 Hello and welcome to CMC Markets on Tuesday the 17th of February and the weekly market update and it's been a fairly good week for equity markets over the past few days. The S&Ps hit another all-time high as has the German DAX and generally investors tend to be treating as background noise what's really going on in Brussels and the tortuous negotiations and they are tortuous because we don't disappear to be getting anywhere between the new Greek government and the EU about the future of Greece's bailout program. On the one hand you've got the EU who maintain that Greece needs to extend its bailout or stick to its current program and on the flip side you have got the new Greek government who insist that the bailout must end at the end of this month. In the background you've got the European Central Bank essentially keeping the liquidity tap open in the form of the ELA which is the Emergency Liquidity Assistance and on Wednesday they will be reviewing that having increased it to 65 billion euros at the end of last week. I think it's very important to point out it is very unlikely that the ECB will turn that off because if they turn that off Greece will be to all intents and purposes insolvent and I think any decision to expel Greece from the euro will be a political one it won't be a one made by the European Central Bank. In that context I think if we look at euro-dollar I think we can safely assume and I'm using those words rather euphemistically that we will probably stay within the range that we've been in over the course of the last couple of weeks with a support level round about the mid 112s and resistance about 114.30, 114.50. If we get a break either side of that we could see a sharp move higher or lower but it's not really the euro that I'm going to be looking at this week because I think most of you are probably sick and tired of hearing about Greece and about the euro so what I'm going to focus on this week is I'm going to focus on the UK and the data that we've got coming out this week and also going to be looking at the Canadian dollar in the context of the rebound that we're seeing in Brent crude prices. So earlier today we saw UK CPI coming at its lowest ever level at 0.3% year on year and on month-on-month basis that equates to a decline of minus 0.9. Interestingly though core price is actually edged higher up to 1.4% from 1.3 and I think that sort of feeds into the narrative that the Bank of England is likely to look through the current weakness in inflation but what that doesn't mean is that we're going to see a rate hike anytime soon. I think what we're going to be particularly looking closely at is the average earnings data that's due out on Wednesday along with the unemployment numbers. Now the average earnings data is expected to come in around about 1.7 but if we start to see that data start to wedge higher that could actually be fairly bullish for the pound and there does appear to be some evidence that we're building up a little bit of a base on the pound against the dollar after the lows that we saw earlier this month around about 150. So let's look at a four hour chart. Now this four hour chart what I've done here is I've put on the previous triangle or potential inverse head and shoulders. We've got the breakout we're currently trending higher and thus far we've hit a high of around about 154.5. The oscillator on the four hour chart is starting to look a little bit oversold and as long as we don't break below that trend line from the February lows which currently comes in around about 153.20 then the current move to the upside could well be maintained. Now there is one word of warning with respect to all of this and for this I'm going to pass you over to the daily chart because the daily chart gives you a slightly different flavour in terms of where we could go next. Now those of you who have watched my videos on a fairly regular basis what I've done is I've completely decluttered this chart. There's nothing on it apart from a 200 day moving average and sometimes I do this on charts. I completely declutter it so I can actually see what the candles are actually doing and as we can see from the daily candle on this chart here we've got a bearish engulfing or a key reversal day on the daily chart for Monday this week. Now ordinarily that would be a potentially bearish signal but I am very cautious about it and the reason I'm cautious about it is simply speaking this uptrend that we've been in for the past few days really hasn't been in place long enough to really exert a significantly powerful reversal so what I will be looking for is a break below that trend line that I drew on the four hour charts at 153.20 to call time on my scenario where we could well see 154.80 or 155. So the next few sessions are likely to be fairly important. We have also got the latest Bank of England minutes coming out on Wednesday as well and they should be particularly interesting given the fact that Mr Martinwheel and Mr McCafferty both reversed their calls for an increase in interest rates at the last meeting so it'll be interesting to get a flavour of that particular debate. We've also got retail sales for January as well later this week as well as the latest public sector or the public finance numbers for December for January so it'll be also particularly interesting in that context as to see how much of a surplus we get in terms of the end of the tax year for 2013 the deadline for people's tax returns how much money actually came in and that will determine whether or not Mr Rosbourne is on target for his borrowing target for this particular tax year. So let's move on to Brent Crude now over the past three weeks we've actually seen a significant rebound and if we look at this weekly chart actually the candle formations on it are fairly instructive certainly we've heard an awful lot of bearish forecasts with respect that we could well see 35, 30, 25 dollars a barrel. If we're looking at this weekly chart you have to question whether or not that is actually feasible and the reason for that is if we look at in particular the weekly chart or the weekly candle for last week if we look at that lower shadow and the fact that it's a positive candle we have actually tried to push significantly lower for that week but we've actually closed upon the highs so that suggests to me that there's there's a significant amount of demand for Brent Crude contracts at very low levels which suggests to me also that maybe the risk is probably more to the upside than the downside. Long lower shadows in a downtrend does suggest that there is a reluctance to hold short positions and certainly that weekly candle for last week does seem to suggest that the market is a little bit reluctant to be short of crude oil. Let's step it forward a bit and move on to the four hour chart because I think that gives you a much better indication of the overall underlying trend and if we draw it from that if we draw this trend line from the lows that we saw at the end of January beginning of February we can see that as far as the Brent Crude price at the moment is the momentum does appear to be for a move higher towards 65 dollars a barrel that only remains the case if we remain above 58 dollars a barrel and those series of highs that we saw in the first two weeks of February so we can see very long uppers shadows on those four hour candles through the highs first in the middle of the week of the second of February and at the beginning of the week of the ninth of February nonetheless we've finally managed to push through there which does would appear to suggest that if we come back to those levels we could find some significant buying interest so for me to basically change my view about a move to 65 dollars a barrel we would need to see a move back below 58 dollars a barrel which brings me neatly on to dollar CAD now dollar CAD this chart in particular is very very interesting it's a daily candle chart and we can see that there's potential for a topping formation here now the Canadian dollar has suffered quite significantly as a result of the decline in crude oil prices if Brent prices continue to push higher and WTI prices also continue to push higher then we could actually see the Canadian dollar strengthen and start to push higher and inversely push the US dollar lower the key level that I'm looking at on this daily chart I've highlighted with a circle and it comes in around about 123 and a half we break below 123 and a half then we could well see a sharp downward thrust towards that trend line support from the lows that we saw at the end of November so certainly keep an eye on that very key level around about 123 and a half so that concludes this week's weekly market update until same time next week this is Michael Houston talking to you from CMC Markets