 Good afternoon and welcome to this week's Monday market webinar on the 30th of June. And we're looking forward to a fairly big week. It is the end of the quarter and end of the half year. But overall, markets have been slightly negative this morning. Not really too much of a surprise given the fact that we are still not far off record highs, particularly in the case of the S&P. And certainly in the context, I think of what is going to be a pretty heavy date a week over the course of the next four days because it is going to be a slightly shorter week. While I talk over the risk warning, you can just digest that. It is going to be a very significantly, hopefully volatile week, albeit a shortened one, given the fact that U.S. markets are off on Friday because of the Independence Day, Fourth of July holiday. With that in mind, non-farm payrolls, instead of being on Friday, is actually on Thursday and actually overlaps the ECB press conference at the same time. So certainly this week's non-farm payrolls webinar, which will be on Thursday, Friday, Thursday, starting at 1.15, could well be an interesting half-hour session. So I would certainly urge you to tune into that so you can sign up on the education section of the CMC Markets website. And for that, you get two significant market events for the price of one. Certainly something not to be missed in the short to medium term. So just to sort of give you a bit of a preamble, markets are slightly lower today. European markets are on the back foot slightly. It's the end of the quarter, end of the month, looking ahead towards a raft of key economic announcements starting tomorrow, not only from the U.S., but also Europe and the U.K. And I think we really need to look ahead to this week's market events in the context of obviously the climax later this week on Thursday, which will be non-farm payrolls, which will be at 1.30, and obviously the European Central Bank Press Conference as well. So as I say, two for the price of one should be very interesting. Let's start this week with a look ahead to tomorrow's PMI data and tomorrow's ISM data out of the U.S. Now last week we had a very disappointing GDP number, a Q1 GDP number out of the U.S. It came in at minus 2.9%. The statistics don't really appear to be too perturbed about that, but given where our expectations were at the beginning of this year with respect to U.S. growth and given where they are now, you would think that would be factored into the market sentiment, and it doesn't appear to be the case. The CIS warned at the weekend that stock market returns certainly aren't being backed up by economic growth, and I noticed something actually quite interesting over the course of my looking at the markets over the weekend was that for the past six months the U.S., S&P 500 and the German DAX have pretty much moved in lockstep with each other over the course of the last six months. There's been a fairly good correlation between the two. Now those of you who are probably regular viewers of my webinars will know that I'm probably not the most bullish person in the world when it comes to stock markets at this present time simply because really the economic data doesn't really bear out where equity markets are at the moment. Really equity markets are at their levels at the moment simply because of the expectation that central banks will be keeping their foot hard on the accelerator over the course of the next few days, weeks and months. Now if we look here at the correlation between the DAX and the S&P 500, it's pretty much been fairly constant over the course of the last eight to nine months, but I actually have noticed a slight weakening in sentiment with respect to the correlation between these two indexes and I really noticed it over the past month. We've seen the S&P 500 continue to make new all-time highs on a month-to-month basis. Now the Germany 30 index which we have here, let me just show this to you, has continued to make new all-time highs, but over the past month or so it's started to tail off. You can see this purple line here. There was the peak in early June. It corresponds with that peak there in the S&P and the peaks here, here, here, here and here. But now the DAX is starting to roll over and that for me is a little bit of a concern given the fact that the correlation between the S&P and the DAX has been fairly well solid for a very, very good proportion of the last eight or nine months. Now we appear to be getting early signs of a bit of a roll over in the DAX and we can look at what are the reasons are for that until we're blue in the face, but if I actually look at the underlying chart I can see straight away that we're at a very key point with respect to the DAX and a potential reversal pattern. I'm not going to suddenly say stock markets are going to collapse. I don't believe that for one moment, but what I would say is a warning sign in the DAX suggests that the recent upward momentum that we've been seeing in that particular index over the course of the last few months is starting to give early signs of a possible roll over. So let's look at the actual index itself. What we've seen here is it's finding support round about the 50-day moving average. It's bounced off that. It's currently holding above the previous highs at 9,790 apart from obviously a