 Hello and welcome to CMC Marcus and this quick look at the week ahead beginning the 14th of August and certainly the benign trading conditions that we've seen so far at the beginning of this month have been shaken up in the past few days and It's been geopolitics. It's been the catalyst to fire and fury of those comments by US President Trump There's certainly I think product heads that put the cat amongst the proverbial pigeons when it comes to risk appetite We've seen the return of the haven trade a big rise in the value of the Swiss franc Gold prices have taken a little bit of a bid As well an equity markets are now starting to show a little bit of nervousness As we head into what traditionally is a fairly low volatility Time of the year certainly seeing that played out in the German decks at the moment Seeing that starting to test down Towards its 200 day moving average is made a three month low as I record this video on the Thursday and The US dollar now does appear to be catching a little bit of a bid and those of you who saw my video on the 7th of August will know that I Was probably thinking that the US dollar was probably overdue a little bit of a rebound and we're certainly Seeing some evidence of that Given how euro dollar has performed over the course of the past few days after peaking just above 119 a few days ago We're now back down Towards the 117 level with the prospect that we could actually go a little bit lower back towards The breakout level that we saw Earlier in July around about 1 16 15 1 16 20 Certainly as I record this particular video. We've seen some evidence that we could have seen a significant resistance On a hero dollar around about 200 week moving average I talked about this in my video earlier in the week and certainly in the context of the US dollar index which is held above its 200 week moving average This particular level is very very important on a closing basis 200 week moving average on euro dollar comes in around about 117 95 117 90 as yet we haven't closed above it even though we have traded above it and in that context on a technical level I think that's very important So looking ahead to the key The key levels or the key data points that I'm looking at for this week It's going to be the Fed minutes Looking for further detail as to what the Fed might do at its September meeting Whether there was any discussion about the timing of balance sheet reduction Ultimately, I don't expect there to be too much information there We may get some further information later this month of the Jackson Hole Central Bank Symposium, which is due to start around about the 24th of August But more importantly than that certainly be looking for some sort of indication as to what the central banks thinking is With respect to inflation repression, which at the moment in the US still remains on a fairly benign basis Also keeping an eye out this week and I'll be looking at UK data Specifically, we're going to be looking at inflation data We're going to be looking at average earnings data and unemployment data now unemployment is at a low of four and a half percent lowest level since 1975 But I think the important correlation of the important relationship at the moment that most people are looking at given the recent Bank of England inflation report is that relationship between wages and inflation now In June, we saw that gap between wages and inflation closed from 2.6% And 2% which is basically average earnings came in for the three months to May They increased from 1.7 to 2% and the CPI headline number came down from 2.9% in May to 2.6% in June and Those inflation expectations have undermined the pound and the dovishness of the Bank of England have undermined the pound Over the course of the last few days to the point where we're coming into a very key support level around about 129.20 129.30 the 50 day moving average then below that We've got the 100 day moving average But we still remain within the broader uptrend that we've been in since early January and those lows in March And I've drawn the line in on this particular daily candlestick chart and that comes in around about 128.40 128.50 so I would argue that there is potential for further downside in the pound But as long as we stay above This trend line support from the March lows and the July lows Then ultimately I think what we're seeing here is just an adjustment to a slightly higher range with respect to euro dollar Again, we talked about that one 1620 level. I've already looked at it So I won't look at it again but what has been quite notable in the aftermath of these events in North Korea and The ratcheting up of the rhetoric that we've seen from President Trump and the North Korean Leadership has been a sharp reversal in euro Swiss Certainly on the weekly chart. We got that breakout above the 200 week moving average on euro Swiss as well as the 2016 peaks back to levels last seen at the very beginning of 2015 Having said that we at the moment are looking at the potential for a bearish and weakly Reversal on euro Swiss So let's look at that in the context of dollar Swiss in terms of the overall direction of the dollar We have come back on dollar Swiss But what we haven't done is we haven't reversed the Bullish weekly engulfing pattern that we saw on the weekly chart We've just done a little bit of an adjustment on the daily So this is a quite sharp move lower here We could come back on the dollar Swiss in terms of a little bit of broad dollar weakness to around about 95 50 But looking at the dollar index There doesn't appear to be too much potential for a significant move lower So at the moment, I'm still maintaining my slight bias for a slight move higher in the dollar index Despite the weakening in the dollar Swiss and despite the weakening in the dollar yen now rather strangely We've seen the end gain on the back of what are we called safe Haven buying as a result of this raising of Tensions between North Korea and the US which rather sounds a little counter-intuitive Given the Japan would be on the front line of any flare-up which would make I think holding yen Slightly more risky than you'd want it to be and I think that's why the Swiss Frank has probably gained more and gold Has gained more rather than the yen has and we can see that born out in this gold chart here But once again with respect to gold, we're bumping up against resistance at 1295 So short of an all-out firefight, which I don't expect to happen Well, I hope won't happen I think the likelihood is that we're going to slug and have a slightly more risk averse bias But it's not going to the equity markets aren't going to come crashing off Certainly what we've seen with respect to US markets is once again a slightly minor adjustment lower Which will bring us back to these lows that we saw In the middle of March around about 2450 that's the key level I think on the S&P that I'm focusing on over the course of the next few days We've also got some more China data out later this week Retail sales and industrial production the recent trade data does appear to suggest that there has been a slowdown in Domestic consumption domestic demand in China And I think the retail sales numbers industrial production numbers are likely to reflect that we're expecting Those numbers to come in slightly weaker at 10.8 percent for retail sales and 7.2 percent for industrial production More importantly is what July retail sales in the US are likely to tell us about the overall health of the US consumer They've been weak pretty much for most of this year, but economies are projecting a rise of 0.4 percent there Up from a minus 0.2 percent decline in June and we're also getting Walmart and Target reporting as well So we could get some indication as to whether or not we're getting a pickup and footfall for those two big box Retailers in the US. So that's it for this preview of the week beginning the 14th of August Thanks very much for listening. It's Michael Houston talking to you from CMC markets