 Hello and welcome to CMC Markets on Thursday the 21st of September and this quick preview of the week beginning the 25th of September. We've seen more record highs for US markets, we've seen the Federal Reserve keep the optionality of a December rate rise on the table and that has seen the dollar undergo a modest rebound but ultimately I think this particular week is going to really be about absorbing what's taking place in Germany and the German elections and what sort of coalition the Angela Merkel will be able to put together in the aftermath of the Sunday vote. At the moment it's not really, there's not really any doubt I think that Angela Merkel will win a fourth term. I think the doubt starts to come about with respect to the type of the coalition that she's able to put together and ultimately that could have significant repercussions for the EU and the relationship between Germany and France over the course of the next few months. There's certainly no secret that Emmanuel Macron, the President of France wants to put together some EU reforms and certainly in the context of a Eurozone budget, potentially a Eurozone finance minister and certainly Angela Merkel has gone to great lengths not to rule that out but ultimately her room for maneuver will be dictated by her coalition partners and ultimately if the FTP come into the mix and hold the balance of power then certainly the types of reforms that Mr Macron wants to bring in will be that much harder to put together and I think as a result we could find that it takes quite some time to put together a new German government even if we know what the probable mathematics and the arithmetic is in the aftermath of the Sunday vote but I think for the most part I think most of the attention for this coming week will be on US and UK GDP, the final revisions there, those numbers are coming out on the back end of the week but also the latest inflation data not only from the United States but also the European Union and that could have significant consequences for the next direction or the next move in Eurodollar as we can see from this chart here now looking at this chart there's potential for a triple top forming here we've had a sideways consolidation pretty much since the end of August and those highs around about 120 are really proving to be a significant barrier to further progress but we also have significant support coming in around about the 11820 area so if we look at the distance between these two points here the 12070 level here and the lows around about 11820 that's round about 250 points so if we get a break down below the 11820 area then there's significant chance that we could see a 250 point correction down to around about 116, 115 and a half that being said if we're able to get a consolidated break above the 12020, 12030 area I'm able to hold above that level and I think that's particularly key in this instance if we were able to hold above that level and we could well see a significantly similar gain towards the upside towards around about 122 and a half, 123 so let's look at what we're expecting next week in terms of the latest inflation numbers certainly EU CPI for August was confirmed at 1.5 percent that was a significant increase to the 1.3 percent that we saw in July and this coming week we're going to get the latest flash number for September so that'll be an early indication of the type of inflation repression that we've seen in the month of September and furthermore on the Friday we'll be getting the latest US PCE number now PCE is the Fed's preferred measure of inflation and at last week's FOMC rate decision there were no surprises we found that the Fed is pulling pulling the starting gun firing the starting gun on its balance sheet reduction program and that will start in August of ten billion dollars six billion dollars of treasuries and four billion dollars of mortgage-backed securities now that's not really unexpected I think what was surprising was the Federal Reserve downgraded its inflation forecasts while at the same time upgrading its growth its growth forecasts which seemed rather counterintuitive to me simply because not only because of the concerns about Hurricane Irma, Hurricane Harvey and potentially we could also find Hurricane Maria added to the mix in the coming months not only because of that but also because of the fact that retail sales for August posted a significant decline in the month of August but not only that we saw significant down revisions to June July now that's going to have a significant impact on the final US GDP revision I think going forward certainly in terms of the June number because that will basically take in the end of the second quarter for the US GDP revision and that's expected to come in around about 3% don't be surprised if actually that comes in a little bit lower certainly in terms of third quarter GDP that is tracking well below the numbers that we saw in Q2 now the Fed has given indications that it still remains on course to raise rates in December I think a lot will depend on the data as we go forward and a lot will also depend on obviously who's left on the FOMC committee going forward so I think we're going to have to pay close attention to the data pay close attention to the inflation numbers and certainly I think look at reconciling any potential damage or hit to the economy as a result of the US hurricane season other things to keep an eye out for this week obviously we've talked about inflation we've talked about the mathematics for the German election and we talked about UK second quarter GDP that's expected to come in around about 0.3% and ultimately Q3 GDP at the moment is tracking along similar lines and obviously we're also talking about the potential for a Bank of England rate hike also at some point before the end of this year none of the data that's far has really ruled out the prospect that will happen retail sales are very positive and that would appear to suggest to me that even if we get a rebound in the dollar thing the downside in terms of the pound is going to come in around about the 134 level and we can really see that I think it's born out on this chart here we have seen a significant move higher and a new multi-month high around about 136.5 and until I think we break below this series of lows through here around about 134.20 134 then ultimately I think there is a good chance we could start to wedge higher but even if we do break below 134 we've also got a decent area of support at 133 and if the pound does start to drift lower over the course of the next few days that's going to be broadly supported for the FTSE 100 which is broken below that key long-term support level of 7300 and is now capping subsequent rebounds if it's unable to get back above 7300 then is a good chance we're going to come back and track towards the April lows around about 7100 so that's it for this week thanks very much for listening this is Michael Houston talking to you from CMC markets