 Hello and welcome to CMC Markets on Wednesday the 13th of August and a slightly belated weekly market update, quite a bit of stuff to get through this week. We've got a bit of a mixed bag when it comes to equity markets over the past few days. The German DAX hit its lowest levels this year on Friday at 8,903 yet U.S. equity markets continue to remain fairly resilient despite concerns about ongoing geopolitical tensions not only in Ukraine but also in the Middle East namely Iraq and obviously the Israeli Gaza situation. I think the Israeli Gaza situation is likely to have little or no impact on market sentiment going forward. I think it's predominantly concerns about an escalation or potential escalation in the Ukraine and Russia situation and I think that's why more than anything we've seen a significant sell-off in the German DAX. Now if we can look at a chart of the German DAX we have a daily chart for that and as you can see from the horizontal line that I've drawn through the lows that 8,900 level is a really key chart point and I think that's really the key level with respect to keeping the current uptrend that we've seen in European equity markets intact. We've seen some extremely disappointing economic data across the broader Euro area over the past week or so a very disappointing ZEW survey lowest number since December 2012 and I think the likelihood is the GDP numbers that we're going to see coming out later this week for France and Germany are going to be similarly disappointing. That being said it obviously is going to increase the pressure on the ECB to look at loosening monetary policy further particularly if CPI tomorrow on Thursday rather comes out significantly worse than expected. Now the expectation is we're going to get 0.4% but we've seen some pretty disastrous CPI numbers from Portugal, Italy and Spain this week and that is really raising concerns that Europe is falling into a deflationary trap so really it really boils down to the CPI numbers the final July CPI numbers tomorrow and in that context I'm going to have a look at the Euro dollar and I'm also going to have a quick look at the pound against the dollar in the context of the US retail sales numbers that we've seen out this week which were again very disappointing declining for the fourth month in a row despite the fact that consumer confidence rose for the fourth month in a row so those two indicators appear to be diverging like an awful lot of the US economic data appears to be doing so and we'll also have be having a look at the pound against the dollar given that very significantly poor wage growth number that we saw earlier this morning and Mark Carney's comments with respect to the quarterly inflation report. So let's start with our daily Euro dollar chart because I think this more than anything is significant in the context of where we could potentially go from here. Now if we look at this daily chart and we look at the daily candles we can see where I've circled a significant area of support around about the one thirty three thirty area. Now if you look closely you can see a hammer which we saw last week. We can also see some fairly long shadows through those daily candles towards the downside which seems to suggest that markets do appear to be a little bit short of euros against the US dollar. We've also seen a potential bullish engulfing day. Now we have been in a downtrend since May and we're likely to remain in that downtrend until such times as we break above that trend line resistance from those may highs. Now we could be actually forming a potential double bottom here. The top of that double bottom is going to be around about one thirty four fifty one thirty four fifty resistance. So if we break through one thirty four fifty go towards one thirty four seventy five. We are very susceptible to a short squeeze and those daily candles do appear to reflect that. That scenario is only negated if we break below the lows that we've seen over the past few days at one thirty three thirty. It's a similar sort of story on the pound against the dollar again. It's all about interest rate expectations and for all of those people who thought we'd potentially get a rate hike at the end of or before the end of this year from the Bank of England I think this morning's wage growth numbers have made that outcome much less likely and that's really reflected in the reaction of the pound in today's price action. If we look at the daily candle chart in front of you right now we can see we've got a significant area of support that we're currently approaching around about one sixty six ninety one sixty seven. The May and June lows. We've also got the two hundred day moving average. Now looking at that chart we can see that pretty much the what the direction of travel is with respect to the current direction of travel. But given the fact that we also had a disappointing retail sales number from the U.S. the likelihood is that both the Fed and the Bank of England are likely to have to keep rates lower for longer. So the prospect of a sell off or a deeper sell off in the pound against the dollar only increases on a break below the twin lows at one sixty seven and the two hundred day moving average. Otherwise like Euro dollar we remain susceptible to a short squeeze. Now where's the key resistance. Well if we look at the four hour chart we can see where the key resistance is. It currently comes in around about one sixty eight twenty thirty trend line resistance from the highs in mid July. So certainly keep an eye on those particular levels. Be aware that we could get a short squeeze. Be also aware that we could we remain vulnerable to a deeper sell off if we break those two support zones. So that's pretty much it for this week. Once again thanks very much for listening. Just a quick reminder. Three o'clock tomorrow fourteenth of August. Colin Suzuki and myself will be doing an analyst update or an analyst debate which you can sign up for just by basically clicking on the link down here and we can then go into a little bit more detail about some of the analysis that I've talked to you about today. Until then I'll speak to you all next week. This is Michael Houston talking to you from CMC Markets.