 Hi there, I'm Anthony Chung and I'm the Head of Market Analysis here at Amplify Trading. Every weekday morning I'll deliver a fundamental rundown ahead of the European Open. But if you subscribe to the channel, you'll also get content from the rest of the team. So, let's begin. Okay, very good morning to everyone. It's Wednesday, the 23rd of September. Hope you're doing well. Going straight into things this morning and certainly going to have a look at the FX market. We've already seen a bit of continuation of dollar strength but also latest catalysts being some renewed weakness in sterling currency on the back. Of course, renewed restrictions being announced by the UK government yesterday ratified by Boris Johnson in his House of Commons and Speech on national TV last night. So, let's delve straight into the charts and what we're looking at. And as you can see here, Cable having a bit of a breakdown this morning. I've just marked up a couple of charts here to share with you guys. So, we've seen some volatility in yesterday's session right in the morning. We saw quite a recovery. There were some Bailey comments where people obviously were looking for more details on negative rates and not seeing that materialized caused a bit of whipsaw price action on the upside. But then ultimately as the common speech materialized, we saw everything that was conveyed in the national press coming to fruition with the announcements of more stringent measures being put on place in order to control the exponential growth that we're seeing now with the alert level for status of COVID-19 in the UK. So, the pound coming under some pressure. We retested that same point of the initial volatility that we had the European open yesterday into the European close yesterday afternoon. Retested that again in the Asia-Pacific session and then we've seen a bit of a breakout to the downside this morning. We've just dropped momentarily through the 127 handle. So, decent 40-pip move there. Seemingly, a catalyst of sorts was the UK Foreign Minister Dominic Rab came out saying that cannot rule out a full second lockdown. I wouldn't say that was the reason. I would say it's a catalyst. Fundamentally, on the coattails of what happened yesterday, all the logs were on the burner if you like. It just needed a match to light the fire and I think that was the Rab comment. And obviously, Rab has been a person who's been very vocal and adamant about people going back to work and that's one of the main things in which the government has now reversed, of course, from yesterday's announcement. So, I guess a little bit symbolic coming from that particular person. On a slightly longer dated chart, this is looking at the bigger picture of near-term price activity for sterling because I do think that there is potential some room for further downside here. First of all, we've got to tackle the 12681 looking at sterling futures here, which is the S1, but any move beyond that point then. Technically, support doesn't come in until we start getting down to around that July 23rd low and that also starts to bring in some of the resistance areas that we were seeing at the beginning of July and then also around the previous response to that level and the 200 DMA, which has acted as a good cap to some of the upside movement that we've seen on the intraday today. That was, of course, a really important level to look out for, which caused a market reversal back on the 11th of September. So now we're below there, definitely a bearish setup from a technical point of view and fundamentally as well, plenty to go at into expectations of further sterling weakness about the implications these latest announcements could have and certainly a full lockdown certainly would have on the UK economic recovery. So, a couple of things then to also throw into the mix is continuation of dollar weakness. So obviously sterling weakening is going to benefit to a certain degree dollar strength and certainly on that cable break it's managed to see the Dixie just get above the overnight highs. The dollar index is trading up about a quarter of 1% at the moment. From a technical perspective, people are looking at the dollar breaking out of a downward trend line that's been respected since the overall beginning of COVID. We obviously saw on the initial commencement of the panic in the market sell off a very strong flights of quality bid into the greenback during the kind of devastating stock route that we're seeing globally at the time when it was being priced in initially. But then after that point then the kind of extreme accommodative measures adopted by the Federal Reserve saw persistent dollar weakness and we've just broken out now in the last day or so of that that descending kind of trend and we're up to retesting now around the 50 day moving average. So quite a key area here to have a look at this would certainly be a signal that would further add to the belief then that they could see some downside pressure materializing on cable. Let's have a look then at sterling in a bit more detail. We're talking about obviously what happened yesterday. The biggest blow is likely for sure to be felt of course by the hospitality industry which is being forced to close early from 10pm each night from Thursday this week. Now suffers from the government's new instruction as well to office workers to work from home and those new restrictions could potentially last up to six months is what the public is being prepared for by the government. So of course it's this idea of and you know it's quite interesting watching the news last night they were actually filming in a pub just down the road for me in southeast London and they were talking about it sounds like okay so what they're going to shut an hour or two earlier but this guy was saying well not only are they under pressure financially as a small independent pub let's say that they now have to actually bring in extra staff on a security basis because trying to actually enforce people to leave at a certain time as you can imagine comes with some complication and he was saying that's adding their costs are going up but their demand is going down and so they're already in a losing situation the respective of before some of these announcements