 Good afternoon and welcome to CMC Markets and this week's Monday market webinar on Monday the 30th of January pretty much close to the end of the month. So I'll be looking at the performance of the key markets on a monthly chart to give an indication as to whether or not we could well be looking at a potential topping pattern. Certainly I think in the context of where we've been over the past month we've hit record highs on US markets. We've hit record highs on the FTSE 100 but we are starting to give back some of those gains and I think that does beg the question as to whether or not this particular rebound and the rebounds that we've seen over the course of the past couple of weeks or the record highs that we've seen over the past couple of weeks is sustainable. Certainly we're seeing a little bit of weakness today just going through the risk warnings for your perusal which I have to do for compliance purposes but certainly going back to what I was saying previously looking at the performance of some of these key markets certainly the fact that we've broken through the 20,000 level on the Dow Jones. The key questions I think the people are asking at the moment given what's going on over the other side of the Atlantic and some of the controversy shall we say being coming back coming off the back of the presidential executive orders. The big question I think people are asking themselves is whether or not Mr. Trump will be able to deliver. Certainly early indications would appear to suggest that the markets are giving him the benefit of the doubt for now but ultimately I think we are seeing a little bit of caution starting to kick in and I certainly think that's being reflected in some of the pullbacks that we've seen on the major indices. Let's start off with looking at the Dow Jones as a case in point. Now this is a four hour chart and this 20,000 level that was the trigger point for the move higher is now probably going to act as a decent support level on any pullbacks. We've certainly seen that on the intraday cash chart. We gapped lower on the open this morning in Asia. At the moment we are currently holding above it 19,980, 20,000. There or thereabouts is likely to be a key support area. We are looking a little bit oversold on the four hour chart but certainly I think if you look at it in the context of the daily chart probably not so much but that being said we are seeing a similar pattern play out not only on the Dow but we're also seeing it play out on the S&P 500 as well. Certainly not so much. We haven't come back and retested the previous highs which were 2282 nonetheless similar sort of similar sort of play out here. We've traded pretty much sideways for the past few hours and the likelihood is that unless we break below this key support area here then ultimately we're probably going to continue to chop around. We have gapped lower. Typically what normally happens when we do that is that gap gets filled. So I would anticipate some form of pullback towards 2295 in the short to medium term on the S&P and it's funny actually when you look at these sorts of charts that how similar they are. We've got a similar sort of story also playing out on the German DAX. This is the daily chart but again if I drill down into the detail we've seen a similar roll over here. So now what we've got on the DAX is resistance 11,800. Having pushed all the way up to 11,900 in the middle of last week we are now starting to drift lower again. One thing I think we do need to be aware of is the fact that Euro dollars looking a little bit weak as well and that could actually be fairly supportive of the DAX. That being said the Euro dollar and the DAX now do appear to be once again moving in lockstep with each other along with pretty much global markets in general. We did see some initial dollar weakness initially overnight. That does appear to be starting to be reversed but I think what we're seeing also here on Euro dollar is a little bit of a technical pullback after we broke that long-term uptrend line that if you've been following my chart forum posts I've been referring to over the course of the past few weeks. We've broken below it this morning. We've also broken below last week's lows around about 10650 and that would in all likelihood probably push us back down to this series of lows through here around about 10580. I've talked about that in my chart forum post this morning but I have also talked about it on at the end of last week as well. So you know these updates are fairly regular. I usually post them once a day and unless they haven't really changed that much then I won't bother. But ultimately this move lower here does appear to suggest that we are starting to pick up a little bit of US dollar strength. So I've been told that someone's lost sound. I'm guessing that you can all hear me otherwise I'd probably be getting more than one person telling me that I've lost sound. But moving on we also looking at the UK 100. Again I talked about this last week and I also last week talked about this potential bullish weekly reversal that we've seen in the FTSE 100 and that would appear to suggest that ultimately we could well have seen the top. But we need to be careful about calling the top on the FTSE because last week I also talked about the prospect that we could find support around about 7120 and we do appear to be continuing to find support at that particular level. That being said however if we look at the 4 hour chart we can actually see where that support comes in. It's the series of highs through here then support there. We are finding a little bit of support through here so we do need to be a