 Good morning and welcome to CMC Markets on Friday the 1st of February and this quick look at the week beginning the 4th of February and it's been a fairly decent start to 2019. We've seen some decent gains for global equity markets in January. We haven't as yet reversed the declines that we saw in December, but certainly I think there is slightly more optimism in the markets than there was say for example 30 days ago at the end of December when equity markets have come come off the back of one of the worst quarters we'd seen in quite some time. If we look at the FTSE 100, we're back above the 7000 level. We've broken above the downtrend line that we've drawn from the highs that we saw in August. And if we look at also the S&P 500, we've broken a similar downtrend line from the highs that we saw in mid-September. That being said, there still I think remains some significant obstacles to further gains in US-European and more broadly equity markets in general. We've got the 200 day moving average on the S&P 500 which comes in around about 2750 so we could see further gains over the course of the next few days, but there is a significant barrier through there not to mention the fact that we've got three successive peaks just above 2800 on the S&P as well and that's likely to act as a significant barrier to further gains going forward. If we look at the UK 100 again, we've managed to push above the 7000 level and these series of peaks through here but nonetheless we still have a number of peaks around about 7,180,7200. I think in terms of support areas our key area remains the 11,000 level on the DAX and I will be paying particular attention to that over the course of the next few days as I have been all of this week. In the event that we see a little bit of a breakdown in that, but for now the upside still remains the predominant predominant area I think for the German DAX while we're above the 11,000 level. That being said, despite the optimism for global investors we can certainly see evidence of a continued weakness in global economic data. We look at the Chinese data, the latest Kaishin Manufacturing PMIs, they were disappointing 48.3. That's a two-year low Obviously we are coming into Chinese New Year, so it's unlikely we'll see a significant pick up in February but we could see a little bit of a pick up in March, but nonetheless I think the I think the outlook is slightly more optimistic I think largely on the back of a number of factors. The first of which is that the China and China in the US are still talking with respect to coming to a trade agreement and also the US Federal Reserve is pretty much backed up the rhetoric of earlier this month with a very dovish outlook with respect to monetary policy. I think the Fed has woken up to the risks of moving too far and too fast. That has seen the dollar index come under pressure and we can see that from this chart here that it has put upward pressure on the euro. It's also put downward pressure on the dollar and we can see that from this series of daily candles here. I think there's a key support area on the dollar index. It currently comes in around about the 95 area which more or less coincides, I think, with the 115-20 area on euro-dollar and I think that's one particular area I will be keeping a close eye on and while I think that the sentiment towards the dollar has shifted that that's borne out by a significant decline in US Treasury yields. Ten-year Treasury yields have dropped back quite substantially over the course of the past two or three days on that very dovish outlook from the Federal Reserve in January and the fact that they downgraded their growth description from strong to solid. I think it's a recognition that the Fed is likely to remain on hold for at least the next six months and ultimately I think there's a distinct possibility that we could actually be done in terms of rate rises for this year. Now that's not a universally held view but it's certainly one which I remain, I think, still fairly confident about notwithstanding any potential negative effects from the US government shutdown. Now as I as I record this video we've got non-farm payrolls coming up and I think it's very unlikely that we will see the type of Goldilocks report that we saw as a result of the December number which showed payrolls growth of 312,000 new jobs and wage growth of 3.2%. I think the payrolls numbers are now marginally less important than they were say for example two or three months ago and I think the reason for that is the fact that the Federal Reserve has signaled it's likely to remain on pause for quite some time now. So even if wage growth, even if wages growth does age higher while it may give a modest uplift to the US dollar it's not likely to change I think the overall direction which is that the dollar is likely to drift a little bit lower if US yields on a 10-year start to drift back to 2.5%. And you've also got a price in the prospect that the European Central Bank is unlikely to be looking at raising rates anytime soon. We can certainly see that in terms of the way the euro's trading we have started to age higher and I think the euro's starting to age higher but more on the back of the fact that the Fed is unlikely to ease sorry the Fed is unlikely to hike anywhere near as much as markets is initially expected and that as that starts to get priced out that is likely to exert upward pressure on the euro but make no bones about the fact that we're seeing a significant amount of euro weakness in terms of the economic data. Italy is back in recession the PMI numbers that we're seeing or likely to see out later this week in terms of services are probably likely to paint a significantly weaker picture than they did in December manufacturing has already come in very very weak for Italy as it has in Germany. I think there's a distinct possibility that German data in Q1 isn't showing any significant signs of picking up after a week Q3 a fairly stagnant Q4 and any prospect of a pickup in Q1 is likely to be overhung by the fact that the Brexit on pass is unlikely to be unlocked much before the end of February or even the end of March and German manufacturing in the German economy is very exposed to a disorderly Brexit we're not likely to get any progress on that before the 13th of February which is when the next parliamentary vote is on the withdrawal agreement while the UK and the EU basically stare at each other relative to the red lines the UK wants the withdrawal of the Irish backstop the EU have said the withdrawal agreement won't be reopened and ultimately I don't see there's going to I don't see the I don't see that there's much outlook for any change of position going forward with respect to that with respect to the relative negotiating positions of either party there so what does that mean for Cable well I think it means the Cable upside is likely to be fairly limited despite the fact that we've got a host of UK data out this coming week we've got the Bank of England rate meeting along with the latest inflation report we're not expecting any changes here this is during the 7th of February and we could see a change to the inflation and growth forecast and I thought it's highly likely that the inflation and growth forecasts will be adjusted downwards that could see the pound edge back towards 130 or even 129 and a half the upside is likely to be restricted to around about 132 which were the highs of this week we've also got the latest services PMI out of the UK that's and that's due out on the 5th of February the construction PMI out from the 4th out on the 4th as well and we also have the latest RBA rate meeting we also have a whole host of US data out later this week non-manufacturing PMI and there could be the outside possibility that we could get a whole host of US data that was delayed from the US government shut down we don't have a precise date on any of this stuff yet so I think it's incumbent upon you guys to keep an eye out on the daily calendar for any any evidence that this data will be released and the data that we're missing is US GDP, durable goods, retail sales all been delayed from the US government shutdown and that could give us an indication as to the hit US economy has taken as a result of that shutdown in terms of the US economic growth outlook. Other items to keep an eye out for for the coming week are the latest earnings updates from BP we had a fairly decent update from Royal Dutch Shell this week which showed that they're still generating some decent cash flow we've also got Barrett developments UK house builders should given a good insight to the UK housing market which is showing signs increasing signs of stagnation in the first quarter but also we've got a whole host of US earnings as well from Twitter GoPro and snap so that's it for this week thank you very much for listening Michael Houston talking to you from CMC Markets