 Good morning and welcome to the weekly market update with me David Madden Today's date is Monday the 20th of July 2020 and the time I just gone 1140 British summer time And it's been a fairly mixed art to the training session today Essentially that the big in the story of the last few days is the European Union's 750 billion euro rescue fund The original proposal was that 500 billion euros be doled out as grants and the remaining 250 billion euros will be issued as loans And essentially that those talks carried on over the weekend. They didn't reach an agreement. The progress is being made The and the talks are going to continue later on today Essentially a number of countries the Netherlands Austria Finland and Sweden Dubbed the frugal four are essentially opposed the idea of such a high percentage of the overall fund being issued as grants They will prefer to see more money issued a high percentage of loans And in addition to that there also Are not keen on the idea of funds being Issued without any conditions attached over the weekend those talk of very different conditions conditions being attached for bike One government could have effectively Question the the deployment of funds to ensure that it's been spent on its appropriate issue Also over the weekend the kind of goalposts have changed in terms of the monetary amount So it's understood that the likes of the likes of the Netherlands are still really keen for only 350 billion euros to be spent on grants While where it's France are kind of Lowered their threshold to their they still want grants to be at least 400 billion euros So things are heading sort of in the right direction. They haven't gotten to achieve and yet But because it's moved in the right direction. There's some level of optimism But some sort of deal it will be struck The European Union has a long history of a lot of kind of in-house hikling and in-house fighting But in the end a deal is often struck But because there's kind of a mixture of optimism and also pessimism going around a deal hasn't been achieved. That's bad They're the raking progress. That's good. They probably did the track record of making a deal at the end. That's also good That's why we're going to see the moves we are so we know earlier today We saw that the the DAX briefly trade above 13,000 but for the moment You know that the footsie is a Is in the red rolls is going to see in mixed markets not so nothing pretty special going on currently in Germany or in France That's kind of the major kind of story of the day. Also keep an eye out for the health situation in relation to Clack so sorry, I apologize AstraZeneca and they're working in conjunction with the University of Oxford They're working on a potential vaccine. There has continued to be high hopes around that Obviously, it's a very long process But it was reported earlier on that the Lancet medical journal is due to report trial results From the particular drug today, so that that's going to be in focus To be honest, all of that has been a fairly quiet story and quite day Not much really going on in terms of economic indicators or even on corporate stories So for those of you who listen regularly to my weekly market updates, you know the structure I'll talk about the week ahead. Then I run through the popular indices popular currency pairs and commodities So let's take a look at the week ahead. Now the weekend article can be found on our website cmcmarkets.com go to insights under news analysis, and that's where you'll find this So looking ahead to tomorrow. We have Canadian retail sales snap the social media company They have second quarter numbers out on Tuesday We'll also be focusing in on UK public sector net borrowing public sector borrowing Tomorrow, that's obviously going to be in focus given how much money has been allocated towards the furloughs and the like excuse me We have Q4 numbers out from Microsoft keep an eye out for the the figures From the cloud division That's been a big money spinner for Microsoft recently and that area as a whole Is doing very well. Just look at us about Google's parent and Amazon Twitter the social media crowd they have numbers second quarter numbers coming out on Thursday Unilever lever They have first-half figures coming out on Thursday and then also in relation to PMIs We have the UK, France, Germany PMI numbers coming out on Friday And we have first half numbers coming out from Centrica on Friday And finally we also well we also have UK retail sales on Friday and as we do with the Vodafone Q1 numbers So I'll take a quick what I do now is I'll run through a few of the pop render sees starting off with it with the the footsie with hundred So the wider trend of the last few months It's been a nice upward trend for the last few months at a three month high in June It's since then it's been sort of range bound It's still holding the kind of the wider upper trend of the last few months But notice how this is old here, which is in around 3000 sorry 3000 it's in around 6300 this area here continues to act as a kind of an area of resistance For the footsie with hundred but notice how we're nicely above this blue line here They 50 movie average while we hold above that metric It's like that We're gonna see the upper trend continue if I do press on higher from here We keep looking at retesting in the kind of six thousand three hundred area I should we break beyond this area here the the late June high of our 6342 if we go beyond that we can then be looking at targeting the highest set in early June If you do move to the downside in around say six in in this zone here in around 6200 that's all the axis about north of it has actually fairly decently as support recently so that zone could Could act as support again, I can move below that keep enough for this blue line here the fifth in the movie average You know to be fair it acts nicely as support on a couple of occasions here and here We saw that consolidation in around it in around in the past So that it's just because we've seen it act as as a we've seen a solidation in the very in the past and Because we've also seen that support in the past It's a possibility that could area of the could be of importance should we drift lower from here But obviously there are no guarantees to be honest If you know if you look at the trend for the last few months, it's been it's it's an upward trend We really need to be breaking below the early July lows Inter kind of just south of six thousand before you guys you want to consider Okay, maybe the kind of wider trend on the last few months has come to an end I'll take a look at what's going on over in Germany Like I said in Iran Very briefly a while ago the market hit took out hit his level last hit his highest level It's hit a trade above 13,000 So, you know that that took us back to level last seen in February I believe It was February so we're talking, you know, multi-month high was achieved that give indication of how kind of strong the market is So it's in the kind of wider upward trend if you do press on higher from here We keep looking at heading towards 13,000 and if you go beyond 13,000 The next kind of level to keep an eye for well to be honest We'll be the kind of highs of late February in our kind of 13,440 basically kind of the last week or so February before Sentiment really turn sour But it is worth noting that the market's kind of been grinding higher the last few months hasn't really kind of pushed on aggressively to the upside so Things are more bullish than bearish, but there isn't a whole lot of bullish sentiment Even if you do drift a bit lower from here We could find support from this zone in around 12,500 and if you go below that support could come into play from this red line here the 50 movie average and