brief dip below that last Thursday. But overall there does appear to be some signs that we are starting to lose a little bit of momentum. We can see that from the lower lows here and here. So what we need to see now on the DAX and we're at a very key level in the context of that is for a move below the 50-day moving average. Will we get it? It's very difficult to say, but certainly the data that we've got so far this week could actually reinforce that. So let's concentrate on what we've got tomorrow. We've got the Italian, Spanish, French and German manufacturing PMIs for June. Now while we're not expecting any significant deterioration in the Italian, Spanish and German ones, there is still some evidence that the growth that we've been seeing in those three economies is starting to slow down. As for France, well, France is basically a law unto itself. We're expecting in a contractionary reading there of 47.8. All the other three are expecting readings that are in or around 52.5, 53, 53.5. If we get weaker readings than what we're expecting then obviously that is going to be a concern for growth going forward and it's certainly going to be a blow to the European Central Bank given the fact that earlier this month they put interest rates into negative territory and also announced a new LTRO. The only problem with that LTRO is that it doesn't start until September. So this week's meeting of the ECB is only important in one respect. There will be no change to monetary policy and really then it's just a question of what does Mr. Draghi say at his press conference because he's already stated that interest rates can't go any lower. He's said that they are at the lower bound of where they are. So any further easing measures from the ECB will have to come in the form of monetary stimulus. What form that takes we still don't know yet. We know that there's a $400 billion TLTRO which is due to start in September but between now and September there is not likely to be any further policy movements by the ECB certainly in the context of interest rates and that's very, very important. We saw this morning that CPI inflation came in at 0.5% but more importantly than that, core CPI which strips out more volatile factors like fuel and energy actually jumped higher to 0.7%. So that in itself suggests that the previous, sorry, 0.8 my mistake, it jumped from 0.7 to 0.8 so that suggests that fears about deflation may be and only may be slightly overstated. So that's likely to keep the ECB on hold for quite some time to come notwithstanding all of those points I made earlier and furthermore it's more than likely expected to see the euro continue to try and push higher. Now what am I looking for on the euro? Well you can see my comments in the chart forum. That's in the bubble up here on the right hand side but essentially the key level that I'm keeping an eye on ladies and gentlemen today is this red line and the 200 day moving average. That level is around about 136.75. If we are able to sustain the move above 136.75 then there's a good chance we can go back to 137.30 and then these series of lows just below 138. Now just quickly draw that horizontal line on there. There is a significant area of resistance around about 137.80, 137.85 and what we need to see for that to happen is from a sustained move through the highs in June and that trend line resistance and the 200 day moving average at 136.90. So between 136.75, 136.90 the market I think the euro is definitely going to have a pop at that. The key question then remains is to whether or not the momentum is there to push it through that. Now also on Tuesday we've got a whole host of other data items out of the euro area. German unemployment for June is expected to remain at 6.7%. We've also got Italian unemployment for May. We've got EU unemployment for May. Italian unemployment is expected to stay at record levels of 12.6% and we've also got EU unemployment 11.7%. So again it's expected to remain at fairly elevated levels and that more than anything else is probably going to continue to be the case irrespective of what the European Central Bank does. Certainly in terms of policy mistakes the French government seems to be moving from one disaster to the next. Because over the weekend they announced that they were going to be increasing tourist taxes by quite a substantial amount which is more than likely really going to help the Paris economy grow a lot more than it already has. The heavy note of sarcasm in that last statement. On Wednesday we've got first quarterly GDP revision for the EU area. That's expected to be confirmed at 0.2%. And PPI for May expected to come in at 0.1%. Then on Thursday main event we've got services PMIs for Italy, Spain, France and Germany. Again France is going to be the weakest link there. So again we need to be watching for further divergence between the German economies and the French economies. That's certainly going to raise tensions between France and Germany going forward. And retail sales for May. We've got a very disappointing German retail sales number this morning. We're expecting a big jump in that number given the fact that consumer confidence in Germany continues to rise at a significantly increased rate. Yet what we got was actually a minus 0.6 reading for the month of May. And yet German consumer