little bit careful about trying to sell into a sell-off because ultimately we could actually get caught on a short squeeze back to 7200. So I'm being told that the sound is pretty much okay and that would appear to suggest that ultimately there's a problem with audio. Maybe it's your speakers, loose wire or somewhere like that. I'm just going to quickly check your speakers and your audio sound if you can't hear sound. So I'm just going to break away slightly the sound as audio okay elsewhere. Multitasking is not one of my strong points. Okay so we're looking at the UK 100 and for me I think the key level on this is really I think you've got to look at 7100 as a key level on that 7115, 7120. Simply because it was such a key level on the way up it was the previous all-time highs and ultimately what normally happens is those tend to reverse their roles but certainly in the context of what we've seen on the weeklies if I actually change this to a monthly chart that is actually even more significant because ultimately we've made record highs. There's only one more day of the month left apart from today 31st of January. If this candle is not able to sustain any of the move higher then potentially and this is potentially we've got what I would call a gravestone doji and I think that could be quite significant in the overall scheme of things. So please reply to this there's this three of you are trying to talk to me you need to please reply to the chat message that I've just sent out so please reply to the message that I've sent to you here otherwise I'm not going to be able to see your messages so that's Warren Clive and Adrian you need to reply to the message that I've just sent out if you have any particular problems either that or try and contact the help desk and they'll try and resolve any audio problems that you might have unfortunately I can't resolve them from here. So I think with respect to the monthly close I think need to keep a very close eye on the UK 100 certainly in terms of the weekly we are we are seeing some evidence that we could be running out of steam and could be due a little bit of correction so those are the warning signs that I'm seeing on the footsie let's see if we've got similar warning signs on the German DAX on the monthly chart drill down again and not so much we've made decent gains here but we are also very close to all-time highs on the German DAX on a monthly chart so we do need to be aware that we could be wearing we could be heading into what I would call nose bleed territory when it comes to stock market valuations certainly I think in the context of US equities while the longer-term outlook may well be fairly positive I think in terms of what we're seeing on a long-term basis we are we are struggling at these sorts of levels and certainly I think in terms of the dollar trade everyone's talking a higher dollar for me I think there is some evidence that again if we look at the dollar index and I'm going to show you a Bloomberg chart here because I think this illustrates the point quite nicely we are above a fairly key support area on the dollar index so ultimately as far as the dollars concerned we are what I would call in decision-making territory because ultimately while we're above 100 then I think we could well rebound but certainly if we break below 100 and I think that's really a key level for me 100 on the dollar index is likely to a break of 100 on the dollar index is likely to precipitate a quite a significant sell-off and we can see it probably it's better spawn out if I draw that in there so that comes in round about there and I think sometimes because we don't have we don't have a dollar index on the CMC platform sometimes it's nice to look at a proxy so a good proxy for the dollar index is say for example dollar Swiss or dollar YEM and yes they only make up a very small part of the dollar index but certainly if I look at this dollar Swiss chart there's a decent area of support through here and this is something that I looked at last week and it was 99.70 now throughout the whole of last week we didn't really break below that 99.70 area we sort of flirted a little bit below it but we never really took it out and at the moment we're seeing a significant rebound off that base so you know while we're above 99.70 on dollar Swiss then I think you need to be very very careful about being overly short of dollars because ultimately if we are going to trend lower then we really need to take that 99.70 area out and if we look at the peaks draw a line through the peaks that we've seen thus far since the beginning of January we are trading lower have been trading lower for quite some time but every subsequent rally has been shallower so if we break out through this series of highs through here which we look as if we could do we also need to take out this downtrend line from the peaks that we saw in early January to suggest that potentially we could have seen a top in the dollar so we are trending lower but trying to preempt a weaker dollar is fairly dangerous process so at the moment with respect to the dollar I'm still in buy the dip mode we can we can sort of see that quite nicely illustrated as well in euro dollar as well because if you actually look at the euro dollar chart we've looked at the support level but if you look at the 108107 above 107 we've not really been able to take that level out so again dollar weakness if we could get through 10750 on the euro dollar or these peaks here around 1077080 then again I think we could proceed some prolonged dollar weakness but at the moment that doesn't appear to be particularly likely and that's a worry for me at