 Hello and welcome to CMC Markets on Thursday the 5th of October in this quick preview of the week beginning the 9th of October But before I get into the details of the upcoming week I think it's important that we look back at the events of the past few days and in particular events in Spain and the Catalonian constitutional crisis now at the moment both sides appear to be at a little bit of a stalemate the Spanish Constitutional court as I speak has just suspended the Monday Parliamentary sitting of the Catalan Parliament and that was when The Catalan Parliament was supposed to be debating whether or not they were going to declare Independence now obviously the Catalan crisis as we can see from this graph here as Spain 35 or the Ibex Down to its lowest levels since March this year But it's been in the context of a broader downward trend that we've been in since the middle of May So I think the big question at the moment is what would a potential escalation do with respect to the current crisis? Will the Spanish government miscalculate in the same way that they did on the Sunday during the referendum vote when they decided to send in Civil Guard police to fire rubber bullets at protesters or Voters if you like because ultimately they weren't protesting they were just looking to cast their vote or will they Will they just will try and rely on the rule of law in trying to bring the Catalanian government back into line and ultimately if the Catalan Catalan government does as expected Institute some form of secession procedures of what will the Rahoyi government's response to that be you also have to remember that Mariana Rahoy is in charge of a minority government He still hasn't got a budget through and ultimately a schism for both Catalonia and Spain would be Equally as serious though probably slightly more serious in terms of Catalonia because they don't have their own Treasury They don't have their own currency and ultimately it would be very very difficult for them to get external financing outside of the ECB system, so I think at the moment there's a significant amount of uncertainty Whether it's going to escalate further It's very very difficult to say but ultimately I think in the context of this overall downtrend The overall downtrend for the Spanish 35 is likely to continue despite the fact that we could get a rebound Back to the highs or back to the top of this range highs that we've seen here back above around about 10,300 So looking ahead. What does that mean for your dollar? What does it mean for cable and certainly? What does it mean for the direction of the dollar going forward? Certainly some of the data that we've seen out over the course of the past few days has been very Dollar-positive and in the in the week ahead. We've got the latest Fed minutes There's been an awful lot of debate as to who the next Fed chair is likely to be and ultimately I think The balance of probabilities is now shifting towards the fact that we're probably going to get December rate rise Barring I think a significant escalation of risk or a significant Significant period of weakness with respect to the economic data certainly the economic impact of hurricanes The two hurricanes and Harvey don't appear thus far to be affecting the underlying economic data Now we've got non-farm payrolls coming up on Friday as I recall this video I don't as yet know what those numbers are going to be but the estimates are for a right number in the region around about 90,000 a significant drop from the one five one fifty six that we saw in August We saw a significant drop in the ADP numbers But I think it's highly unlikely that even if we get a very weak number Out of non-farm payrolls that it's going to really derail the momentum Towards a potential rate rise in December unless obviously the debt ceiling rears its ugly head Or where other some geopolitical factors get in the way I think the biggest the biggest I think thing to keep an eye out for on the payrolls is the wages numbers So keep an eye on them. They should come in around about two and a half percent And certainly I think in the context of CPI which is coming out later this week U.S. CPI If we see any evidence that inflation which appears to be building up in the various surveys that we've come We've seen coming out of the ISN if we see any evidence that inflation is starting to filter through Into wages and inflation and I think as far as a rate hike is concerned We've it's pretty much a done deal barring any Unforeseen circumstances that we might come across so let's look at some of the the key data points that I will be keeping an eye out First and foremost Let's look at the dollar index because I think the dollar index in terms of where we go to next could be a key arbiter Will be a key arbiter of where euro dollar goes and at the moment it does appear That we could be starting to form a little bit of an inverse head and shoulders on here if you look at the the the peaks here around about 94 Just above there about 94 20 if we draw a horizontal line through there then we've potentially got an inverse head and shoulder there a left shoulder there a head there and a potential a Little bit of a weak right shoulder there, but a breakthrough 94 is likely to potentially see further dollar gains up towards 95 or 96 so that's something to keep an eye out for More importantly, I think if we then look at that in the context of euro dollar Then we have a similar sort of neckline on euro dollar and that comes in at these August lows around about 116 70 now I've talked about this triple top A week ago and the potential for a move lower the bias for me while below 118 30 on euro dollar is for a move back to around about 115 and a half 115 70 Nothing that has this nothing that's happened thus far this week Changes that opinion unless we close back above 118 30 and the 50-day moving average more Importantly on the pound against the dollar We do appear to have broken lower and the probability is given the current sterling weakness that we've seen and the shambles That was the conservative party conference Then we're likely to see a move back to this trend line support from the March lows Which currently comes in just above around about 129 and a half 130 that sort of area I've moved below the 50 day and 100 day moving averages But within the overall uptrend that we've been in since the beginning of March So a little bit more sterling weakness potentially a little bit more euro weakness and a little bit more dollar strength Other key people points to keep an eye out for this week will be the latest China trade data for September the best start of US Bank earning season JP Morgan City group of Bank of America and Some UK retail results from Ted Baker first first half results from Ted Baker and the latest manufacturing data for the UK economy So that's it for this week. Thanks very much for listening. It's Mike Houston talking to you from CMC markets