 Hello and welcome to CMC Markets on Friday the 31st of August and this quick look at the week ahead beginning the 3rd of September and it's set to be a fairly busy week. We've got a host of data coming out, non-farm payrolls. Obviously the US Employment Report will be hosting our monthly webinar at the usual time between 1.15. 1.45. We've also got manufacturing and services PMIs from Europe, China, the UK and the US as well as a couple of central bank decisions as well, the Bank of Canada rate decision on Thursday as well as the RBA on Tuesday. But before we talk about that I think it's important to look back at the events of the last few days and once again we've seen divergence between US markets and the broader global markets, US markets once again made new record peaks for the S&P 500, the NASDAQ and even though the Dale Jones hasn't been able to follow suit nonetheless I think appetite for US stocks appears to be outweighing appetite for stocks elsewhere and I think that's largely been as a result of two factors, the ratcheting up of concerns about Chinese trade dispute with the prospect that Donald Trump doesn't appear overly concerned about implementing another $200 billion worth of tariffs on Chinese goods in the next couple of weeks and the fact that the NAFTA deal appears closer than it did at the beginning of the month. Agreement appears to have already been reached with Mexico, with Canada set to follow suit in the coming days assuming there are no last minute hitches. Also seen increasing concerns about emerging markets, in emerging markets particularly in currencies we've had the Argentine currency crisis where short-term interest rates have been raised to 60%, also seen further losses in the Turkish lira on the back of the resignation of the Turkish central bank governor and we have seen ripple over effects into other emerging markets with the Indian rupee hitting a record low and the South African rand coming under pressure and I think the reason I think for these concerns in emerging markets is the fact that these countries hold an awful lot of US dollar denominated debt and at a time when the US economy appears to be on cruise control grew at 4.2% in Q2 with the prospect that we could well see a Q3 number in excess of 3%. Expectations of further US rate rises are raising concerns that these countries may find increasingly difficult to roll over the US dollar denominated debt at a time when the currencies are rapidly depreciating and inflation repression is increasing. Taking Turkey as an example the inflation rate at last checked was around about 17.5%. That was even before the declines that we've seen in the Turkish lira so the new inflation rate is much more likely to come in much higher than that and pressure will increase on the Turkish central bank to try and raise rates to offset the inflationary shock that a lower currency brings about. Whether or not successful is another matter given concerns about the stewardship of the Turkish economy we've certainly seen in the case of Argentina that higher interest rates doesn't preclude a currency crisis because ultimately seven day rates there have been raised from 45 to 60% and the peso has continued to fall and when investors lose confidence in your ability to steward your economy then no amount of interest rate rises is likely to stem the bloodletting. So emerging markets are likely to be a clear and present danger to risk appetite over the course of the next few days as are the concerns of a ratcheting up between the European Union and the US after President Trump rejected the EU's suggestion of scrapping car tariffs to 0% across the board. This was rejected by President Trump as not being sufficient but I think that's a convenient get-out clause for President Trump simply because of the 25% US tariff on pickup trucks that are imported from the EU. Given the size of the US pickup truck market I think he would have been reluctant to upset US automakers by dropping that particular tariff so always thought it was a little bit of a high bar that certainly proved to be the case. Certainly looking ahead the strength of the dollar hasn't really been that much of a factor this week on course decline for the third week in succession so certainly a higher dollar isn't the risk to emerging markets. Certainly in the context of the G10 it's the perceptions that we could see significant increases in funding rates and a tightening of liquidity as the Fed raises rates but also reduces the size of its balance sheet. Looking at euro-dollar we did see a little bit of a breakout higher over the course of the last few days of this triangular pattern but what we haven't done is we haven't broken above that 117.5 area that has really I think capped the range since the middle of June. So that for me I think is the key resistance level on euro-dollar with a very big supporter around about 116.20 but also slightly below that just below one towards 115 and the lows that we saw in early August. Looking ahead to the data or we've got the Bank of Canada rate decision coming on the back of a potential NAFTA agreement as I say as I'm recording this video the agreement is still outstanding but potential Canada downside is likely to be limited by this downtrend line from the peaks that we saw earlier this year around about the middle of June. Now we are getting a Bank of Canada rate decision on Thursday the Bank of Canada has raised rates on a number of occasions over the past few months second time this year actually they raised rates there is speculation as to the timing of a third rate rise I think it's unlikely that we'll see a rate rise this particular Thursday in September but certainly the markets are pricing in the prospect of some sort of move before the end of the year so I think the guidance there will be particularly key. US economic reports the main focus will be on non-farm payrolls particularly on the wages data which is starting to show some signs of life the unemployment rate expected to come in unchanged from 3.9 percent average earnings I think we could we'll see an increase to 2.8 from 2.7 percent but once again I think we'll have to wait and see as to whether or not we're seeing evidence of that certainly inflation doesn't appear to be showing too much signs of picking up core PCE came in at 2% last week and we've also got some key economic data out of the UK we've got this sterling chart here 50 day moving averages acting as a bit of a barrier on the upside around about 130 and a half if we can get through that we could well make further gains but at the moment the prospect of some form of coalescence around a deal does appear to be supporting our brexit deal does appear to be supporting the pound in the short term what I found particularly interesting in in respect to euro sterling was this very bearish daily candle here which would appear to suggest that we could well have seen the highs in euro sterling in the short term and as long as we don't move back above this 90 30 area then I think there's a very decent chance we could come back down towards the lows that we saw earlier in July around about 88 60 so as a quick recap US economic data non farm payrolls on Friday webinar starts at 115 got the RBA rate decision on Tuesday we've got the Canada Bank of Canada rate decision on Thursday and we've got services PMIs manufacturing PMIs to keep an eye on as well so it's going to be a big week for data so tune in for daily updates on the website in the news and analysis section is Michael Houston talking to you from CMC Markets