 Right, good afternoon ladies and gentlemen. Welcome to this week's Monday market webinar with me, Michael Houston, in place of Jasper Lawler, who's off this week on a well-deserved break. I'll be looking at some of the key events this week, but before I do that, I'm going to run you through the risk warning, the disclaimer, which we have to show at the beginning of every meeting, every webinar rather, and obviously we'll dissect the events of the last, at the end of last week and the surprise decision or the unexpected decision on some parts, on some people's part of the Federal Reserve to keep interest rates unchanged. It was no real surprise to me that the Fed decided to hold off raising rates. I think it's important that when you listen to all the noise about the prospects of a rate rise and the arguments for and against that you look at the Fed's mandate with respect to the U.S. economy and certainly we're already getting some fallout this week and we'll be getting some fallout this week on the back of the decision that we saw at the end of last week. As a recap, the Federal Reserve was expected to push rates up by around about 0.25%. It was a sort of 50-50 split between the rate rise hawks and the doves and the doves came out on top and I think in that context what we have to do is we have to look at the Fed's mandate in the context of what it needs to target in its deliberations with respect to the U.S. economy. Now I think part of the problem I think has been the Fed's guidance and the Fed's guidance has been opaque at best. It has an inflation mandate and it also has an employment mandate so it has two pillars. It's meeting its employment target but it is not in meeting its inflation target and that's where fundamentally it's falling short. If you actually look at the contents of the Fed's statement which we can do we can see the key paragraph in this press release is in the third paragraph. This assessment will take into account a wide range of information including measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial and international developments. So those last two components are really the two key components that dictated the Fed's decision to hold rates on Thursday. They went on to say the committee anticipates that it will be appropriate to raise the target range for the Fed funds rate when it has seen some further improvement in the labor market which is arguably it has and is reasonably confident that inflation will move back to its 2% objective over the medium term. The key words there being reasonably confident inflation is actually on the decline in August it posted a month-on-month negative print therefore I think it's stretching credibility somewhat to suggest that the Fed can be reasonably confident that inflation will return to target over the course of the next year or so when its CPI rate is at 0.2% and the inflation target is at 2%. So I think that gives you an indication of how weak inflation is in the US economy. Now there are some who would argue you know the US economy can probably withstand a rise and on that score you would probably be right. Unfortunately things have moved on since 2006 which was the last time the Federal Reserve raised interest rates for the US economy. In 2006 you could make the argument that the US Federal Reserve was the central bank for the United States of America. It still is unfortunately since then it's pumped in trillions of dollars to the global economy those trillions of dollars have gone into emerging markets in the form of dollar loans 9.6 trillion dollars of loans short dated loans in particular and as such those loans will be very very susceptible to a short-term rise in interest rates and I think that more than anything is what the Fed is concerned about. The capital outflows from emerging markets concerns about the movement in the Chinese room NIMBY PEG which could well cause ripple effects further deflationary effects into the global economy which will put further upward pressure on the US dollar because as soon as you push one rate up then the expectation is you're going to follow it with another one and that in essence is what caught the market by surprise last week. Now the debate has moved on to October and we've had Mr Bullard, James Bullard who's president of the Louis Fed and he is saying that an October rate rise is certainly on the table with respect to a move on rates then. Well I think that's highly unlikely because if you're not prepared to hike in September why on earth would you raise rates in October? Nothing much is going to change between now and the end of October. So Mr Bullard is saying there's a chance of an October rate rise by the Fed. I would say that the chance is fairly slim and certainly Fed funds imply that. This is Bloomberg Terminal WIRP. Fed funds rate is suggesting there's a 20 percent probability of a move in the Fed funds rate in October and the fact of the matter is the factors cited by Janet Yellen in her speech earlier this week sorry late last week rather aren't likely to change that much with respect to the overall measures taken by Chinese authorities to improve the Chinese economy and I think that's what you're really going to need to see a significant improvement in the Chinese economy to prompt the Fed to act on rates. So for the moment I think the most likely outcome is that we could see a move in December but even a December rate rise as designated by this particular chart here is pretty much a 50-50 split. There's a 48.8 percent chance of a rise in December. So what does that mean for the dollar and also what does it mean for those Fed members who prior to the meeting in September suggested that the bar to raising rates was very very high and we've got Mr Lockhart the Atlanta Fed president Lockhart talking later today and tomorrow and on Wednesday. Now Mr Lockhart gave the impression that he was going to vote for a rise in rates in August before the stock market turmoil out of China. In any event he actually voted to keep rates unchanged so I think it's worth listening to what Mr Lockhart has to say we know Mr Lacker dissented. It's worth knowing what Mr Lockhart has to say and what caused him to change his mind and I think that's very very important. What caused Mr Lockhart to change his mind about a September rate rise. So his comments later today will be very very important in the context of the overall debate. I think again it's very unlikely that we will see any move in October and for central bankers to claim otherwise I think it is