policy as well at this point Remember unless there's a new general election and Boris has a man new mandate then that he can lead forward The deal at the moment is still that there should be a deal. It's just a Boris obviously is playing this card at the moment so It's going to be quite an interesting one to see how this this plays out the forward interest rates for August So looking at what the market is pricing is that rates in the UK will be cut Towards the beginning of 2020 taking us down 25 basis points to pipe point five of where we are today And that being the kind of one and done for the moment I Saw this article and I think this makes things a lot more explicit and easier to understand These are basically five different ways to interpret then the Bank of England So number one removing the hawkish bias and assuming a smooth Brexit Yeah, how to see at this point can the Bank of England? Assume a smooth Brexit. I mean as I said although Boris is threatening these the government's plan is still to deliver it in a Transitional phased and Boris as much as there's bluster behind what he's saying at the heart of it still is that the fact That he does want to deal at the end of the day It's more of a negotiating posture that he's been putting forward albeit the big tail risk of no deal Now if they were moving the hawkish bias assuming a smooth Brexit I would say that's probably more towards the neutral area in terms of a potential market response potentially a little bit of Mild sterling appreciation could be on the cards number two option to Remove the hawkish bias assuming a hard Brexit Now if that's the case, I'd probably be looking for downside in sterling I'll leave the pound chart for Sam really to look at but we're at a really interesting technical point for the pound given some of those Initial post EU referendum lows are within striking distance of where we are at the moment Option three then maintain the hawkish bias Expressing concerns. I would see the pound appreciating a Decent amount on the back of that I don't think that they will maintain that hawkish bias My reasoning being if the most hawkish member has shifted then I believe that the whole composition of the MPC board has Also moved more to the left to the dovish side. So that would be a surprise I think I don't think keeping that hawkish bias and just expressing concerns is enough I think there's enough to warrant now shift being more neutral on that that overall bias If they maintain the hawkish bias, but two members vote for a cut. That's a little bit more tricky I think to manage You might get then a little that kind of volatility the initial spike in reverse move And then number five maintaining the hawkish bias by expressing business as usual I'd say that's the lowest probability most sterling positive on the initial release I just kind of stick to what they were saying in May But I think enough has changed that they do need to alter and with the subsequent projections to reflect More a more kind of overall More pessimistic outlook. So I see that as very a low likelihood. So therefore maximum impact I'd say you'd see a sharp rally in the pound if that were to happen That's not forget though If even if any movement of the pound higher that does not detract from the bigger story at play Which is a very downward trajectory for the pound of late and I would anticipate that to continue particularly because of the dollar strength if you look at the fundamentals at the moment in the short term you've got a hawkish cut from the Fed leading to dollar appreciation and At the moment despite any movement we see on the back of the Bank of England today Overall the fundamentals and the political uncertainties are stacking up which will weigh on the pound that Fundamental divergence of those two currencies with these key technical levels makes it an interesting prospect for the pound For potential more or more downsides to come This is the final thing on the UK. I wanted to point out. There's not really a lot of people that have talked about this But I just wanted to remind you that keep an eye out for the Brecken and Radnyshire by-election happening in Wales I think it was trying to recall the numbers something like 2008 to 2015 I think it was a Lib Dem area and then it flipped in 2015 to being conservatives, but the conservative the reason for this by-election is that conservative MP was filing false expense claims Hence the by-election and the bookies have the Lib Dems as favorites. They've been very much pinning it on Even though this was a vote leave area the Lib Dems have seen a pretty decent resurgence even in that area and The vote leave is divided Problematically for conservatives between the Brexit Party and the Tories And therefore Given the the local focus as well as the Lib Dems the Lib Dems are the favorite now if they do win The Liberal Democrats that reduces Boris Johnson's majority in Parliament to just one Which is obviously particularly interesting given the How difficult then at this point it would be for Boris to do anything other Then it just cements the idea that there is a general election in the in the in the pipeline for the next couple of