 Welcome to another Tick Mill Weekly Market Outlook for week commencing 20th of September with me, Patrick Munley. The back-end of last week markets seemingly returned to long-dollar positions, as markets looked to gain some concern on the potential combination of monetary tightening at a time when the Delta variant spread looks likely to hinder economic recovery. Some local stories have emerged, G10FX currencies have partly shifted away from the usual risk off-trades, China-U.S. relations are also back in focus as Biden and China's President Xi spoke of the firm for the first time since February. As we enter the Fed's blackout period ahead of 22nd of September FOMC announcement, all focus in the week ahead will be on the U.S. August CPI numbers, with economists looking for slowdown from 5.4% to 5.3% in headline inflation. Recent Fed communications have not diverged from the view that inflationary pressures have a trend of certain nature. So even in the event of another rise in inflation, I doubt the Fed rate expectations and by extension the dollar will be particularly impacted. Markets have likely acknowledged that the disappointing jobs figures with the most crucial piece of data before the Fed meeting and other releases in the week ahead including industrial production, retail sales and University of Michigan sentiment may also have limited impact. Clients think that markets may take a wait-and-see approach ahead of the very busy 20-24 September period in terms of central bank activity, so some stabilisation sentiment may be on the cards after investors appear to have already priced in a certain degree of pessimism in the back-end of last week. From a technical perspective, the dollar index extended up through the monthly pivot at 92.72. Now at a retesting the 93.20 area, as any pullback now is supported into the 92.85 so we look for a further extension up into the target area of 93.72 to 94.19. This is going to be a key test for the dollar as this will be a technical area that bears will look to research short positions and try and take the dollar lower. If however we fail to find significant resistance there, then I'd look for the dollar to extend up to test here from 94.70 zone. At this stage, only a loss of the trend line support in our community at the 92 level would suggest that the dollar has topped and that we are going to explore lower prices. Moving to the Eurozone, September ECB meeting marked a small win for Hawks as policy makers finally caught up with the reality and modestly reduced the pace of asset purchases. That was however largely priced in by the market and the Euro failed to see any material benefit. After all, the overall policy stance of ECB remains firmly on the dovish side and markets are reasonably reluctant to see last week's move as the first step in the sustained policy normalization and there are no clear data drivers really in the Eurozone the week ahead and it's all focused really for the Euro. This week is going to be the dollar counterpart on the 22nd of September. So from a technical perspective, the Euro broke down through the monthly pivots at the 17.90 handle. Now look for a test of monthly range support down to 16.73 but whilst any bounces are now contained by the monthly pivot I'm actually looking for price to extend down into the major equality objective at 1.1628 and the projected descending trend channel support coming in at 1.1580. That's going to be a key test for the Euro and from there we could see a more meaningful relief rally getting us back up into the trend channel resistance at 1.18. At this stage only a loss of this 1.1580 support would be of significant concern and then we would be looking for an extension lower down to challenge at 1.1430 as the next downside objective. In the UK the pound was little touched after some softer than expected growth data out last week and also saw quite contained impact from BOE Governor Andrew Bailey's cautiously optimistic comments earlier last week. However as we get closer to the BOE's policy announcement on the 23rd of September selling sensitivity to domestic data drivers may increase. Even more so as this week's calendar includes pretty high frequency data suspect that jobs figures on Tuesday will be a more important release compared to CPI numbers on Wednesday as a bounce higher in August inflation will be mostly due to base effects and a short-term CPI swings are playing a secondary role in driving BOE's decisions compared to the longer-term projections. Later in the week we'll also see retail sales in focus. From a technical perspective Sterling is testing this support zone at 1.3720. We lose that area then we look for a test down into the 1.3680 but ultimately whilst any balances are contained by the month we cover here at 1.3770 actually look for an extension lower down to test the key 1.36 support zone where we could see a more meaningful balance. At this stage only a loss of the monthly projected range support at 1.3550 would be a significant bearish development and open up an equality objective down at 1.3330. It's the next downside objective for Sterling. The drop in 10-year U.S. year yields back to the 1.28 level amid generally grim market sentiment into the close on Friday saw the dollar yen fall below the 1.10 handle but hopes of a more relaxed U.S.-China relationship saw those yields tick back up and the yen shed some of its more recent gains. Any improvements on this topic should continue to hit the yen harder than the dollar. Rate strategists see the balance of risks skewed for a continuation in the 10-year yield into next week with a chance for it to retest the 1.37 monthly highs. Accordingly that should be supported for the dollar yen. From a technical perspective we look for in terms of sorry the data out next week in terms of Japan is pretty limited PPI machine orders and trade numbers and they're likely to have less of an impact again more focus is going to be on the FMC on Friday. So from a technical perspective the dollar yen held that support zone. Long positions warranted from there. We're now up into the pivot cluster of the high volume lows here at this 1.10 handle. We really need to get up into test a bit descending trend line resistance coming up 1.1030. If we can get through there then we look for a move up into monthly range resistance projected at 1.1130 and then any pullbacks that hold the 1.1020 zone of support should set the stage for a move higher to test projected ascending trend line resistance coming at 1.1240. Finally down under in Australia the RBA delivered what could be considered as dovish tapering last week while the bank went ahead with plans to reduce asset purchases to four billion Australian dollars per week and extended the no tapering horizon saying the current pace of purchases will be kept unchanged until February 2022 despite the initial spike in the Aussie the currency then fell in the session and closed the week actually as the one of the weakest performers in the G10 space. An improvement in market sentiment around the US-China relationship has provided provide some help to the overexposed centipede and is surely a factor that may ease pressure on the currency as we head into this week at the same time iron ore has been unable to continue its recovery this week and a remain of the few really that the more sell-offs in the commodities space are very material really at risk to the Aussie on the data side Australia's jobs data will be closely watched as they will provide an important gauge of how the how much economic drag has been generated by the spread of the Delta variant in the country here worse than expected data may push markets to price in another delay in the RBA's policy normalization plans and offset any benefit from a potential stabilization in risk sentiment next week. It will also be worth monitoring RBA Governor Philip Lowe speaks on Tuesday from a technical perspective the Aussie dollar closed week on Friday with the general market also in risk sentiment very very weak into the closed so any support that we find now on pullbacks into the one sorry 73 70 area should see another round of selling ultimately looking for at least a test of monthly range sports 71 50 and then into the prior lows here at 71 at this stage really only a close above the descending trend line resistance coming at 74 20 would suggest that we could be exploring higher prices and that concludes the weekly market outlook for week commencing the 20th of September as always traders plan to trade trade the plan and most importantly manage your risk until next time thanks very much