going to be extremely disingenuous. I think the Fed is already coming under fire for its credibility by holding off in September. If it then goes an accident October it will blow that credibility to shreds because not much can change in six weeks certainly in the context of visibility on economic growth. So let's look at some of the key chart points with respect to not only the S&P but the Dow Jones because I think in that context what we want to see is whether or not for the Fed decision that we saw at the end of last week will have any significant repercussions for stock markets because we saw a massive sell-off on the back of the Fed decision which was somewhat counterintuitive because for the last five or six years low interest rates usually points to a stock market rally, further QE, easy monetary policy. The fact that the Fed didn't tie in should have given us a relief rally and it didn't and I think the key reason that that didn't happen was because a lot of people widely expected a rate hike and then what we got from the Fed was rather spurious reasons if you like as to why they didn't act and the fact of the matter is the Fed is now having to consider global growth considerations and that is a worry for investors they don't have the same sort of what I would call confidence in the Federal Reserve to be able to control the glide path if you like for future growth prospects and when key economic forecasters are completely divided and what the Fed should do that does give you a certain amount of worry with respect to where stock markets can go over the course of the next few weeks and months so looking at the S&P here this is a little bit of a worry the fact that we weren't able to sustain this move up to the 2000 level at the end of last week we've got a sharp move lower at the moment I think we're still within this broad range that we've been in for the past few weeks I don't think we're going to break out of that range I certainly don't think we're going to see a strong move higher certainly in the context of a stronger dollar if the dollar remains strong then I think it's unlikely that US stocks will find it will find it easy to rally significantly yes we are finding support at slightly higher levels the fact that we got this move here this strong upper shadow here and then we close lower and then the strong down move does seem to suggest that investors are a little bit worried about being overly long of stocks and I think over the course of the next few trading days we could well start to roll over and come back towards these lows around about the 1900 level here the oscillator does appear to reflect that as well we've also got moving averages starting to roll over as well to reinforce that I think we need confirmation from other US indices so let's look at the Dow to see whether or not that reinforces the slightly negative outlook similar sort of chart here again similar sort of roll over support 16,310 on the Dow Jones 30 the US 30 so keep an eye on that level there we've got one two three four daily lows around about 16,300 so I think that's going to be a very very key support level on the downside keep an eye on that on the top side keep an eye on the 16,700 area which coincides with Friday's highs and also the highs at the end of August we did have a little brief move above it but once again we found it very very difficult to break through that 17,000 area looking at the small caps index as well gives you another decent indication we've got resistance at the 50-day moving average on that slightly different we do appear to be starting to find momentum starting to peter out and stutter out and as such I think that's again likely to keep a lid on prices yes we are finding support at higher levels and that could actually be a short-term buying opportunity certainly in the context of this particular chart here in the four hour chart where we're actually finding a little bit of support through the highs from the lows rather from the end of August let's quickly draw that trend line in there to give us an indication of where the support lines come in so again just draw the line in like so so we've got a little bit of support coming in but overall looking at this four hour chart here very strong downward candle there looking at the resistance around about 1180 so we as I say we could see a short squeeze higher but overall based on the daily charts I think it's likely that we're going to see a little bit of a roll over and a move down towards the downside but we'll probably see a short squeeze higher first looking at the Germany 30 it's been a bit of a mixed session today for European stocks simply on the back of this Adidas news which was very very bad news for the DAX given how heavily weighted auto makers are in the DAX index we've seen this break lower here we're still I think within the broader range that we've been in over the course of the past few weeks but ultimately I think unless we can actually work out where we are with respect to the China growth story it's going to be very very difficult for the DAX to make any significant upside until we get further clarity on the health of the Chinese economy now in that context this Wednesday's Chinese manufacturing PMI could actually be significantly could be significantly important because this kicing manufacturing PMI was the number came in a 77 month low that also preempted the widening of the band and the easing of the band by the Chinese authorities in August it came in around about 47.8 since then we've seen another easing and monetary policy by the Chinese authorities so I think in that context we need to keep an eye on that particular economic indicator for any signs of an improvement to see whether or not the p-engine port explosion actually caused that particular manufacturing PMI to be unusually weak for the month of August and whether or not we've seen an improvement in the September numbers and whether or not the August number was just a one-off as a result of the disruption caused by that explosion so keep an eye on that I think that could that could actually prompt a little bit of an upside surprise but at the moment the jury remains out on that so certainly keep an eye on the DAX same for the FTSE 100 FTSE 100 again finding decent area of resistance around about 6300 but finding decent support just above the 6000 level we can see it through these lows through here long shadow there I'm looking at support over the last couple of days again around about 6070 but what's interesting here ladies