are already being made and it's only going to be accelerated by this but also people not going to work you know we saw job losses in those types of related areas where you know a lot of these businesses are contingent certainly in the city where amplifiers based on the traffic of people going to work and then purchasing goods food during lunch breaks and so on so that not happening is certainly going to heat more pressure on the hospitality sector and so everyone is now looking to obviously Rishi who was such an important character of course when he initially unveiled a number of significant policies on the initial onset of the pandemic but growing calls are coming his way now to announce a new package of support for the hardest hit sectors when he delivers his autumn budget later this year the push of course is for a much more targeted extension of the furlough scheme the FT has reported that Sennach's colleagues have said a range of support measures were on the table and no decision has been taken as yet but several people briefed on the issue stated that work was underway on a number of options to subsidize workers wages now an interesting thing that the FT was talking about is a template that's been proposed by the CBI who've outlined a new scheme and that they're saying that's to be in place from November 1st which would be available to all companies in the last a period of a year it would involve a state subsidy if an employer was able to offer workers at least 50% of their normal hours the attraction here for Sennach the Chancellor of a CBI style scheme is that it would be able to keep people in the workplace support jobs that were still viable because remember he's had this and and probably a correct assessment of the idea of jobs being in somewhat suspended animation of their only being kept employed because of the furlough who would otherwise be let go and that's not a healthy thing obviously from a cost perspective or for just delaying the inevitable which is that the unemployment rate will go up at some point so again the attraction for Sennach here for the for the CBI style scheme is it can keep people in the workplace support jobs which are still viable if only on a part-time basis and so that could be something to look out for and I think something will have to materialize in this sense particularly for the hospitality sector something which has been our base expectation for some time anyhow so the other thing is let's have a look at the economy and and obviously following these latest restrictions that have been announced yesterday quite interesting to see the series of graphics that the FT had put together and we were already before yesterday seeing the Surgeon UK spending growth starting to tail off in September from this big resurgence that we saw through the summer so this is a graph looking at the percentage increase in consumer spending which had already started to initially peak and then has just softened slightly the other things then retail footfall picked up when shops reopened obviously in the middle of June June 15th but they still remain well down on their kind of normal levels in case of the UK still close to nearly 30% off normal levels and this is something that you know this kind of referring of more high-touch high frequency data rather than in these more traditional macroeconomic measures are a better way of mapping people's mobility and also then getting a more real-time sense of where we're at in terms of anticipating the economic recovery so here I guess the point I'm trying to say is it we were already were not fully recovered and now this initial this next phase is coming in and my assessment of the situation at the moment is that this this recent acceleration in covid numbers in terms of confirmed cases in the UK net result in increase in hospitalizations and subsequent lead deaths all of these numbers I think they go sharply higher over the coming weeks I think the government's kind of obviously caught between a rock and a hard price between dealing with a humanitarian crisis but also managing an economy which does have then secondary humanitarian consequence if people are left unemployed and it increases then people's poverty levels and access to medical care and all these types of things so it's kind of they're both bad situations but the economy function is a key component more medium long term to facilitating then better quality of life for all so obviously though they've got a confront a virus which is at risk of initial deaths so it's a difficult situation it's one where you know I'd say on the balance here the government's been very upfront with trying to prepare people for six more months of this and the potential for it to get worse with a second national wide lockdown a real prospect and I think a lot of that potentially and particularly with the announcement of kind of the sensational numbers of 50 thousand potentially by mid-october are being constructed in order to make people become more fearful and ultimately more compliant which in itself then becomes self-fulfilling to help to control the virus so yeah here at the moment I think things are gonna get get worse considerably so on this front and certainly that is going to impede the economic built-in recovery and so as a consequence should then net result continue to be a significant headwind for sterling at the moment and particularly if we start to see the dollar technically on a bit of a breakout at the moment and if that continues to remain the case then certainly compounding this is brexit negotiations which we're obviously coming to the crunch time right at the worst possible time where you know by my calculations looking at previous kind of developments of COVID what we see in main man Europe and in the previous first phase of the virus back in kind of March April time that really these numbers are going to peak at around the point of when the soft brexit deadline hits in the middle of October so it's definitely going to be an interesting couple of weeks to come for for not just a government but the sterling currency of course so football was already down that's going to get significantly worse levels of socializing eating out and travel have already decreased in the