 Hello and welcome to CMC Markets on Tuesday the 8th of September and the weekly market update and we're coming off the back of a rather mixed non-farm payrolls report, a report that actually saw US markets trade lower into the end of last week, a G20 meeting where there was some broad agreement about the various measures that China had been implementing to stabilise its economy and its stock market, but nonetheless I don't think we're really any the wiser with respect to what the Fed may well do at its policy meeting next week and I think that going forward is going to have significant effects I think on potential stock market volatility over the course of the next few days and possibly weeks. Chinese data once again for August came in particularly disappointing and I think with respect to the narrative on that I have to take you back to events in July in early August where that is when we first started to see the really big volatility that we've been seeing in equity markets over the course of the past few weeks it was those July trade numbers that saw significant declines in Chinese exports to Europe and Japan and prompted to the revaluation on the one and the current volatility in equity markets and currency markets so this morning's disappointing trade numbers I think are going to continue to feed into that narrative continue to feed into further expectations of Chinese one weakness further easing from the Chinese central bank and could actually impact on Fed policy next week because actually when you go through the guts of last week's payrolls report or last month's payrolls report while the headline number was disappointing at 173,000 there was upward revisions to June and July the unemployment rate fell and average earnings edged slightly higher so the argument sort of comes around to whether or not the Fed will raise rates can they afford to just based on the economic data out of the US potentially yes but and it's and it's quite a big but in this case it's concerns about deflation or disinflation those concerns haven't gone away the Fed has an inflation mandate it also has a financial stability mandate it's missing its inflation mandate and financial stability at the moment is a little bit you know it's it's it's under reference shall we say so in that context I think we're going to continue to find equity markets particularly volatile and I'm going to look at the UK 100 and the Germany 30 and the key chart points there because both those indices look very vulnerable to a little bit of a sell off at the moment we could get a rebound we'll look at the key resistances there if you remember my video last week where I talked about oil prices I still think there's potential for a rebound there so if you want to go back and look at that particular video please feel free to do so it's in the library also going to look at the euro against the Chinese and whether or not we can expect to see further gains there and also look ahead to the Bank of England policy meeting on Thursday and the prospects for a significant rebound in the pound after nine consecutive days of losses so I'm going to start the chart section of this video with the Germany 30 this is a four-hour chart that we're currently looking at and as you can see we're pretty much in a bit of a trading range at the moment the top of that trading range is just above 10,400 where I've drawn the horizontal line and the bottom of the range is just below 10,000 around about 9,900 a word of warning we just we have just posted on the daily charts a death cross now death cross is where the 50 day moving average crosses below the 200 day so potentially that is that is potentially a very negative sign now that's not to suggest that we're going to continue to go lower we could well squeeze all the way back to 11,000 but while the price action and the moving averages the faster moving averages stays below the slow moving average then the bias will still remain to the downside even if we get a move through 10,400 towards that upper moving average and those mid-august highs around 11,000 moving on to the UK 100 the footsie 100 again it's a similar sort of story we've got what I would call a sideways trading range starting to play out at the moment the top of that trading range is around about 6,270 which is the highs at the end of August but we've also got a little bit of resistance just above 6,200 while on the downside we have a decent area of support through the 6,000 level so what I'll be looking for there is continued range trading and a potential break higher if we get through 6,200 is certainly potential to go all the way back to 6,400 but once again here the bias remains for a move lower but we could squeeze higher first now we've heard an awful lot in the past few days about potential further weakness in the Chinese currency and I to a certain extent I think that is inevitable and I think to really reinforce that point I think we need to look at the Euro-Chinese Remnambi chart because I think in this context we've seen a significant break out on this daily chart from a sideways consolidation from the April lows to the peaks that we saw in May now we've broken higher we've broken above the 200 day moving average we've peaked at around about 7.64 and we've come all the way back to just below 7.2 if we hold above the support which is currently around about 709 which also coincides with the peaks that we saw in May then the bias for this move remains for further Euro gains and further one losses back to the highs that we saw in the middle of August now how will that play out I think it's more likely to play out in terms of a move higher in Euro dollar than a gradual weakening of the one against the US dollar so certainly keep an eye on the Euro dollar in the context of this particular cross because I think Euro dollar could be the primary driver of this particular move let's finish up with cable pound against the dollar come off the back of nine consecutive down moves and we saw a very nice rebound on Monday and I'm paying I'm paying an awful lot of attention to this rebound simply because it's a bullish engulfing day or a key reversal day that suggests to me we've seen the bottom we've seen the bottom the tweezer bottom around about 151 70 and the potential is that we could we'll see further gains through 154 and back towards 155 now what's the catalyst for that going to be to be quite honest I'm not really interested in what the catalyst could be we've certainly got the Bank of England policy meeting at on Thursday at the end of this week it's unlikely that we're going to get a change from the eight to one voting pattern that we saw at the last meeting simply because the economic data doesn't warrant another hawk coming on board and asking for a rate rise the policy maker I'm particularly interested in is Martin wheel the data that we've seen since August hasn't been particularly great so I don't think it's likely that we will see any further descent from the NPC and in that context I think we could well see the pound start to wedge a little bit higher against the dollar okay so that's pretty much it for this week once again thanks very much for listening this is Michael Houston talking to you from CMC markets