confidence has been the highest levels it has been for five or six years. So again you've got confusing data points pointing to completely different outcomes with respect to the German economic recovery. Are we getting a slow down? We're certainly seeing some evidence that businesses are losing confidence. The IFO survey came in at a seven month low last week. We've got ZDW survey again showing signs of weakness. And we've also got PMIs at last week which came in slightly below expectations, albeit still in the mid 50s. But early signs that maybe the German economy is starting to lose a little bit of steam. So for the hearing now let's look at euro sterling and look at what the key levels are on that particular market. And we are starting to see what I would call a little bit of a bottoming out in that particular market. We've been in decline since March. The March highs around about 83, 90, 84. We found a bit of a base around 79, 60. We are starting to wedge a little bit higher. But we haven't as yet been able to take out this 80, 35 level that we saw in the middle of last week. And I think that's the next resistance level on euro sterling. Again I've outlined my comments on that in the chart forums on that particular currency pair on the right hand side here. Very, very easy to access that. Post your own comments even. And by all means, if you have any questions that you want to address to me, please feel free to ping them across using the chat feature which is available to you on the WebEx platform in front of you. So we culminate the weeks events in Europe with the ECB rate meeting. No real policy changes expected there. I think it's really going to be okay. How does Mr. Draghi sound in his press conference? Is he going to be overly dovish? Is he going to change his message to any significant extent from what he said in June? And obviously one of the key questions I think he will get asked is how effective does he think the events of or the policy changes that he made in June have been in the past month or so? I would argue that there's little evidence that they've had any effect at the moment. And if I'm honest, I don't think they'll have an effect over one month or two months or three months or four months. It's going to be very, very difficult for the ECB to do much more without a certain degree of input from politicians. And really now it's a question of what can politicians do to try and institute reforms to their economies to try and basically kick-start the European economy on an upward path. At the moment the signs don't look particularly promising. So looking at euro sterling we've got a little bit of support around about 79.80 on the downside but on the top side we've got 80.35. I think there's a good chance we could get a little bit of a push up to this upper trend line here but overall the downtrend remains intact simply because of the fact that monetary policy for the ECB and the Bank of England remain on completely divergent pathways and they're likely to remain that way for quite some time to come but as with anything with the euro sterling it sometimes short squeezes you when you don't expect it to do that so certainly worth keeping an eye on that. So that neatly brings me on to the UK. It's also a fairly big week for the UK. We've had an awful lot of what I would call mixed smoke signals from the Bank of England. Mark Carney was in compared to an unreliable boyfriend blowing hot and cold and sending out mixed signals and I suppose that's one word for it but overall the message hasn't changed. The likelihood is we will probably see an interest rate hike in the UK sometime over the next 12 months. It's really about the timing and nothing more than that. So let's look at the pound. Now those of you who will have watched my videos or will have listened to my ramblings on YouTube will know that I've been looking at the pound against the dollar for quite some time and I've been identifying this 170 level as a key, key level going forward. We look as if we're going to get a monthly close above 170, 170.50. Let's look at how important this 170, 170.50 level is because no matter how often I mention this I still think that it really needs mentioning and bearing out. If we change this to a monthly chart we look at the 2005 lows. We draw a trend line from the draw tools button here. Horizontal support and resistance line right through there. 170.50 we can see straight away how absolutely really important that level. 170.50 is on this particular chart. Blow it out here. We can see once again I'm going to put it on the chart forum so you guys can have a quick look at it. So you can see the line that I've drawn. 