 Hello and welcome to CMC Markets on Friday the 1st of June and this quick look at the week beginning the 4th of June and it looks as if we're probably going to come off the back of a second successive week of declines for European markets. Some markets have outperformed others but it's not unusual when you come off a run of 8 consecutive weekly gains that you start to see a little bit of a pullback in risk appetite and obviously one of the factors surrounding the pullback that we're currently seeing is concerns over trade and I think they're going to take front and centre as we look ahead to the week beginning the 4th of June because we have a G7 meeting in Whistler next week this coming week and it seems quite likely that trade will be top of the agenda given that President Trump has finally pulled the trigger on those tariffs on steel and aluminium on Canada, European Union and Mexico now. All three sides have pledged to retaliate in some cases these retaliations have taken place immediately I think in the EU's case we may find that there is a delay until the 20th of June before these measures on US products take place and they are likely to be targeted if some of the speculation is accurate on states that are predominantly Republican dominated. So what does that mean going forward? Well I think obviously it's going to add to the uncertainty with respect to how this particular trade spat is going to play out. As it stands the Trump administration has already announced $50 billion worth of tariffs on certain Chinese goods now obviously we're looking at the EU, Canada and Mexico and I think the risk now is that there is a significant escalation over the course of the next few days. And Whistler, so what does this mean for the dollar, what does this mean for currencies because I certainly think in the context of equity markets we are seeing a little bit of a pullback, certainly the charts would appear to suggest that we're finding in the case of the FTSE 100 the UK 100 we've seen a little bit of a pullback to around about the 7,580 level, finding a little bit of support but what I think it was also actually quite encouraging is that the moving averages on the UK 100 are starting to point upwards the 50 and the 200 day so even if we do get a move lower I think it's likely to be contained to where the 50 and the 200 day moving average converge. Any different story on the Germany 30 or the DAX, what we've seen over the course of the past couple of weeks is a significant bearish reversal on the weekly charts which would appear to suggest that we could be at risk of a significant pullback there, I think obviously there are concerns that the trade wars or the trade tensions could hit Germany more than any other European economy given the exposure that its car makers have to the US market. At the moment we're currently holding above the 50 day moving average and finding support around about these twin lows here, the oscillator is starting to look a little bit oversold so I think how the market reacts around about the 12,420 level if we get there I think will be key to where we go to next. Overall we've got a number of key indicators coming out next week, we have the RBA rate decision, we have Australian first quarter GDP and I think first quarter GDP for the Australian economy will I think be largely determined by how well the Chinese economy has been doing and that does appear to after a little bit of a slowdown in the first quarter starting to be showing signs of picking up if the recent PMI data is any guide. We've got the latest Chinese trade data for May that's due out on the 5th of June and after a slowdown in exports in March the Chinese economy did show signs of picking up in April, saw a significant pick up in both imports and exports which suggests that the global economy is also starting to show modest signs of normalising in terms of the slowdown that we saw in Q1. Again the US-China trade story is going to play into this narrative to a certain extent so you may see a little bit of softness in the trade data as a result of that but I will be paying particular attention to China's exports activity to determine whether or not you're seeing a pick up in global demand. We've also got services PMI for May for France, Germany, Italy, Spain, the UK, obviously the US as well and there is some concerning signs there particularly in France and Germany of a significant softness in the services sector. We saw that in the flash PMIs a few days ago which came in at one year and 16 month lows for France and Germany and I think this could have a significant effect on where Eurodollar goes over the course of the next few days. Now that does appear to be some signs that Eurodollar may have found a short term base just above 115. Now why do I say that? Well basically if I look at a daily chart here I've removed all the lines so that it's very, very, so it's completely uncluttered. This looks like a bullish reversal on the daily candle. Now we do have non-farm payrolls later today as I recall this video so I think in terms of what the Fed might do over the course of the next few months we're going to get a rate rise in June. It will be a significant surprise if we don't but certainly in the context of where we go to next with respect to the dollar I think the strength of the payrolls numbers, the strength of the wages numbers won't dictate where we go to in June but they could dictate where we go to in terms of extra rate rises later this year and I think that will be the key determinant of where we go to next with respect to the dollar but certainly there does appear to be some signs particularly if we look at the dollar index as well on the daily chart of a bearish daily reversal on the dollar index. So I think as long as we stay below 95 on the dollar index we could see a little bit of a correction in that back to around about 93. Now if that happens then obviously we could see euro dollar start to head back towards 1.17.30 and even 1.18.30. Certainly that's the next key level that I'm looking at with respect to euro dollar if I put all the lines back we can also see why that 115 level is very very important it's a trend line from the lows that we saw in early 2017. As such it's a very very key support level also coincides with the 1.618 Fibonacci projection target of the entire down move from that double top triple top breakout that we saw in the early on the middle part of April so I think if I'm going to be looking at euro dollar in the round good support around about 1.15 obviously if we break below that we could look at to target around about 1.13 but while above that then I think there's potential for us to come back to 1.17.17 1.18.30 and potentially even 1.19.25 what else have we got next week we've got a couple of other fairly minor earnings reports from workspace group and AOL AOL world even not AOL they went they disappeared a long time ago but overall next week I think the key the key arbiters the key determinants will be obviously the resilience of that services data that we got out on the Tuesday and any further developments in trade talks and also not forgetting of course which I almost did how could I events in Italy now that they appear to have come to some form of arrangement with respect to a new government how that relationship develops with Brussels could be a also a key determinant as to how the euro performs over the course of the next few days and days and weeks so that's it for this week thank you very much for listening to Michael Houston talking to you from CMC Markets