weeks Voting ends usual Procedure for UK so 10 p.m. The results then we should be looking out for on Friday morning So I can update you tomorrow. I Don't think this mates. This is not so much. I think a sterling trade It just really encapsulates the idea of why it's more than likely Boris Johnson will call a general election in the coming weeks Okay, that is it Let me just have a quick look at the calendar of what's to come and then I'll hand you over to Just Sam to give you a look at the technicals so from a Data points of view We have had some Chinese data overnight So let me just update you with numbers the Cajun Chinese manufacturing PMI 49.9 slightly above the expected 49.6. So not really too Impactful on the markets markets very much still focused on the Fed from last night this morning You get the manufacturing PMIs in the various Eurozone areas But I think these are the the final readings. So I won't be looking for much reaction on the back of them Bank of England, of course two-part event midday and press conference with Carney and some of his senior MPC to deliver the Q a Q IR and the Q&A That'll be at 1230. So do look out for that In the afternoon weekly jobless claims ISM manufacturing PMI and obviously we'll look at not only the headline figure, but the employment component Let's not forget. We've got non-farm perils as well coming out on Friday. All right. I'll leave it at that Let's get Sam on see what he has to say catch you in the chat room and I wish you a good day. Thanks very much Thanks, and hope everyone's doing well and enjoyed last night It's gonna start off with the pounders where we're we're on the that low from Overnight, but certainly on the the longer term chart here and just putting this on On to the weekly make you sort of see that trend line is on. We never really got a retest of that unfortunately You can see that would have been Obviously hindsight with a with a toly where it'd been a good or not but waiting for that to come back in around the 124 handle would have been lovely not to beat however, we are trading on some pretty key levels just going back to the March and well the beginning of March and the February time Back in 2017 literally trading right on the now bit of support come in If this was to go and of course you do at the Bank of England later So it's not a foregone conclusion that it does go today Of course, then we are really looking down to those 120 levels on the futures that we did get that that post Brexit low In January 2017 so that would be there at the next level I'd be looking at if we can get a breakthrough there But you can just see the importance of the levels that we're trading at and understandably just slowing down a bit over the last couple of the couple of days Opportunity-wise you can see once we did break the area support that offered really a good opportunity around sort of 730 on the press conference Of course the board the dollar was strengthening course But you can just see the importance of 121 35 and the futures to test there So we're keeping a closer eye to see how we React if we were to come back down again to the other side bit of a line in the sand 121 61 Which was yesterday's low this morning around 3 a.m. That retest happened if we were to get above there You imagine it's just gonna drift for a bit before pushing higher, but really key level 121 35 and then that 120 Coming in a fair amount of ticks below, but that would be be massively important If we were to get a break of that euro as I mentioned did decent break yesterday, and if we put this on the weekly chart and Again to remove the pivots just to clear things up You can see well now suddenly the break of that important level which was May this year was also May 2017 we're now looking like we can get down to touch what was the the higher back of the beginning of The week of the first of May and the future is that coming in at one 1039 give or take a few ticks I've a way 36 So that would be the next important level for the euro in in in where the market really is picking up for a dollar strength here And you know can we get a retest of any of these levels in euro then for an ideal? Place to get short you could either look 111 yesterday's low up towards the pivot or just above all So it looks quite good because you do have the previous low from the 25th the pull back yesterday again was a great opportunity Certainly on the hourly chart. These are all areas where you would favor to continue this trend and despite How's best efforts the dollar has strengthened on a rate cut and has continued I mean look at the journey it's been on now. This is just going back here to the 27th of Of July just literally drifting down and down and down quick look over equities You can see the the original push lower following the announcement at 7 730 With the press conference we we got to pretty key points and that mentioned that that Dow Jones level But also the the S&P really coming to a key point Where we get higher a few weekends back It's quite a few now we almost filled well We did fill the gap on that but we almost came back down to touch that low that we had from July So decent push through here understanding