 Hello and welcome to CMC Markets on Friday the 10th of August and this quick look at the week beginning the 13th of August. And once again it looks set to be a disappointing week for equity markets, particularly European equity markets as investors pull back to the sidelines on the bank on the back of increasing concern about rising geopolitical risk. Now while markets have been content to put to one side rising concerns over escalation between the US and China as both increase the amount of the tariff burden on each other's imports to another $16 billion to 25% it would appear that the implementation of new sanctions against Russia by the US and a growing crisis in Turkey is giving investors far too many balls to juggle with any degree of comfort. US markets on the other hand continue to remain fairly well supported and immune to the concerns driven primarily by a continued resilience in the tech sector however at some point you have to think that even here gravity may well start to take over if the dollar continues to rise. Now I am going to focus on the Turkish lira, Turkish lira has hit new record lows on an almost daily basis this week and it is likely to continue to do so in the absence of measures to stem the bloodletting. Talk of interest rate rises, capital controls may help stem the decline along with a talk of an IMF package however any such measures would require a significant climb down by President Erdogan, something that he has given no indication thus far that he is willing to do. There is also the geopolitical angle given that Turkey is a key NATO ally and there is the risk that the dispute with the US over the detention of their citizen could shift the geopolitical dynamic in the region however that is the least of the problems at the moment because while investors have been content to look at the unfolding currency crisis in Turkey as a bit of a local difficulty it would appear that the accelerating speed of the decline appears to be raising concerns about European banks exposure to the Turkish banking system, reports that the European Central Bank is concerned that some banks in Europe particularly in France, Italy and Spain may not be fully hedged against the falls in the Turkish lira through their exposure to the banking system has seen the Euro fall sharply and we can see that born out in this daily chart here which to those of you who have been regular watchers of these videos will know that I have been looking at the base of around about 115 for quite some time now. We have now appear to have broken below that which really now opens up a potential retest of levels that we last saw in 2017 around about 112 and the way I have projected it is basically taking the height of this pattern projecting it down so potentially over the course of the next two to three months we could will see further Euro losses towards 112. It is also likely to cause a little bit of weakness in European markets as well. Now normally if you have a weaker Euro that would project itself into a stronger DAX but because the reason for the declines in the Euro is over concerns about European banks exposure to the Turkish banking system coming on top of the fact that a number of banks in Europe are already struggling as a result of non-performing loans then it's likely that concerns about further non-performing loans on top of the ones they're already having to deal with is likely to constrain those banks ability to lend and therefore support growth in the Euro area. So in that context I think in the coming week we have a whole host of data that's due out in the week starting the 13th of which includes second quarter GDP from Germany and the EU. Now the latest EU GDP numbers came in slightly weaker than expected on the back of a very weak Q2 French number. If the latest German numbers also show a little bit of weakness as well as a result of the trade concerns that may have impact business confidence in Q2 then that could well raise further concerns as we go into the rest of this year about the ability not only of the German economy to grow at its current level of around about 0.3 0.4% but the wider Euro area as a region as a whole so German and EU Q2 GDP numbers are out on the 14th of August. Now the Q1 number was 0.3% for Germany a similarly weak number in Q2 would obviously raise concerns that growth is slowing down in Q2 and likely to manifest itself into also weak Q3 numbers. Certainly some of the data that we've seen out from July would appear to suggest that the weakness that we saw in Q2 could well be looking to continue into Q3. We've also got EU CPI for July on the 17th of August and it's been one of those indicators that has actually started to show signs of life in recent months not necessarily for the right reasons though most of the rebound has been due to a rise in energy prices which generally tends to crimp consumer spending and it's the worst kind of inflation for consumers and businesses alike. It's also likely to make it very very difficult for the ECB to really talk about aggressively looking at tightening monetary policy in 2019 if you've got inflation going up and GDP slowing down. So keeping an eye on the German DAX and the key chart points there we talked about a lower euro we've also seen a sharp move lower in the DAX on the Friday as a result of these concerns about European banks and if we take out this trend line here from the lows that we saw in March then we could see European markets come under further pressure as it is already this year European markets have significantly underperformed the US and the FTSE 100 certainly in terms of trying to retest the highs that we saw at the beginning of the year. It's also a big week for the pound having seen an awful lot of weakness this week on the back of concerns about rising risks of a no-Brexit deal. We've seen the pound hit a one year low around about 127 and a half matching the August lows that we saw last year and which was one of the launching points of the rally up to 143. If we continue to see further declines below 127.50 then again we're looking back probably a potential move towards 125. We've got a whole host of data out this week CPI wages unemployment and retail sales and with concerns about a no-Brexit deal rising by the week the data I think really needs to support no surprise to the upside to really help underpin the recent declines that we've seen in the pound. The Bank of England has raised rates UK GDP in the second quarters come in at 0.4. What we want to see now is some evidence of wage growth which does appear to have plateaued a little bit of around about 2.7 percent inflation slightly weaker around about 2.4 percent but the recent weakness in the pound is likely to put a floor under that and we could well find that it may struggle to get much below the 2.4 that we saw in the June numbers despite the fact that we've seen a very decent summer retail sales was surprisingly weak in June hoping to see a little bit of a pickup in July but nonetheless it's going to be a very very important week for wages unemployment CPI and retail sales that come out Tuesday Wednesday and Thursday. We also got the latest Chinese retail sales and industrial production data for July which come out on the 14th of August. They are likely to be potentially fairly decent given the fact that we saw fairly decent trade data earlier this week and on the company's front we have got the latest Walmart earnings for the second quarter the latest earnings for Nvidia second quarter and Belford BT first half data as well so that's it for this week thank you very much for listening to Michael Houston talking to you from CMC Markets