that's in around 12,181 I need if you go below that support could be found from this zone here down around 12,000 Taking a look at what's going on over in the US Take a look now at the down Jones and the likes so Last week we saw a multi-week high set in the On the on the Dow Jones hit its highest level Yeah, and about a month or just over just under a month But we haven't been drifting ever so slightly lower So it's still in the upward trend notice how we're holding nicely above the tune of the movie average Just red line here while we continue to hold above that metric It's likely to get a wider upward trend of the last few months It's going to remain intact. So if we do press on higher from here, and we look to take out the highs of last week We're gonna be looking at targeting this zone here the highs of early June in around 26,000 27,630 there there abouts that area there Even if you drift drift below this red line here at the truthy movie average Which goes into play at 26,250 we could find some support from this area here 26,000 itself, you know big psychological number and even if you go below that It's blue line here at the fifth of the movie average. It's actually nicely a support on a few occasions in the last few months in mid-June in late June and also in Mid to early to mid mid-July So if metric is important in the past it makes it more likely it'll be of importance in the future But obviously there are no guarantees and that comes in the play at 26,662 Taking a look at what's going on with the S&P 500 So we can see here in the S&P 500 To draw a trend line between the lows of late March and the lows of mid-June You get this trend line along here and even though it's even though you prefer that the trend line The market has been trading below I still think it's interesting because the market seems to be kind of gravitating in around it We obviously broke a company below it here when the market tried to push higher again It's fitted above it on a few occasions, but it couldn't quite get there So it's interesting that we're below the trend line, but at the same time the market is still moving higher And it's almost like even if you do move higher this trend line could continue to act as a barrier To further gains should we see the market press on higher here We could be looking at Right now taking out that trend line and if you do take out that trend line It's possible that old resistance could become new support So the wider trend is still to the upside It just seems to me at the positive that the positive trend is advancing at a slower rate So keep an eye out on that if you do Good to drift a bit lower from here because we're currently expecting the S&P 500 in the cash market to open 3215 if you drift lower from here this area in a 3200 itself could act as support and if you drop below that head back down towards the low scene in the Kind of in the first week or two of July north of three thousand one hundred in around three thousand one hundred and fifteen or 120 their their abouts Take a look now. I was coming on with the currency markets starting off with Euro dollar So your dollar today hit its highest another multi-month high well a fresh three month high fresh Form of higher rather highest level since early March. So it's in a nice solid upward trend You've been pushing higher the last few days today. It is like highest level since early March So tonight's upward trend if you continue to press on higher from here, we could be looking at testing the March highs in at one spot 4995 And if you go beyond that we could then be looking at targeting This area here and the highs apologies We keep making a target in this area here the highs of January 2019 and that comes into play in at one spot 1570 if you do let the drift a bit lower on Euro dollar this area just north south of 114 in around in around One spot 1370 there their abouts could act as support if you drift further lower from here You know, we really need to be taken out the kind of 112 area down to kind of one spot 1168 So, you know, we really need to be going below that metric And if we can actually get worried about, you know, the overall trend turning over on itself Taking a look now at the pound versus the US dollar to be honest the pound dollars We know she became a lackluster the last few sessions. It seems to me a bit indecisive and you can see what I mean here So it's kind of almost a cop between this kind of range between above the 50 moving average This blue line here, but it hasn't really retested the turning moving average the red line So it's become a range bound recently Of course, you know, we can see the last few sessions. We've seen the lows have been higher So the last few days we could you know in the near term that seems to me the bias could be Remains to the upside, but if you do press on higher from here We could be looking at retesting the turning moving average in at one spot 2698 And if you head beyond that we could be looking at targeting this early here the highs of mid-June early June in a one spot 2831 a move of the downside could find support from the 50 moving average And that comes into play in at The 50 moving average is in at 124 spot 53 And if you head below that We could be heading back down towards the kind of 124 area and a break below that It could take us back down towards the the low scene in late June I've taken a look now what's going on on the oil market starting off with the Brent crude September contract So if you can see here that it's been a nice upward trend the last few months in fact only and the In the last in kind of the back end of June it hit a three month high So it's in the thought upward trend, but notice how it hasn't really kind of pressed progressed on It's featuring a small range. It hasn't really gotten up to course 44 bucks a barrel But then again has really drifted that much lower. So the we've been training a small range recently But the overall the upper trend of the last few months is still intact We're currently on Brent September contract 42 dollars and 71 cents if we continue to press on higher from here We could be looking at targeting the lows of a of early March in a 46 dollars and 33 cents If you do not to move lower from here, we could find support from the 40 bucks a barrel region Big psychological number and all that and then even if you go below that Excuse me this blue line here the 50 moving average Which comes into play in a 39 dollars and 82 cents that could potentially act as support to move to the downside And lastly, I'll be taking a look at gold So it was only last week we saw gold hit its highest level Since September 2011, so we're talking, you know, and that was in it a price of around 1818 there there abouts were currently at 1810 so we're not too far away from you know multi-year high Gold isn't in a quite a strong position Recently there's been a quite a strong inverse relationship between the gold market and the west dollar market. That's often, you know We've been the case between particularly That's particularly stood out recently but I've been said The the US dollar has often attracted Safe haven funds Recently, so keep keep in mind what sentiment is actually doing to kind of see because I could impact what's going on in the gold market So the trend is clearly remains into the upside if you press on if you hold while we hold above 1800 it's likely the kind of wider upward trend is going to continue if you press on higher from here We could be looking at our getting 1828 if you have a decent move back below 1800 We could find support from the kind of mid-July alone in around 1790 and a move below that could take us back down towards 1770 Thank you for listening. I appreciate the time. Stay safe. Have a good trading week and good luck