the moment I think yes the long dollar trade is a very crowded trade but everyone's looking to try and look for the break and ultimately I think that's the wrong way to do it at the moment you've got the dollar index which is well supported around 100 you've got dollar Swiss which is well supported at 9970 you've got euro dollar which is well capped 1077080 and what we want to see for a weaker dollar to unfold is for all those levels to get taken out and at the moment that doesn't appear to be that likely and 57% of the dollar index is euro dollar you then got the dollar Swiss on top of that as well looking at dollar yen again it's a similar sort of story we have pushed higher but we are finding a little bit of resistance at 1155060 but we've also got a very solid base around about 11250 so at the moment we're in a bit of a range trade on dollar yen we do have the Bank of Japan overnight and the Bank of Japan have been insistent that ultimately they are not put they will want to anchor their bond buying program around a 0% 10-year JGB which essentially means that ultimately what US yields do is very very important in the context of dollar yen and ultimately if the Bank of Japan is looking to anchor yields around zero and the gap between US 10-year yields and JGBs continues to widen then ultimately it's likely the dollar yen is going to find it very very difficult to go lower because the gap between 10-year US treasuries and JGBs is likely to get wider and at the moment it's around about two and a half percent because if we look at what 10-year US treasuries are currently doing and again this is quite useful for when the Bloomberg chart comes in if we look at a yield chart here we do appear to be building up for a significant move higher now if I take that out to a five-year chart we can see that we broke this downtrend in five-year yields quite some time ago and I remember talking about this in a previous video a few weeks ago we've broken this downtrend in yields and now what we're looking to do is potentially head back towards around about 2.7 2.8 percent 3 percent so ultimately US yields are likely to increase over the course of the next few months now obviously we we've talked about we talked about the Bank of Japan we also have to talk about the Fed and the Fed meets for the very first time this year later this week now there's no press conference we're not expecting any major changes from this Fed meeting and ultimately and a lot of the a lot of the narrative has been fairly hawkish with respect to the potential for further rate rises this year ultimately I still think there's an awful lot of uncertainty surrounding what the Fed may do in the first quarter I do not expect to see the Fed raise rates in the first quarter of this year there's still an awful lot there's too much uncertainty around a Trump presidency for the Fed to be able to act with any confidence about the outlook for the US economy we saw on Friday US GDP came in slightly weaker than expected that wasn't a surprise to me because of the fact that I think the third quarter numbers were artificially boosted by exports soybean exports in particular and what was notable was that net trade was a drag on Q4 GDP now the reasons for that are likely to be a strong dollar and we've already heard from certain US officials or US government officials Trump administrators they're not comfortable with the cover with with the current value of the dollar that suggests that they would like a weaker dollar and I think how does how does Trump react with Janet Yellen it's no secret that mr. Trump has been highly critical of the Fed in keeping interest rates artificially low for quite some time and ultimately he's felt that they are behind the curve but of course the rhetoric his rhetoric is likely to change now I think with respect to the Fed because ultimately he won't want the Fed to do anything that's ungoing to undermine his program of potential a fiscal stimulus and fiscal stimulus is have a habit of being inflationary we've certainly seen that reflected in the rebound that we've seen in bond yields over the course of part over course of the past week and the key level for me I think in terms of the US 10 year is 2.6% so there's also a slightly different narrative amongst Fed policymakers for this year as well because we have four new voting members on the FOMC and my hunch is they're probably not going to be as hawkish as say for example the Fed committee was last year so look for comments from Robert Kaplan Neil Kashkari and Patrick Harker because those are some those are three of the new voting members of the FOMC Patrick Harker has already suggested that there's no rush to raise rates anytime soon which is a slight departure from what he was saying a month ago when he was slightly more hawkish about the prospects for Fed rate rises so I think that the narrative is going to be particularly important and the narrative is going to be more important in the context of what the Bank of England has to say the day after because I think we've talked about last week about the strength of the dollar and potentially in the context of what we could what it could do with respect to the pound and we've seen a decent rally in the value of sterling over the course of the past week or so we are now starting to give that back certainly on the in the context of the daily chart we've broken lower and we are heading back towards the 100-day moving average which is still very very negative the 50-day moving average is starting to flatten out and has acted as support and resistance over the course of the past few months in equal measure I think we do have