and gents is this bearish engulfing day here on Thursday we had a very negative day on Thursday and then a very negative day on Friday now we've partially reversed some of that today but ultimately we're finding that around about 6,270 there's a significant area of resistance and it's hard to really get your head around as to what would cause us to significantly push above this area between 6,270 and 6300 so looking at this I think we're in a broad range in the FTSE 100 if we do get a rebound in oil prices or commodity prices then we could well get a rebound in the FTSE 100 certainly something to keep an eye on unfortunately at the moment we don't appear to be getting anything that could be considered a rebound in oil prices but there does appear on the face of it and this is something that I've been looking at for quite some time with respect to oil prices some evidence that maybe maybe and I'm caveating this extremely heavily there could be a short-term base in oil prices if we look at this particular candle here this candle here on the weekly charts is a potential bullish reversal and I say potential because at the moment since we posted that particular reversal pattern we posted three successive weekly declines but what's interesting about this is we actually haven't traded below the lows of the week before it which is around about $44.80 on the Brent contract so if we drill that down to a daily chart and then a four hour chart we can see from the price action yes we are in a bit of a downward trend but there does appear on the face of it to be a little bit of support building up on the downside we haven't yet had any evidence that a low is in but I'm keeping an eye on this series this low here around about $46 a barrel but also keeping an eye on on this area around about $44.80 so what I think we really need to see here and the four hour chart does appear to reflect that that maybe we are starting to build up a little bit of a base it's taking a while to build itself up is there a base building process in place at the moment it's difficult to say with any degree of certainty but the fact that we haven't come back into this corridor here between $42 and $45 a barrel would appear to suggest that there's a possibility that we could be building up a bit of a base we get a break back up here and then we could head back to forwards $50 a barrel now when I say talking about a base I'm not talking about rally back to $70-$80 a barrel I don't think we're anywhere near that and certainly in the context of Goldman Sachs's call for $20 a barrel I don't think we're talking about that either but what I am saying is that with all the with all the analyst talk of a lower oil price I think there is a risk that that particular trade is becoming a little bit crowded and we could actually start to squeeze higher so certainly in that context keep an eye on this downtrend line here it's a similar sort of story on the WTI contract similar sort of price build up we did get a little bit of a breakout in the triangle on the four hour chart on at the end in the middle of last week ultimately proved to be a little bit of a false break but if we look at these series of lows through here ladies and gentlemen around about $43 a barrel it's interesting to note that again if we look at the weekly chart it's a similar sort of story a very bullish candle here it's a slightly different story with respect to the weekly closes unlike Brent where we saw three successive weekly declines we've only seen one weekly decline and we are now slightly up on the week today but that could well change very very quickly while we remain about $43 a barrel certainly on the four hour chart then I think there's a good chance that we could slowly start to weaken move higher back towards $49 or $50 a barrel so certainly keep keep an eye on them and I think if if oil prices do start to form a little bit of a base then that could have benefits for the Canadian dollar and we certainly see the Canadian dollar in joy a certain well hesitate to use the word enjoy I don't think anyone enjoys getting whipped around on volatility but certainly in the context of this triangle triangle breakout that we saw on Friday we saw a sharp move lower on this triangle breakout here unfortunately we did not meet our minimum price objective at $129.53 we got close to $130 on the breakout now we're back inside it and the worry is here I think that we could actually squeeze all the way back up to this upper line here but overall I really cannot be bullish on the US dollar at this point in time irrespective of what you think about whether or not we get a rate hike whether we get a rate hike in October or December certainly on the four hour chart I think there's more probability that we could start to roll back over and head back towards 131 as opposed to 133 and I think what we've seen here is very thin liquidity said very thin volumes causing an awful lot of what I would call market volatility so what is the Fed's decision to hold rates mean for euro dollar it certainly gives Mr Draghi a bit of a problem because the last thing the euro area wants is a stronger euro and in the past couple of weeks we've seen the euro continue to move higher certainly in the context of this four hour chart that we've got here I've been tracking this trend line from the lows in August which is which I've drawn on the four hour chart overall though if we look at these highs and lows we can see that the lows are getting higher and the highs are getting higher now that's 117 we've seen a sharp move down on Friday which seems bizarre when you consider that the Fed left rates on hold but with Mr Draghi due to speak later this week on Wednesday we've heard an awful lot of chatter from ECB policy makers that the ECB are prepared to do more with respect to further QE and maybe outline further measures to extend their QE program beyond 2016 September 2016 I think that unlikely I don't think everyone can keep their currency week all at the same time the Federal Reserve probably doesn't want a stronger dollar because it doesn't want weak inflation to ripple out through the US economy and certainly way on the manufacturing sector we've seen very very weak manufacturing numbers last week from the Philadelphia Fed and the Empire Manufacturing Survey we've had weak price pressures we've seen weak wage growth and the likelihood is the continued strong dollar will continue to weigh down on the US economy and it certainly means that US data will continue to be in the spotlight