latest week after increasing through the summer and then football to restaurants pubs and takeaways has also been on a weakening trend since the beginning of the month so this latest development goes into an already slightly reversing situation from what otherwise had been quite a positive catalyst for for general perception of the economy's recovery going forward so that's the sterling story as I said there's some key technical levels I think that definitely need to be watched you can see we settled a little bit after that initial I think was more of a technical break would wrap comment being the catalyst rather than the actual reason in itself and you can see there's quite a cluster there's a really important area of support around 126 53 74 in the futures and which is around this kind of you know horizontal area here if I just draw a rectangle to make more sense of this which is here is the next key level of support any breach of that whether it comes today or this week then I pushed for lower down through 126 toward 125 is certainly on the cars which will then start bringing in those price areas that we're seeing back around the 20th 17th of July obviously then given the these types of moves the euro has also traded negative this morning by around 20 pips got some really important data coming out in the calendar in a short while it's the flash PMI numbers and so let me just quickly jump over to here you get the German number of course coming up at 830 got French numbers 815 excuse me German 830 euro zone nine o'clock UK 930 these all will be potentially market moving these are always very significant and in order to see generally the perception of confidence from these person managers at this point in time euro little bit susceptible here to potential downside break that s1s held in the futures so far during the Asia Pacific session had a brief flirt with it at the European Open but bounced and so certainly be keeping an eye there on the upside obviously here you've got the near-term range being defined by the low point that was seen at the London FX fix yesterday that was retested in the early Asia hours and also first thing this morning so it's confined to a fairly tight range and I would say that ultimately that's going to break one way or the other and the PMIs could well be the major catalyst for that price movement in the euro coming up within the next hour or so otherwise looking at the other charts equities well US shares reversed earlier losses yesterday and they come after drone power said the economy has a long way to go before fully recovering and will require further support and certainly that type of more dovish tone tends to be well received by markets particularly in the equity space however there has been dollar strength which we somewhat counterintuitive to that a lot of people have been looking at comments coming out of the Chicago Fed president Charles Evans yesterday just to recap Charles Evans who's due to become a voter on policy setting at the FMC in 2021 so he is currently a non-voter said yesterday the Fed still needed to discuss its new average inflation target but that it could start raising rates before we start averaging 2% and he said more quantitative easing may not provide another lift to the US economy so quite quite hawkish comments there there are some market commentators saying that these were taken out of context he was referring to the overall framework and flexibility of AIT but nonetheless again when we're at these technically important or sensitive levels like we were just discussing here with the dollar then it's a comment like that can certainly bump things out and if we get technical break we start to see price confirmation and we can get an extension on moves so the dollar certainly has has been a bit lively on the upside in recent sessions that seemingly continues to be the case particularly if it's supported by if we get weak eurozone PMIs puts a bit of downside pressure fundamental in the euro with already a negative narrative for sterling and certainly that that short-term dollar reprieve might might continue in terms of the overnight session if we go back and just have a quick look at some of the the equity markets you can see here equity index futures the S&P is pretty flat the NASDAQ is a slight negative but the usual case yesterday did see some outperformance was up nearly 2% comparatives to just 1% gains in the S&P overnight in Asia it was a bit more of a mixed situation failed to take philanthropists from the rebound in some of its global peers region a little bit more tentative ahead of ongoing US China tensions Japan playing a bit of catch-up just coming back from its market holiday having been away for the last two sessions and generally trading negative following that extended weekend session on the equity front do be aware that Tesla shares were down another 7% last night so remember they've had back-to-back quite significant losses in excess now of a 10% loss in just two days you might have seen then a lot of people you know he tweeted a little bit of pessimism the prior day about coming up for this battery day event that event then was delivered as far as what it was unveiling they laid out a roadmap to build a $25,000 car by 2023 and eventually 20 million cars a year part of a highly anticipated presentation that mainly that caused disappointment was short of any kind of spectacular fireworks or PR stunt which I guess people become used to and the lack of that force coming then has meant that their shares drop quite significantly post-market on that point of view and also as well these ambitions of producing a very low car low-cost vehicle to quite high volume is heavily dependent on multiple planned techno technological innovations which is all well and good promising but very very high bar to executing that type of plan of course when it's contingent on those types of things with the equity front obviously then the market still remains a little bit sensitive to Fed rhetoric I talked about the dollar potential reaction to those comments coming out of Evans one thing to be aware of is the speaker slate on that front is particularly busy when it comes to Fed speakers so if there was any misinterpretation from the Fed's