a bit of support where to go from here Well, if we just drop it down to 15 minute, you know It's always worth with these kind of markets trying to identify where that line in the sand could be right now To today's price action. It looks quite choppy. You haven't got that Look that there's going to be at least a trend line forming from the lows I mean, maybe that's something to have on just in case there was to be that third test from the upside You can see we're not exactly Forming a nice trend line down either so the pivot or basically the higher the day somewhere you would have marked up But for me, I think where you've got what and what was an interest in there is a poor 29 89 You'd want that to go and then of course people would be looking towards the low that we had on the 30th And then the pre breakdown low just above 3000 as a level But just above the pivot. I'll just be a bit careful about getting too aggressively long 29 89 Yesterday was a decent enough area of support And if that was to break to the upside then I'd be a bit more confident just speak for all equities Just have these trend lines on just to see can we start respecting them and then maybe look for that break lower as well It'd be a case where I really did the market tell me what's going on break of those lows again Just be careful because below yesterday's low is that low that we had back on the first But then it does open the door up to You know quick move down 10 points lower to the original high on the 28th of June As which could obviously offer a bit of support there as well Gold tricky one yesterday. You had that complete reversal didn't really make sense to me perhaps at the time But you know all was well that ends okay I guess if you were looking to short gold and you can see we did push down lower We we got up to test that R1 again and that had been to such a key level You know can see previous sessions how we've sort of broken through this this trend line You know that I just roughly drew that on but you can see the just the significance really going back to the 26th Every time it come back to test that train It just couldn't confirm a break above that coupled with the high that we had back on the 25th Just saw us push lower from yesterday And then the the conference conference and the interest rate decision We never really threatened to get back above that the pivot Did you know it was quite choppy on the read test as well So how you would really have traded this? I think the the opportunity like the euro and the pound that we saw really came Around eight o'clock once we had had all the noise. We've digested. What's actually happened We broke this low came back and like the euro came back to retest and you got a good opportunity to To then get in as well funny a bit of support here double Bottom on the S1 bit of a trend line from the 11 o'clock high last night well respected one two three four Tests price just getting squeezed in so break above that just be a bit careful about maybe looking for a short on this resistance at 1422.7 to the downside if that was to go Levels of interest and see there's not much room Until we get down to the low the 17 so again, there's been a slight bit careful there As well before wanting to take that on and that's a really key level low the 17 higher than 9th If that was to break then suddenly, you know a bigger move could be expected I'd say down to at least 14 10 and 14 0 5 so gold just perhaps get squeezed in from both ways The volume is not really going to be that for now, of course. I'm gonna look over oil just to rack things up The low I can see there's a line still drawn up this S1 previous highs I think the safe must have had this drawn on from When he was talking through the DOE and and that held superbly really nice Level support overnight yesterday's original low. That's gonna be a key level 58.07 Along with the pivot would be my sort of line in the sand for the upside if I was wanting to get long price Not necessarily squeezing in from the downside But again similar thing just looking to to have these trend lines on just to see how price does react Should we come back to test these areas? Again quick look over and there's just that that dow you can see what a what a reaction what a reaction to that and I Guess if you're longer term, you know, you'll be happy to see all-time highs again If we can get back above 27,000 and 33 those lows that we did break through yesterday quick look over at the decks Just to see how we go in first or 15 minutes about a 30 minutes. I should say positive pushing higher so stocks in in Europe just Buying into the open. Let's have a quick look over trend line from those highs Just getting a test of that so you can see you had that there and we're having a look now Can we get a close above here if that was to happen? You might get the follow-through? Certainly in US stocks, but where we close this trend line will be key Going forward as usual any questions do let us know Bank of England coming up this morning or midday I should say and then a bit of data in the afternoon As well. So any questions usual, please let us know if not. I hope you'll have a great training day