 Hello and welcome to CMC Markets and this quick look at the week ahead beginning the 24th of July Certainly coming off an interesting past few days. It's been a rather mixed We've just come off the back of a rather mixed week for European markets We've yet again hit new record highs for US markets as the earnings season continues to progress we've got a number of Important earnings updates coming out this coming week Namely from Google alphabet on Monday and then later in the week. We also have Amazon and We have Facebook so with the Nasdaq at record highs is their potential for a little bit of froth to come off that particular Market certainly I think the political intrigue in Washington is adding a new dimension To what markets are thinking certainly it's had a significant effect on the dollar Despite the fact that we've had two very dovish press conferences from not only the European Central Bank But also the Bank of Japan yet despite this the dollar has continued to decline So I think let's let's let's look forward to this week's FOMC meeting While I add any clarity to the overall picture or outlook for the dollar I don't think it will ultimately. I think nothing much has changed from those comments made by Janet Yellen At the Humphrey Hawkins testimony just a few days ago and Ultimately, I think any decision in the summer from the Federal Reserve is highly unlikely I don't even think that we'll get any new indications as to whether or not the Federal Reserve will look at tapering its balance sheet in September We're probably likely to get more clarity on that the Jackson Hole and your central banks symposium In August and I think that's really a I think that's what really markets We'll be focusing on over the course of the next few weeks Given mr.. Draghi's comments last week, which were very very dovish in terms of when the ECB might look at tapering It's monetary policy despite the fact that he was very dovish He said that inflation still remained some way away core inflation remains some way away of coming off Reaching its target of 2% The markets simply didn't believe what the ECB president had to say He said that they would potentially look at tapering in the fall Could that be September or would it be later? Would it be October or November? Nevertheless, the markets are pricing in the quite likely probability But we will see some form of pairing back of stimulus as we head into 2018 whether we see that in the first quarter or the second quarter. I don't think the markets too concerned I think they're more concerned about what's going on with the dollar The pound is also suffering quite substantially on the back of the resurgent euro And it's unlikely. I think that the economic data that we've got coming out this week We'll probably change that much in terms of the progress of the euro appears to be on a tear We've got two GDP numbers second quarter GDP numbers one out of the UK And we're expecting to see a minor improvement on the Q1 numbers that we saw 0.2 to 0.3. We've also got second quarter GDP out of the United States and there again expected to See an improvement from the 1.4 percent we saw in the first quarter coming in at 2.6 We've also got French and German PMIs flash PMIs for July So if the economic recovery and economic robustness that we've seen in the first part of this year Continues into July then ultimately I think that's another reason really I think why the euro continues to remain buoyant certainly with respect to Bundy yields We're now well-esconced above 0.5 percent and there's potential for us to potentially go even higher there so Again, I think it's all eyes on the euro and let's have a quick look at this euro dollar chart because I think this chart in Particular will give us some decent indications as to what the next levels are we broken above the 2016 highs that's displayed by this line here around about 1.16 15 1.16 20 Which really takes us out to the highs that we saw in them in around about August 2015 But the the level that I'm really looking for is a 200 weight moving average, which is 118 I think that really I think is the next target for euro dollar As long as we stay above around about 1.15 then I think the line of least resistance now for the euro Is for a push higher and that's really going to present problems for the european central bank, so expect to hear And I think a number of dovish messages coming out from the ECB as they try to temper this rise Unfortunately for the ECB. I think the euro's fate in terms of the dollar is out of their hands I think a lot of people have lost faith in the US dollar You've got the political uncertainty in Washington the investigation into Donald Trump's finances by Robert Muller the special counsel He's appointed to look into The Russia situation and ultimately I think with the dollar breaking some very key support levels And also approaching some key support levels, which is no better illustrated with this dollar Swiss chart here Which is broken below the 200 week moving average We could see for the dollar the clients towards the 2016 lows at 94 40 and potentially even lower What does that mean for the pound well the pounds had a very difficult week had some decent economic data I think with respect to the pound particularly against the dollar and the uptrend still remains intact As long as we stay around I think around about 128 and a half still think we're on course for 133 On the basis that this pattern that we that I highlighted earlier this year in around about April still has scope To play out which means I think the pressure valve I think for the pound will be euro sterling and we're certainly seeing that play out in the way that it's behaving here We've broken above this 89 20 level and I think now there is potential for us to revisit Those highs that we saw around about September October, which was around about 90 25 90 26 if we break above that then we've been looking at last year's highs or around about 93 One other thing to keep an eye out for next week is the start of UK banks earnings Looking at Lloyd's Q2 numbers and Barclays Q2 numbers If you cast your mind back to earlier this year, they posted some very good numbers the pair of them On their annual numbers as well as their first quarter numbers So hopefully we'll see some decent numbers there though I would point out with respect to Barclays investment banking revenues could well be hit on At the back of the slightly lower volumes and slightly flatter your curve that we saw recorded or we saw take effect With respect to JP Morgan's earnings numbers and Goldman Sachs I think the narrowing of the yield curve there and slightly lower volatility hurt their businesses And I would expect to see the same thing manifest itself with respect to Barclays results So that's it for this week. Have a good week trading. This is Michael Houston talking to you from CMC markets