 Good morning and welcome to CMC Markets on Friday the 17th of August and this quick look at the week beginning the 20th of August and this week we've seen significant amount of volatility in the Turkish lira talked about last week the prospects for further losses in that and we did see a new record low in the Turkish lira since then we have rebounded a $15 billion rescue package from Qatar a limited package of exchange controls and limiting banks abilities to take out short positions has bought the Turkish lira a brief respite and we can see that here in this chart but we still remain significantly below the levels that we were since March when we were around about 3.8 we are still around about 5.8 as we speak so there is still a significant inflationary risk for the Turkish economy going forward and unless President Erdogan takes steps to restore confidence in his stewardship of the Turkish economy then we could well see the lira come under further pressure in the days and weeks ahead US certainly doesn't appear to be in any mood whatsoever to relieve the pressure on the Turkish government in securing the release of their pastor certainly if recent comments from Vice President Mike Pence and Treasury Secretary Steve Mnuchin are any guide so while you may see President Erdogan seek to defray some of the risks to the Turkish economy by improving ties with Russia and Germany be under no illusions if the US really wanted to turn the screws on the Turkish economy I think it's unlikely that Germany or the Russians would stand in their way one positive development this week has been the re-announcement of a resumption of trade talks between the United States and China and these are due to start in the coming week ahead the week beginning the 20th of August there are also a number of other key events to keep an eye out in the coming week first of which comes at the end of the week and it's the Jackson Hole annual symposium in Wyoming and that's a really key market event has been for the last few years and the topic is changing market structure and implications for monetary policy which all sounds very worthy but ultimately I think with respect to the strength of the dollar and the divergence that we're currently seeing in terms of monetary policy I think it's going to be a very significant event the Federal Reserve is the only central bank at the moment on an aggressive tightening cycle the rise in the dollar is exacerbating the problems in emerging markets we've seen that play out with respect to events in Turkey that's likely to remain a key concern for investors going forward and this will also be Jerome Powell's first symposium as Federal Reserve chief so I think in terms of comments it's going to be a very interesting symposium that's the symposium starts on the Friday the 23rd of August we all at the 20 the Thursday the 23rd of August rather we also have the latest Fed minutes due out on the 22nd for the July meeting I don't expect these minutes to be particularly instructive when it comes to expectations how US policymakers view the US economy I think in terms of the main event it's going to be this symposium at Jackson Hole but nonetheless a September rate rise still seems a done deal US policymakers upgraded their outlook for the US economy earlier in July and GDP forecasts are already towards the higher end of forecast so I think really it's a case of what happens after September we've also got the latest European central bank minutes as well and given the breakout that I highlighted last week in Eurodollar certainly will be looking for further declines in Eurodollar towards the minimum price objective of around about one 11 and a half now with respect to these minutes the governing council I think it's going to be interesting to highlight see whether or not there are any significant divisions on on the interpretation of what through the summer meant in terms of 2019 we now know from deroghies recent comments that through the summer means Q3 2019 I think today I think the minutes this week's minutes from the ECB will give us an indication as how contentious this was as well as whether there are any concerns about the lack of pickup in the wider economy after the slowdown in Q1 what we've seen thus far with respect to the European Union is his French GDP in Q2 has been significantly underperformed relative to say Germany which posted some very decent numbers so once again what we're seeing in the European Union is Germany appears to be basically lifting the rest of the area in terms of its GDP growth now there are still trade tensions between the US and Germany particularly around the automotive sector and I think that is probably one of the reasons why German markets and European markets in general have underperformed relative to US markets but nonetheless if we do get any rebounds in euro dollar the first resistance I would expect to see coming is around about one fourteen and a half then above that at 115 while we remain above sorry what will remain below 115 then the probability over the course of the next few days and weeks is we will probably see a move back to this lower line which I've identified here of around one eleven and a half at the moment is finding support around about one twelve eighty which is the sixty one point eight projection from the breakout point at 115 we've got German and France flash PMIs for August also this coming week recent PMI data has been a bit of a mixed bag if I'm honest with you it's it's in terms of the French economy I think that's been held back by widespread industrial action across the whole of France that's caused a significant economic disruption and I think that's probably why you're seeing the divergence between France and Germany there doesn't appear to be any signs of that being dialed back so I'm not overly optimistic about there being a significant improvement in French economic data with respect to the pound it's a fairly quiet week but once again the pound is being weighed down by Brexit uncertainty the economic data that we've seen this week has by and large been fairly decent it points to an economy that's not while it's not firing on all cylinders is certainly ticking along quite nicely but it's been politics that's keeping a lid on it and I think this week there are reports that the UK government will be publishing a raft of government contingency papers which are highlighting what steps the government would make in the event of a no-deal Brexit so I think if those papers get published it's likely to be a significant drag on any upside in the pound we can see here we've broken significantly below 128 70 128 80 while we remain below this key level then I think there's a distinct possibility we could head back to look towards around about 125 and a half 126 in the short to medium term so that's it for this week once again thanks very much for listening to Michael Houston talking to you from CMC 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