 Good morning and welcome to CMC markets on Friday the 20th of September and this quick look at the week ahead beginning the 23rd of September. It's been a bit of a strange week for equity markets in general We had a little bit of a weak start on the back of the spike higher in crude oil prices On concerns that the drone strike in Saudi Arabia might precipitate much bigger aggregation which could in essence drive fuel prices up through $80 a barrel and derail the global economy and Certainly the outlook for the global economy hasn't improved despite some evidence of a little bit of an improvement in the economic data This week the OECD downgraded its global growth forecast from 3.2 percent to 2.9 9% at a time when central banks have been largely constrained a little bit in their easing By the fact that they're probably operating at the limits of their capabilities Federal Reserve cut rates by 25 basis points earlier this week Swiss National Bank Bank of Japan Bank of England all kept rates unchanged and We we only have the RBNZ this coming week to look forward to with respect to That central bank rate decision in the coming few days So what's a make out from the coming week? Well, certainly if we look at equity markets after three weeks of decent gains this week We've sort of traded a little bit sideways with a slightly Positive bias as we head into the weekend We can see that here in the FTSE 100 chart where we still got fairly decent resistance around about 7,380 certainly in terms of safe havens. We haven't really seen any significant strength in gold or the Japanese yen or to a lesser extent in the Chinese one so that would appear to suggest that Investors are still prepared to buy stocks albeit slightly more cautiously now But they're certainly not minded to sell them off aggressively after some decent after some decent gains from the August lows it's similar sort of story on The Germany 30 or the DAX we've traded a little bit sideways on the daily charts Yes, we do look a little bit overbought in the short to medium term But if we actually zoom this out and look at the long shadows on the lower candles We can see that there is some significant decent demand down there 12,300 even though we haven't really traded much more than a 200 point range on the German DAX So keep an eye out on the highs that we saw last Friday on the 13th of September. That was around about 12,500 12495 and obviously the lows at 12,300 for a break either side of that range in the DAX similar sort of story on the S&P 500 We haven't as yet taken out the highs that we saw in July but again It's a similar sort of story when it comes to the long shadows either side of the bodies of these particular candles So there is certainly decent demand to buy equities in and around 2980 on the S&P But I think investors are a little bit cautious about driving it up significantly through the 3,020 level Also keep an eye on Brent crude prices after the oil price spike that we've seen this week We've given a good proportion of it back, but we haven't given all of it back So I'll be paying particular attention to this gap That we've seen between where we closed last Friday on Brent crude or around about $60 a barrel and where we are now around about 64 So from being potentially 10 to $12 higher at the beginning of the week, we're now only $4 higher So that for me doesn't suggest that we're at risk of an oil shock Obviously there's an awful lot of saber-attling going on with respect to Iran saying that they're if they're attacked that they'll be the mother of all wars if they're attacked But I think the fact that the Saudis have actually pushed the matter up to the United Nations suggests that both sides will probably keep their guns holstered for the time being and hopefully oil prices will slip back down Certainly they're not exerting any meaningful inflationary pressure on the global economy if recent inflation numbers have been any guide So looking ahead to the upcoming week it's been a it's likely to be probably not as busy as it was this week Obviously Brexit once again is probably going to be dominate the headlines we've certainly seen the pound continue to push higher and actually from a technical point of view despite all of the negative political discussions that are going on the pound continues to break higher and for me I think that is the important thing this break of $123.80 here is very very significant in terms of the overall trend that we've seen in the pound since those highs of $133.80 all the way back in March we've retraced around about 38.2% of that and that came in at 125 we obviously broke above this $123.80 level which corresponded to these lows here in July and these peaks here earlier this month the fact that we've broken higher should be seen or construed as largely positive and while we're above $123.80 I can still see potential for the pound head back to the 200-day moving average around about $127.30, $127.40 the next target is obviously the 50% retracement which is around about $126.70 now how we get there is anybody's guess but certainly in terms of euro sterling there has been a significant development there in terms of breaking below the 200-day moving average if we look at the weekly chart we can also see that we're in line for our sixth successive weekly rise in the value of the pound so we could potentially get a little bit of a pullback certainly if we look at the Fibonacci retracement of this entire up move from the lows back in March to the highs that we saw in August we have retraced 61.8% of that move at around about $87.95 so we could get a little bit of a rebound we have traded slightly below that in the wake of those comments from Jean-Claude Juncker about the prospects that the EU the European Commission is very perfectly prepared to get rid of the backstop if there are viable alternatives the fact that the Commission is