170.50 key resistance on a monthly close. I'm going to post that there so it appears in the chart forum box on the market post section of the website and that should appear up there in the course of the next couple of minutes. But as we can see from this chart here, ladies and gentlemen, we can see that when we've broken through this 170.50 we've carried on going and then some. So I think if we can close above 170.50 then I think there's a good chance we could get all the way back to 173.5. Why do I think that? Quite simply let's do the Fibonacci retracement from the 2007 highs to those lows that we saw there in 2008, 2009. And 173.35 is the 50% retracement of that entire down move. Now it's probably going to be within 10 or 20 points of that. I would certainly be looking for around about 173.30, 173.40. But certainly if we can sustain a move above this 170 level as we move into July then the chips are starting to fall in favour of further sterling gains. I would only revise my view on that if we fell back below 169.10 on a short-term basis. But here and now even though the pound is struggling and trading sideways between 169.10 and 170.50 I would only revise my review of a lower pound if we drop below this level here which I'm going to draw a little arrow under right there. That's the level that I'm looking at to maintain further sterling gains going forward. So let's move on to Dolly Yen because I think Dolly Yen could actually get quite interesting this week given we've got non-farm payrolls on Friday. Now we've also made a key technical breakout on Dolly Yen. We've broken below the 200-day moving average and we've closed below it for the first time in a very, very long time. We have to go all the way back to 2012 for the last time we closed below the 200-day moving average. So we're not only below the 200-day moving average. We're also below the Sichi-Muku-Kumu cloud resistance level as well which currently comes in around about 101.80. So certainly keeping an eye on 101.80, keeping an eye on the 200-day moving average I think will slowly move lower towards the lows that we've seen this year which are around about 100.60. So for the here and now we look as if we're starting to trend lower. Certainly keep an eye out on US Treasury markets in that context and with this strong Yen, I think it's unlikely that we're going to see a strong rally in the Nikkei either. So looking at US Treasuries, the 10-year note yields are starting to look a little bit soft. While they remain soft, dolly yen will struggle to go higher and we're certainly seeing evidence of that at the moment. We still remain in an uptrend for Treasury prices. That's going to put downward pressure on Treasury yields and the likelihood is we could actually see a move back to this 127 level that we saw at the end of May. So to get an indication of what the yield comparison is with respect to those prices let's have a quick look at my Bloomberg chart which I'm just about to bring across right now. So here we go and it comes. So we can see once again 252, 250, the low is 2.4 at the end of May which correlates with those peaks that we saw in the price at the end of May and again we can see this downtrend here, downtrend in yields. For this downtrend in yields to come to an end we really need to break above this series of highs around about 2.65, 2.66% in the short to medium term and at the moment there is a concern about US inflation which at the moment appears to be being disregarded by the market and the Federal Reserve. I would caution against that but at the moment bond markets seem fairly indifferent to it and so do these prices as well. So it's certainly worth keeping an eye on that particular market, the US bond market and in that context certainly worth keeping an eye on tomorrow's economic data out of the US. We've got ISM manufacturing for June. That is expected to come in around about 55.5. Let's look at the key levels on the S&P 500 in that regard because I certainly think that's important as well. We've had a bit of a pullback. We've got resistance at the two peaks here around about 1969, 1970. So given the fact that we've got the employment report on Thursday I think it's highly unlikely we'll get much in the way of any strong movements one way or the other and I think it's more likely, though I'll probably get this one wrong, that we drift back towards this uptrend line here around about the 1940 area, the 1945 area over the course of the next few days because the Fed is still fully much in taper mode. We've had James Bullard who's actually not a voting member on the FOMC suggesting that rates could rise by the end of the first quarter of next year. Well that's not too different from the Bank of England but certainly yield differentials aren't reflecting that in the bond markets so again that's going to be very much data dependent in the context of that particular move. It would be very, very interesting to keep an eye out on the prices paid element of that ISM manufacturing number tomorrow. While we're expecting just a slight improvement on the main number from 55.4 to 55.5 I think there is a chance the market could react more to the prices paid component of that so those prices paid is expected to come in at 60 which is actually fairly high. It does suggest that maybe there could be an inflation problem starting to permeate through into the US economy. Certainly the CPI numbers appear to support that supposition and certainly the PCE numbers last Thursday appear to suggest that maybe pricing pressures are now starting to filter through into the supply chain. On Wednesday we've got the ADP employment report and that was very weak in May. It came in at 179. Everyone was expecting a 210 plus number for that. It came in at 179. We're expecting a number of 205 for that on Wednesday. Again that will basically be a fairly positive number. Then weekly jobless claims, non-farm payrolls on Thursday and the unemployment rate as well. The numbers