 Welcome to Tick Mill weekly market outlook for week commencing the 1st of June with me Patrick Mumley. Sybil unrest has flared and curfews have been imposed over the weekend in several major US cities, as demonstrators took to the streets to vent outrage at the death of a black man shown in the video grasping for breath as white Minneapolis policemen knelt on his neck. From Los Angeles to Miami to Chicago protests began peacefully before turning unruling demonstrators, blocked traffic, set fires and clashed with riot police, some firing tear gas and plastic bullets in effort to restore order. Sighted protesters, flooding the streets, fuelled a sense of crisis in the US after weeks of lockdown due to the coronavirus pandemic, which has seen millions thrown out of work and has disproportionately affected minority communities. Sybil adding to a fragile environment for risk with US China trade tensions continuing to attract market headlines. It will be interesting to see whether the dollar continues to perform well as a risk off environment, or whether the defensive Japanese yen or Swiss franc and even perhaps the euro start to perform much better against the dollar. Aside from the domestic and international headline risk, the highlights of the US data calendar next week will be Friday's May non-farm payrolls report where we're looking for another big drop, potentially minus 10 million jobs and a rise in unemployment up to 20%. May 12 cut off for the report suggests these figures will not take any reopening into account. We also have May manufacturing ISM on Monday where again the rise in supplier delivery times might be misleading in the rise in the headline number. Overall, we're on look out for a decisive turn now in the dollar, but US China trade tension may muddy the waters of a clean new trend in FX markets. From a technical perspective, the dollar index duly broke down and we have, as noted, taken out the prior swing lows at the 98-30. However, we did hold these on a closing basis and so there is potential as we head into the week to see some back and filling now in the dollar, but I've been looking for this 99 to 99.50 area to contain upside attempts and then I'm looking for another leg lower to ultimately test the equality objective at the 96.30. Once we try down here then we could see a return to retest this 99 area and basically define more of a summer range, a lower range that is for the dollar, but certainly now whilst we hold this 99.99.50 area, look for this 96.30 to be tested. This week I also want to check in with the S&P 500 here as I'm looking for another leg higher to complete this cycle where we have the equality objective versus the crisis low and the secondary low at this 31.70 area. We've actually traded up and developed a test of the 31.00, which did initially see some selling, but now what I've been looking for is as this 3,000 level holds I'm looking for this 31.50, 31.70 area as an area where I anticipate we'll actually see a more protracted correction. So I'm looking for bearish reversal patterns in around 31.39 to 31.70 short positions, ultimately looking for a move back to 28.00. The euro has obviously seen a breakout triggered really by a modest repricing of European political risk. With your euro dollar effectively playing catch up with some of the other effects rallies against the dollar. An EU summit on June 18th and 19th will shed more light on the European Union's proposal for a financial burden sharing. But markets suspect that the euro can stay slightly bid into that on a by the rumor selling fact type set up. It's within this context that a big top up to the pandemic emergency purchase programme at Thursday's ECB meeting should be announced. Markets are looking for about another 500 billion euros. Good for European risk should be good for the euro in the current environments as well. Away from the ECB will also get macro updates such as the German industrial production for April, presumably very negative before somewhat of a bounce back likely to occur in May. From a technical perspective, the euro, similar to the inverse with the dollar index, has tested the march highs at the 111.49 and we did back off from there late Friday in a profit taking move. I'm now looking for any test back towards this 110 area to attract bids and ultimately trade up now to test the 112.30, which is the equality objective versus the March initial low and then the secondary low made in April. From here then we could see a pullback into again what I anticipate to be a higher range now developing 109.12 is what I've been looking for over the coming week. So certainly watching the 110 support to trade up into this 112.30 area, likely resistance. Sterling's path really through the week will be pretty much be guided by the next round of Brexit talks between the UK and the EU authorities. These start on Tuesday and should conclude with the press conference on Friday. Chief European negotiator Michelle Barnier has positioned these talks as make or break and the mute music going into them certainly suggest there's little room for optimism. Little progress has been priced into Sterling already, but a conclusion on Friday that an extension by the end of June to the transition agreement is unlikely could really weigh on Sterling. The UK calendar sees the final manufacturing PMI on Monday and then the final services PMI on Wednesday. Sterling money market futures remain close to their highs suggesting expectations of negative sterling interest rates are not abating and probably won't at all should fail Brexit negotiations this week point to a cliff edge departure at the end of the year. Technic perspective Sterling continued to trade above the five period VWAP and as such I'm looking for a test now of this 124 to 124.50 area where I'm looking for bearish reversal patterns to ultimately get a move down to test the long awaited 120 target. From here then we could see certainly a more corrective action as we carve out this 124.50 range. Speaking of ranges, the dollar yen range continues to shrink has evidence by one month actual and implied volatility converging on the 5% area versus the 15 to 20% levels that we saw in late March. However we do get a sense that the dollar yen correlation with equities is dropping slightly and we want to be on guard for the emergence of a sell US bias in markets as discussed when I looked at the S&P chart earlier in this session. We could see that dollar yen correlation with the S&P flipping from positive to negative and so that's something to be cognizant of in the coming weeks. The Japanese calendar is light this week and instead dollar yen will probably be driven by the headline political risk with respect to US and China. We will also keep a close closed on the first of the Asian trade data for May, which Korea releases on Monday. Technical perspective, looking for the dollar yen now to test the 108.40 area. This is the equality objective versus the swing lows on the 6th of May. From here I'm watching for bearish reversal patterns and looking for short positions targeting this 104.60. We would get this 108.40 test coinciding with the S&P testing up into that 31.30 to 31.70 area. Finally in Australia heading into a week with plenty of releases and events for the Aussie. The Aussie is once again proving extremely resilient to both the geopolitical termals and the risk of Chinese retaliatory measures. The situation that China is planning to impose an import ban on Australian coal is still waiting for some kind of confirmation. If confirmed the hit to Australian exports may well be a function of how US China trade tensions evolve. These diplomatic trade developments will be a major driver for the Aussie this week but domestic inputs won't be lacking either. The RBA will announce monetary policy on Tuesday. The Bank appears quite in the right place when it comes to monetary policy with a slower pace of asset purchases broadly consistent with improved market conditions and the end of the lockdown. Governor Lowe should therefore keep the monetary settings as they are, acknowledge that the outlook is less grim than previously thought but also reiterate the RBA's commitment to provide stimulus it needs it. Tensions with China have just added some extra uncertainty that suggests caution in offering any hawkish hint. Growth data will also be watched. Markets expect Australian activity to have contracted 0.6% quarter over quarter in Q1. This is slightly more pessimistic than consensus. The race should however have a limited impact as it provides little information on the economic implications of restrictive measures which weren't implemented until late March in Australia. From a technical perspective, watching the Australian dollar as we start this week, looking for a test of offers and stops above 67, I'll be on the watch out there for bearish reversal patterns to set short positions to play for a correction in the Aussie. Certainly look for a retest of the 64 area and from there we could actually move lower back down to test the 62 level. We can see that in a bunch of these charts this week we're trading in some inflection points and we should see good trading opportunities in the week ahead. That concludes the weekly market outlook for week menacing the 1st of June.