point of view of how the markets have perceived that comment in a more perhaps hawkish manner then there's plenty of opportunity for the Fed to come out and realign markets expectations I wouldn't expect that to come from Fed's power his testifying before the house is much more fixed in nature but you've got people like feds Mester who is a voter speaking at two o'clock this afternoon feds Evans himself comes out and speaks again on current economic conditions and monetary policy at 4 p.m. so that would be the one I'd watch closely and does he roll that back slightly if so you could see some reaction of dollar weakness if that were the case Rosengren, Kishkari, Bostick, Kualas they're all speaking today so it's a really busy docket for Fed commentary so do bear that in mind definitely load it into the US session rather than this morning in the UK European trading hours a couple of other things then just to round off you have had the RBNZ they held interest rates as they are overnight as expected at 0.25% they kept their bond purchase program at a hundred billion Kiwi dollars they did refrain from jaw-burning the currency there was a momentary blip up in the Kiwi before then the move was kind of faded their monetary policy committee did favor introducing a funding for lending program for banks before the end of this year that was one thing that people looking at also the RBNZ said they're actively considering taking interest rates negative and it said it could do so in combination with the term funding for banks so perhaps then there was an initial knee jerk and it was faded on the back of those that type of more consideratory commentary with the Aussie as well you know if you do look at the Antipodean currencies that's also been a little bit weaker overnight I'll just bring the Aussie here into shot and looking at the Aussie futures we've found a bit of resistance here as Europe's come in after falling overnight on the breakthrough technically of what was yesterday afternoon's low so a little bit heavy there during the beginning of the Asian session as I said we've had a bit of a cap now the S1 so Aussie's down about 38 was interesting looking at the you know there was this long-term trend line break which was significant for the squeeze up that we had up to 74 through the back end of August but we're now back below that same trend line area so we quite interested to see how we play out here on the downside if we do continue to move lower than an area of support I'd be looking at for from here this is looking on the weekly charts would be you've got to get down to around 70 60 type area so it does open up the prospects of potentially directionally some more more weakness to come in the Aussie this why is the weakening well a couple things I guess more top-level ongoing apprehension regarding the US-China trade talks at the moment but more specifically dollars in Australia slipping overnight yields also decreasing following increasing calls for the RBA to cut rates at next month's meeting some of the RBA watchers are now insulating towards potential more action in the immediate future RBA deputy governor DeBetty spoke yesterday and recently outlined these various different policy options and some of which then would be indicative of more more policy loosening the other thing then oil markets we had the regular release of course of the API inventories last night we did see actually see a surprise build of just shy of 700,000 expectations were for a draw of four million oil has drifted a little bit south overnight it's down 39 cents in the futures in the front months contract at 39 41 ultimately though I don't think it was too much of a big deal here oil still well within its kind of near-term range the S1 little bit area of support near-term to price activity until we probably get the DOEs later on you've got the S1 does coincide with around the low point that we saw yesterday you can see that was also that previous though we had back on the 16th before the move higher so really I guess you've got to wait for the the infantry numbers from the from the DOE later to see whether or not if we break down through that level we'll look to retarget down towards the load of scene on the afternoon of the 21st one thing bearing in mind that's probably offset a little bit of that downward bias on the bearish dates on the crude figure gasoline was a sizable draw and I mean sizable 7.735 million analysts were looking for a draw of around 2 that is the biggest drawdown in gasoline figure since September 2017 in fact all right quick look then to finish the overview of the day ahead yeah these PMIs coming out are super important to keep an eye out for that you would anticipate to seize and reaction in the euro currency for sure and as I said we're restricted in a fairly tight range at the moment so break out either way is probably most likely then you've got the UK related figures as well which you know these are the September preliminary numbers they're going to not capture some of the latest announcements that we've had yesterday but as you already saw from some of that more high frequency data that some of the recent indications would perceive then that general confidence was deteriorating already and during the period of the last week or so so it will be interesting to see if we if you get a downside obviously surprise in the UK figures then that's obviously just going to feed further and fuel the flames of this general negative bias at the moment otherwise into the US session Feds Powell tested testifies to the house panel on COVID-19 so in front of the house today but again we've kind of we've heard what we need to hear from Powell this is more kind of repetition for different political sets at the moment but Feds Evans Rosengren Mester as I said a lot of Fed speakers to keep an eye out for and then you get the US market services manufacturing PMI at 245 later on today all right gonna leave it at that gonna wish you guys a good day ahead if you've got this far for watching thanks very much don't forget to subscribe to the channel and drop a comment if there's anything I can do any questions that you have I can help I'll be happy to alright guys have a good session ahead and I'll speak to you tomorrow