that we're looking for on Thursday are 210 slightly down from the 217 in May, 210,000 new jobs and unemployment dropped quite sharply in May from 6.7% to 6.3%. Key question, will that drop be sustained? More importantly, what does the labour participation rate do? Does it stay at 35 yellow at 62.8? Those are the key levels to keep an eye out for. I'll just have a quick look at gold in that context because gold's actually been quite interesting over the past few weeks. It's been actually surprisingly resilient despite the fact that the Fed continues to taper but I would suggest that it's in a range. Certainly we can see from the candles, the daily candles in this particular chart that the market doesn't really know which way to send it. You've got long upper shadows, you've got long lower shadows. At the moment with the event risk with respect to Iraq, percolating away and simmering away underneath, there is certainly an appetite for gold. But at the moment it's finding support just above 1300 and it's finding resistance at 1,330. So at the moment we're in a little bit of a range. The oscillator is starting to roll over which suggests that maybe we could see further declines over the course of the next few trading sessions. That is more likely to be the case if we get a significant improvement in the US economic data over the course of the next day or so. More importantly, what's Brent doing? Well Brent after spiking higher is now starting to run out of a little bit of steam. It's starting to slip back which is obviously very good. We're quite pleased about that because it lessens the inflation risk of higher fuel prices. But we can certainly see that from the beginning of the year. If we look at where Brent was at the beginning of 2014 and where it is now, it's pretty much, it's up ever so slightly but not an awful lot. We can go back to the beginning of January and we can see from here, if we look at that there, 0.55% up on the course of the last six months. So that should be good overall for petrol prices at the pump. This is actually quite an interesting chart because if you compare that to WTI prices and this is why I think there's more of an inflation risk in the US than there is here in the UK is while Brent is only marginally higher, the pound is actually quite significantly higher from the beginning of this year. So it's gone from 165 to 170. So there's actually a slight deflationary risk here in the UK because the pound is stronger over the course of the last six months and Brent's hardly moved which essentially makes Brent prices when converted to sterling lower. On the other hand, if we look at where US prices, crude oil prices were at the beginning of the year and where they are now, they're 12% higher. Well that's quite a significant move higher in fuel prices which at the moment does appear to be starting to percolate through into the supply chain because if you look at US CPI, it's at 2.1%. UK inflation is at 1.5%. Everyone's talking about rate hikes here in the UK but no one's talking about rate hikes in the US and yet their inflation rate is 0.6% points above ours. So I think you can see the general thrust of what I'm saying is that I think markets in the US are underestimating the inflation risk in the US particularly when you actually look at energy prices and those crude prices there, 12% up on the year. The likelihood is we could start to see that filtered through into the supply chain over the course of the next five to six months. So it's certainly worth keeping an eye out for that. Okay, just before I wrap up just a quick reminder that the non-farm payrolls webinar this week is on Thursday starts at 1.15. We'll also be going over the ECB press conference. So you've got two major market events of the price of one on the webinar this week. You can sign up on the CMC Markets website under the education section for that particular webinar. Should be interesting, should be volatile and hopefully be able to make, certainly make available quite a few significant trading opportunities over the course of the afternoon. Before I sign off and put this up on YouTube, does anyone want to ask me any questions about anything that I haven't covered already? Go on, someone asked me about the Aussie. You know you want to. I'll cover it anyway because we've got a rate decision overnight from the RBA. Rates 2.5% currently, likely to remain unchanged. If we look at where the Aussie is now and where it's been, there's a big, big top at 94.60. So that big top at 94.60 really needs to be taken out for us to go higher. If we drop below this trend line support, which is currently around 93.50, we could well see further declines towards the 200-day moving average. But overall, I think the likelihood is that we continue to remain in this uptrend from this inverse head and shoulders here. While we remain in this uptrend, there's a good chance we could take out this resistance and head towards this price target just above the 96 area. But initially a break of 94.60, 50.60 should push us up to 95.20 and then towards 95.80. Certainly worth keeping an eye on the Aussie dollar at these levels at the moment. Okay, ladies and gentlemen, well, if that's it for this week, please, please join me on Thursday. Otherwise, I will see you all again same time, same place next week.