being much more conciliatory and Downing Street appears much more optimistic is obviously a positive sign but as with all of these Brexit headlines it's very important that you look through the hyperbole and for me I'm paying more attention to the actual price action and the price action suggests to me the pound for the momentum for the pound has started to shift more towards the upside than to the downside so certainly keeping an eye on how we perform around about this 87.90 area in euro sterling and obviously the 1.2380 area on the downside in the cable so in terms of economic data it's a fairly important week for economic data out of Germany we've got Germany and French Flash PMIs for September and we have started to see some improvement on the margins in some of the more recent PMI data last week we saw ZDW out of Germany improve slightly from minus 44 to minus 22 which I suppose is a small victory when you consider that minus 44 was the lowest level since December 2011 so we're probably going to get an improvement anyway it could hardly be much worse and I think an awful lot of that was down to the fact that we saw a decent rebound we have seen a decent rebound in the Dax and President Trump has slightly called his aggressive trade rhetoric towards China in the past couple of weeks so I think that has also helped in terms of burnishing risk appetite if you like so we've got the Flash PMIs out of Germany there has been significant divergence between manufacturing and services that hopefully won't change services has continued to outperform the ECB is likely to remain accommodative even though we had what I would call a failed TLTRO auction when only 3.4 billion euros was asked for by European banks instead of the 20 to 100 billion euros that was initially estimated we've also got the German IFO business climate survey for the on the 24th of September and we could see a little bit of a rebound in that but that's again probably likely to be a small victory economic activity is already at its lowest levels in the IFO since 2012 because of the triple headwinds of the US-China trade the uncertainty around its auto industry as well as the prospect of a bad Brexit weighing on the manufacturing sector in Germany we've also got a couple of numbers out of the US US consumer confidence I'm usually skeptical about US consumer confidence if I'm honest simply because it's not particularly tangible but nonetheless I think there was an expectation that at the beginning of August when President Trump really ramped up the rhetoric against China and imposed those further tariffs on 300 billion dollars of Chinese goods US consumer confidence would take a hit that didn't happen it only dropped ever so slightly to around about 135 so as we come to the end of Q3 I think investors will be looking for signs that US consumers are starting to lose confidence in the resilience of the US economy thus far we haven't seen much evidence of that jobless claims still just above 200,000 wage growth the recent non-farm payrolls at 3.2% and even though the headline number on the payrolls report was a little bit on the weak side the unemployment rate still remains close to multi-year lows and retail sales still are still fairly resilient so I think a sharp decline in September consumer confidence could be an early sign that investment is or the sentiment is starting to shift so that again is on the 24th of September but certainly in the context of what we're seeing in terms of the dollar I think the likelihood is that as long as US economic data continues to hold up fairly well then the dollar should continue to strengthen and if we look at euro dollar chart here we can see that there's a nice little trend line that I've drawn through the highs in June that currently comes in around about one ten eighty there's also the 50-day moving average just above that so for me while we're below this trend line of 50-day moving average the trend is your friend I can certainly foresee a retest of the lows that we saw in August we've also got the final reading of US second quarter GDP and this final reading I think is likely to be uneventful it's expected to come in around about 2.1% personal consumption still likely to remain fairly strong it's not really going to tell us anything that we don't already know in terms of the earnings picture I think it's going to be a decent we could get some volatility from Thomas Cook and boohoo.com I think very much a case of a tail of two retailers if you like or travel and leisure or have you now there's been an awful lot of news recently with respect to Thomas Cook there's a good chance that the company could go into administration after the bankers asked for another £200 million on top of the £900 million that was agreed with FOSON the Chinese travel operator which is part of the company's restructuring it's the company's Q4 numbers I think there's significant concern that the company may not see the end of the year unless some form of restructuring deal is agreed and their Q4 numbers this week could well be the final nail that's hammered into the coffin of Thomas Cook so I'll be keeping an eye on that I will also be keeping an eye on boohoo.com which is one of those retailers that has actually been outperforming expectations and there has been a few of them there's been JD Sports there's been there's also there's also been Nexus which is also doing quite well in companies like Don Elm so it's not all bad news on the retail front so keeping an eye for boohoo groups first half numbers and on the back of the recent upgrade that management gave to their four-year guidance earlier this month as for the rest of the key events this week you can find them on the news and analysis section of the website otherwise that's it for me for this week once again thank you very much for listening it's Michael Houston talking to you from CMC Markets