with respect to expectations about an October hike which I do not think will happen one other thing that we need to bear in mind about the US economy is there's a high probability that the US government will shut down again the failure to raise the debt ceiling and I have a feeling that even though it wasn't implicitly mentioned by the Federal Reserve that could have been behind the deliberations to keep rates on hold the fact of the matter is political instability in the US economy is the last thing that any economy needs and therefore you raise rates and then you get the government shut down I think it's a similar sort of story to what we saw in 2013 when the when the Fed decided to delay the taper because of the fact that we had a similar debt ceiling squabble between Republicans and Democrats so I think once again we could well see that that player part in the decision to keep rates on hold so looking at the euro dollar look at this keep an eye on this trend line support from the August lows currently comes in around about 12 30 12 40 below that we've also got significant support at the 50 and 100 day moving average these are levels that I've highlighted in my chart forum update on spread bet and I try and update these every single day on euro dollar on the pound against the dollar dollar yen and cable and euro sterling rather and it's a similar sort of story on cable chart as well we can see it in this four hour chart that I've got in front of you here again we've got higher highs higher lows we've got a nice bit of support between 154 70 154 80 we've got a little bit of a peak here we could well continue to trade sideways even if we break below 154 70 80 we've got solid support around about 153 30 which was last week's lows again the chart forum there highlights those those those key levels which I've talked about in previous updates so you can get a fair idea of where the key levels are with respect to my charts and how I arrive at the levels that I talk about with dollar yen and euro sterling it's actually surprising how similar these charts are because again we're in we're in trading triangles and have been for quite some time support coming in just below 119 on dollar yen and around about 120 90 on the top side that's the range until such times as we break out either side of those ranges that's probably the best way to trade it I really don't see too much in the way of top side but again that really depends on whether or not you think that the Bank of Japan is going to announce further QE I think it's unlikely but you never know it's very much a QE expectations driven market and as such it's going to keep markets off guard and it's going to keep markets on edge euro sterling again a similar sort of story we're right on support around about 72 45 if we do break lower then we could well see a sharp move down to 72 the figure of 71 80 looking at the four hour chart on euro sterling it's starting to look a little bit oversold so certainly I think in the context of three that these three lows here we could find a little bit of a bounce around about this this area currently where we are at the moment but if we do break below this this this moving average here we could see a sharp move down to around about 72 but certainly this triangle would appear to suggest that if we do break lower we could break we could see a sharp move down from these lows here and I'll measure that quite I'll measure this from here actually I've done that wrong let's get rid of that this is one of the useful features of the platform is you can calculate price objectives using Fibonacci so if we go from here that's gone the wrong way as per usual always does that because I've gone backwards so go there and there so if we if this is a classic triangle breakout then the potential is to remove down to around about 71 on a measured a not purely measured move basis and we can get rid of the other Fibonacci projections just like that so initially 71 54 and then a move down to 70 97 so we'll be keeping an eye on that in the short to medium term but certainly I would be looking for a move below 72 30 to confirm that that triangle has broken out before even thinking about going into that particular trade right okay so ladies and gentlemen it's now 1244 is there anything else in particular you guys would like me to cover before I sign off this particular webinar I'll just quickly remind you about the key economic data announcements for the due out later this week we've got French and German manufacturing and services PMI for September due out on Wednesday they could well give further indications as to whether or not the ECB will be inclined to jawbone or talk the euro lower we've got US durable goods on a on Thursday and they could give a good indication as to whether or not the US consumer is starting to spend a little bit more money core durable goods which so far this year have been negative and given the fact that the US consumer has enjoyed a positive fiscal boost from lower oil prices it is one of I think little mysteries of this particular debate about whether or not the US economy is doing well why US consumers aren't going out and spending money because certainly the durable core durable goods numbers don't give the impression that the US consumer is particularly confident about spending money on big ticket data items like TVs fridge freezers another another big ticket items which would normally which would normally sort of point to a significant confidence in the robustness of the US recovery so you know that you may have noticed I haven't talked about the Greece vote and the fact that Mr. Sipras has been re-elected with a pretty much the same mandate that he got in January to be quite honest the Greece vote is really a story for later this year and only next year markets don't really care that much about it we don't think it's going to create that much of a ripple effects over the course of the next few months it's important in the context of whether or not Greece is able to implement the reforms that markets think that it will personally I don't think that it will do but it's a story for another day it's certainly not a story for this week markets have more important things to worry about like Chinese growth emerging markets growth and whether or not the Fed or when the Fed is going to raise interest rates so unless anyone has any further questions I told thank you for your time and if you want to listen to this webinar back it'll be on YouTube hopefully in the next 24 to 48 hours