potential in cable to move back to this level of around about 124-2030 without undermining the overall up move that we've seen over the course of the past week or so last week I talked about this bullish reversal here we saw we've seen some decent gains over the course of the past week or so we've gone back to 126-75 and we're now heading back towards around about 125 now 125 we're finding a little bit of support at the moment there's certainly potential for us to fall all the way back to this moving average here and this series of peaks through here which acted as resistance on the way up we can draw a nice little horizontal line through it here around about 124-30 if I take that down into the four hour chart we can see that quite nicely through here how it acted as a peak here acted as a series of peaks here broke through here came back and acted as support before rallying back to 126-75 so we certainly got potential to come a little bit lower in the short to medium term but overall I'm still of the opinion that the risk for the pound is less to the downside and more to the upside and I think a large part of that could be predicated on this week's quarterly inflation report which is also due out at the same time as the Bank of England rate decision on Thursday so we're quite busy in terms of the central bank focus this week we've got the Bank of Japan early Tuesday morning we've got the Fed on Wednesday evening at 7 p.m. and then we've got the Bank of England midday on Thursday and I think of particular interest for me will be the tone of the quarterly inflation report will they upgrade will the Bank of England upgrade its growth forecasts I think that's highly likely I think they're quite likely to upgrade their inflation forecasts because if we look at if we look at where UK yields are and I think this is particularly important in the context of where forward inflation expectations are these are forward inflation expectations on a five-year basis for UK inflation so they're around that they're at significantly elevated levels 3.65% so one or two things needs to happen with respect to that if I type in the UK 10 year which is the yield that's currently at 1.46% that's a huge gap it's a huge discrepancy between what 10 year guilt yields are where 10 year guilt yields are and where the forward five-year five-year inflation expectations are so in that context I would suggest that there's potential for UK guilt yields to move higher if that does happen and I think the key level for that is really this particular this resistance level here which I'm going to draw on my Bloomberg chart and I will obviously keep you all apprised of that around about 1.52% all the way through here would bring us back to the levels that we saw pre Brexit referendum and it's also quite notable that here is the gap that we saw when we gapped lower in the wake of the June 23rd vote so we were there on June the 22nd to June the 23rd day after the Brexit vote we pushed lower we are now back above the levels that we were so that rate cap that the Bank of England instituted in August it's gone it's finished it was a complete waste of time and ultimately what we see now is UK guilt yields are unlikely to push that much lower and I think that rules out the prospect of any potential further easing of policy from the Bank of England over the course of the next few weeks simply because inflation expectations are running a very very hot indeed and I think that ultimately is likely to be fairly supportive of the pound now having been supportive of the pound is one thing in terms of propping up the pound against the dollar is another because you're looking at a central bank the Federal Reserve that's very much on a hiking cycle and a Bank of England which ultimately is not that's not to say that they won't try and dial back expectations of when the next rate hike will come but I think it'll be much more difficult for them to ignore higher inflation when you've got producer prices of factory gates trending at 16% per annum that is likely to filter through into the headline CPI numbers we're already seeing German inflation coming in at 2.3 percent this morning the latest CPI numbers out of Germany at your one o'clock in 20 minutes and there's already a significant debate going on amongst ECB governing council members as to the wisdom of running a very loose monetary policy when you've got inflation running at 2.3 percent in Germany and given the fact that a month ago or two months ago it was a 1.4 so it's jumped 0.9 percent in two months and a year ago it was negative so a significant dialing turnaround in inflation expectations not only here in the UK also in the United States but also in Germany as well and that is going to create tension on the governing council so it's going to be very very difficult to see how that dynamic plays out and further further losses in terms of the euro so in terms of euro sterling I'm not a big you know I'm probably more bearish on euro sterling than I am on anything else certainly if we look at it in the context of a very long-term chart here I talked about this last week potential head and shoulders reversal forming here on euro sterling you've got the left shoulder here you've got the head here you've got a slightly higher right shoulder here around about 88 and we've got a nice little uptrend line here coming in from those lows that we saw at the end of 2016 so we've seen a very bearish candle there if we look at the monthly chart it's probably even more interesting in terms of the monthly reversal that we saw in at the end of November so you've got this January candle here which for me I think