 Okay, happy Friday the 11th of June and just doing the regular briefing then for the day ahead and gonna start off with a reminder for The market watch podcast so peers and I peers the head of trading and me having a conversation later this morning And we'll put out the latest podcast episode today So do check it out when you have time and if you could subscribe to Whichever platform Apple podcast to the actual series and then leave a rating and review that would be amazing Otherwise look, let's get straight into it and talk about what's going on this morning and very much a case of Still chewing over the bones of the main event of the week which was the US CPI report and As you would have seen at the time pretty much as we were kind of expecting to a certain degree from the briefing yesterday In the respect of the upside number did materialize Obviously coming out at the highest rates since August of 2008 in terms of the headline reading Core number also much higher than expected but actually breaking down the components of what were the key drivers of inflation and Just to remind you here used Vehicles energy airfares vehicle insurance These types of factors of which people feel comfortable enough to attribute to the reopening process and therefore classifying them as somewhat transitory in their kind of lifespan if you like of how long these price specials will persist and so We had an initial kind of knee-jerk reaction as typically you see in a day trading environment Where the kind of our goes are just hitting it on the binary factor of the deviation away from consensus and then comes the more kind of Rational approach of which then after the spike came pretty decent moves where yields started to Continue to to move lower and in fact the the US 10-year yield now trading at lowest level since March And then we continue to see it moves higher in gold equities obviously continue to push higher and have been the biggest beneficiary of that equity move of course being big tech which led the rally which subsequently saw the Nasdaq 100 finish up about 1% comparatively the Dow Jones finished only up about 0.1% in comparative terms so very strong out performance in the tech space In the FX markets obviously the dollar weakened the dollar remains a little bit weaker this morning We're down just around 0.1 of 1% and so consequently both the pairs still being supported from that move that we saw materialized yesterday from a short-term perspective Cable just keeping an eye here on the tests on this trend line That's been in play going back to the beginning of the week And so well in fact this is going back to last week So bit of upside here on the test and finding some cap to that recent move higher for the time being from a technical perspective So just to bring that to your attention Otherwise equity markets it wouldn't be too much of a surprise in my opinion if we start to see some of that equity bid Asia obviously bumped the Nasdaq in the center chart here up to its highs The Asia session for the S&P a little bit more quiet But obviously we saw that ramp up shortly after the actual data came out yesterday and a little bit of Vila You can classify it as just coming off those highs and fading that move Just as it the kind of wind comes out the sails so to speak I think is absolutely Not that surprising for the S&P if we just pull back down I guess just looking at the relative range What was a cap to price through the build-up to CPI now turns an era of support? So as you can see here around 42 24 and 3 quarters I'd be looking at for a pullback. I don't think Would be that surprising just given the gains that was seen yesterday one of the other things to mention on the chart just while we've got them up here is oil and You'll probably Recognized there's been a really quite aggressive pop lower yesterday. Just excuse the The technical levels here and just focus really on this point Here we saw a very quick decline of a fairly substantial size We were trading around 1722 in the futures actually hit a low at around 68 68 This is looking on a five-minute chart So you can really see how quickly that set off materialized and that happened because there was an initial headline saying the US Is lifting sanctions on Iranian oil officials? And obviously this comes amid these ongoing Discussions that they've been having and an inability to really broker a return to that 2015 nuclear deal I've seen while pals in Iran What happened though was that shortly after the comments got downplayed by a US official Who basically classified what happened as more routine and unrelated to those nuclear deal talks? And actually we saw a full reversal then as we went through into the latter hours of US trade and and If you actually look at where oil is trading at the moment, but actually take this off That's where we were before really those headlines started to hit the tape and this is where we are trading right now So to be honest, I think you know just going with the price action But fundamentally as well, you know, there's there's no way in my opinion that the US and lifting sanctions immediately This is their major leverage for these negotiations that are ongoing at the moment and as we've seen They're dragging their heels if you remember when they delayed about a week and a half ago the Iranian talks They said they were gonna adjourn until the 10th, which was obviously yesterday Nothing's really happening and I anticipate as I've said before anything to happen particularly quickly on this front And so we're back scratch where we were in the price of crude oil here And so I'd kind of discount that move and not really look too much at it to be quite frank Otherwise, let's get into a few other things. You'll probably see here in the top left hand corner as I said The dollar remains a little bit weaker Just holding on to that move downward that we saw yesterday in terms of euro dollar You've just caught within close proximity to the high that was seen during some of that CPI volatility We are training up marginally about 18 pips in the euro pair one thing to be aware of this did come out yesterday But just so you Know what the details are basically Reuters report came out saying that during the ECB June policy meeting Three policymakers wanted to reduce the pace of pandemic emergency purchase program So that's the key one that the markets was looking for yesterday You know, do they make any alteration to the pace of their bond buying under the PEP program? They obviously didn't which was largely as expected, but the Reuters report citing two sources familiar with the matter Was basically saying that there was actually three who wanted to reduce it Which would be a more hawkish development if that was the case The the thinking there being for those policymakers citing improving economic prospects in the eurozone as the reason behind that proposal So that that in the theory base Term if you like would be supportive of euro currency But I don't think it's really that surprising if I'm quite honest the idea that economic prospects are continuing to Improve as we were looking at those charts vaccinations means re-opening means increased confidence means increased productivity economic activity and so That looks like it's remaining on track at the moment and the key catalyst They'll see being vaccines to initiate that sequence. And so the fact that a couple of hawks are sounding a little bit more Inclined to reduce the bond buying. I don't think it's a surprise personally the other point here that's really important is The fact that these source comments came out You'll be fully aware now that this is the regular routine. It almost seems like the strategy here is Christine Lagarde just Needs to navigate these press conferences as best as she can without saying anything really wrong And she she successfully really did that yesterday But then the source comments come out and that's where we get told as a market then what the true state of affairs is But it means that the guard doesn't have to really either put a risk saying something Appropriately or say something officially above board if you like that gets documented as official commentary So just be aware that source comments Prior and post particularly post and even during press conferences We've seen in recent months is a common thing and something you should be aware of when you're training the ECB Otherwise on the UK lockdown front Bloomberg were reporting last night that the Prime Minister Johnson is poised to basically delay the final stages of pandemic lockdown easing He's due to give that update on Monday Ministers discussed different options this week including delays ranging from nine days to a month To allow some and allowing some planned relaxations to go ahead, but perhaps others not That's a slightly contentious issue that I've read in in various UK articles this week Whether or not you can successfully without causing confusion allow certain things are not most I'd say it seemed to be of the opinion you're better off just rolling over what exactly is going on at the moment Just to avoid that confusion So excuse me I got on the border of sneezing here So I don't think this is particularly new information I think it's pretty similar to what we've already heard before But as far as COVID and you know if you're gonna go with data not dates as the government has coined as their They're kind of key phrase with managing public expectation around lockdown. Well, then there were 7,540 laboratory confirmed cases reported Midweek on Wednesday, that was the most since late February while the number of patients in hospital Or be it's still very low comparative terms of where we were at the beginning of the new year That exceeded 1,000 for the first time since May 12th, so I Still anticipate the fact that the government will roll over either by two to four weeks And I still kind of had the view that that doesn't really have any impact for the pound on that alone at this point in time the other thing that's going on sticking with The UK because it's happening in happening in Cornwall. You probably would have seen Biden and Boris doing a couple of elbow bumps last night on the beach And that's because the G7 summit is happening in St. I. M's in Cornwall And there are a couple of people outside of the G7 that are there that are worth noting the Australian PM The Indian president is there South Korea's president as well as the same irrespective of South Africa as well the main focus here is going to be COVID-19 pandemic climate change and Trade, so not really looking for too much here to come out concrete A lot of the headlines surrounding the fact that a lot of the G7 and the kind of more wealthier nations has obviously absorbed a lot of the COVID-19 Supply away from areas that very much need it in in regards to some a country like India for example And so this is more about just getting that back on track in terms of the the perception of the western world Helping out these more emerging nations and so that will be a thing in terms of climate change I think you get the usual kind of lip service probably nothing really new coming out there And then on trade there's kind of this whole Brexit saga just simmering on the sidelines So obviously PM Johnson might have a few interesting conversations with a lot of Macron in particular I'm sure on the sidelines and then the final thing for Biden is about China A lot of the talk is about Biden trying to kind of unify the European countries Plus the United Kingdom to join them in support and their kind of anti-China stance at the moment There was we've seen developed through various different US legislation this week So they're the main things you're looking for would I expect any movement from the G7? No Basically, so the G7 runs through the weekend But I wouldn't be looking for anything material to really impact the open on Sunday night electronic trade Looking at the calendar, we've already had the UK day to come out this morning Didn't make one iota of difference for the British pound I don't think that's too surprising the GDP estimate month-to-month for April came in at 2.3 percent Above the expected 2.2 manufacturing output minus 0.3 percent We can be expected plus 1.5 industrial output minus 1.3 against expected plus 1.2 It's a little bit soft on the manufacturing and industrial output figures But again as I said no real meaningful impact if anything perhaps it just gives that trend line a bit more further validation to hold That we looked at in cable as well with the fact that the doll has been consistently trending lower post CPI So perhaps a little bump back up in the Dixie before then resuming a trend or keep that trend line resistance in playing cable Otherwise looking at the rest of the day is pretty quiet in fact And then you've got University of Michigan preliminary figure for June coming out at 3 p.m Expecacy at the headline move up to 84 which would be a reversal of the three-month load that we had previously at 82.9 Main thing what led to last month's weakness was kind of consumer Concerned to a certain degree about rising inflation But otherwise though with vaccinations ongoing and further reopening is expected to resume the trend back up So up to 84 no 130 is coming out of the US and then that's pretty much it There's no real other major central bank speakers. Just the G7 summit happening So not gonna go any further than that gonna let you get on with the day I'm gonna wish you a fantastic weekend. Enjoy the sunshine wherever you are stay safe And don't forget to check out the latest podcast as well. All right. Take care