is very very bearish because ultimately we tried to go massively higher we haven't been able to sustain any of those euro gains at all which suggests to me that ultimately for all the bearishness surrounding sterling I think the bias for me would appear to suggest that we could potentially go lower on euro sterling and look at that oscillator on the monthly chart as well that does suggest to me the potential for further weakness but ultimately trying to fine-tune that move lower is going to be very very difficult at the moment we're above this uptrend line we're above the 200 day moving average but ultimately while we're below 85 70 80 on euro sterling I think really you have to sell rallies on euro sterling this is slightly bullish here this daily candle slight bullish reversal though which would appear to suggest that maybe we could go higher but all the other indicators for me I think are pointing to a move lower decent support around about the lows that we saw last week on the four hour chart at around at around about these level around about these levels here let me just draw that horizontal line in there but ultimately around about 84 60 84 70 sell rallies back to this this move here I would expect to see euro sterling start to trend lower and retest the 200 day moving average and that trend line support from those lows there over the course of the next few months ultimately I think euro sterling is probably a sell and not a buy and all this nonsense about parity in euro sterling I think the dynamics of the price action need to change quite substantially over the course of the next few over the next few months for that to play out let's move on to commodities because I know a lot of you look at commodities looking at gold prices we are starting to see a little bit of a roll-off there it's not altogether surprising but I think there is decent support on gold prices around about 1180 we're seeing that there but be careful there's potential here I think for a little bit of a double top breakout we've seen that break lower we could trickle back down to around about 1150 or 1160 but for the moment we've got decent support 1180 decent resistance around about the 1200 level if we break back above 1200 then we can certainly retest that double top there at around about 1215 1220 but certainly keeping keeping an eye on those series of lows that double top breakout there through there so fight probably find resistance around 1198 1200 for a move back down to 1180 I think we'll probably see a retest of that Brent crude on Friday we saw rig counts move to the highest levels since November 2015 of 712 I think the Brent crude price is going to be very very much dictated to you by the strength of the dollar if the dollar strengthens then that's going to push crude prices down we're in a range at the moment on Brent I'm not anticipating a significant move one way or the other solid support around about $53 a barrel solid resistance around 57 I think this is potentially going to be a bit of a snooze trade here an arranged trade over the course of the next maybe two to three two to three weeks simply because we've been range trading for the past two to three months and I don't think that's going to change until we get the output figures from OPEC next week and when we'll find out whether or not they've been cheating on their output cuts at the moment the market is giving them the benefit of the doubt let's wait and see as to whether or not what the numbers come out like over the course of the next few days and weeks quickly have a quick look at see if I've missed anything out I don't think I have looking at guilt prices I think it's probably have a quick look at that because this is quite an interesting dynamic on our guilt chart here we are testing trend line support for on our guilt price chart from the lows that we saw at the beginning of 2014 and that also ties into what I was saying about yields on UK Guilts as well so running into a fairly decent support level on prices resistance that resistance level on yields I will be watching this very very closely for any push higher in UK yields relative to what US and German Bund yields doing as well and German Bund yields are 12 month highs as well around about 0.5% so worth keeping an eye on them as well as shown by this chart here we've pushed higher on German yields 0.5% if we break above there then you could find that that could be supportive but you need to put that in the context of what UK and US yields are doing as well under differentials between the two okay so it's 1247 hopefully that's giving you a bit of an idea of what to expect very data heavy this week apart from central banks we've also got non-farm payrolls on Friday my colleague Colin and myself will be hosting a webinar on that on Friday you're more than welcome to sign up for that on the day that can be found on this page here learn webinars and events go straight to here non-farm payrolls sign up for that here and we'll be covering that live from 115 on Friday to 130 we've got a whole host of data out this week ISM manufacturing manufacturing PMI service PMI's from the UK EU and the US so plenty of stuff to get our teeth into this week if you want to say if you want to sign up for the non-farm payrolls fairly easy to find CMCmarkets.com learn webinars and events and then select non-farm payrolls and sign up there otherwise unless there are any other questions thanks very much for your time ladies and gents always a pleasure and I will hopefully speak to you all on Friday at 115 when we will all cover the non-farm payrolls over one over the 130 numbers thanks guys and see you on Friday