 Good afternoon ladies and gents and welcome to this week's Monday market webinar on the 24th of March 2014 and once again we're looking at equity markets under a little bit of pressure today but really not threatening to do too much at the moment. On Friday we saw an intraday record high for the S&P 500 on the day trading charts, but on the actual futures charts we were actually unable to take out the highs that we saw earlier this year around about 1887 as can be seen from this chart on the screen right now. So we can see straight away that there's a significant amount of resistance around about that 1885, 1886 area. The S&P continues to outperform the rest of the global markets particularly the European markets which I think continue to find upside progress difficult to sustain. I still can't get away from the overall feeling that in general markets are being very complacent about the geopolitical risks as well as I think the longer term effects that these geopolitical risks will have on long term growth expectations. If we look at what's going on in Turkey for instance and the ban on Twitter there, the fact that the Turkish Prime Minister is looking to crack down on dissent, they've also recently doubled their interest rates as well. So I think if you're looking at emerging markets and you're looking at potential growth expectations, I think looking at the S&P 500 you've got to ask yourself how much further actually can the S&P go. Unfortunately trying to pick the top on the S&P has been a rather difficult past time as can be seen from the chart in front of you. I think at the moment there's a certain degree of support building up around about 1835. We could I think on the margins maybe push to 1900 but overall in the wake of last weeks, I think rather surprisingly hawkish interpretation of the last Fed meeting and Janet Yellen's rather indelicate aside about the prospects of maybe future rate rises. I think there could be an expectation that maybe US rates may rise sooner rather than later. It's certainly nothing unusual from what we've been hearing from the Bank of England in the past three or four weeks. We've heard from a number of policy makers from the Bank of England who've warned that consumers in particular need to be prepared for a rise in interest rate. So I certainly don't think what Janet Yellen said was altogether overly surprising. I just think that the markets were expecting a much more dovish message than the one they subsequently got. And I think more than anything I think that can be that particularly hawkish interpretation can be reflected in the bond markets. If we look at the US 10 year note, yields are starting to creep back up again. We are now starting to push lower on the prices. At the moment we're currently trying to push below this key support level here around about the 12460 area. But I think what was actually quite interesting is that even though for the past few months long-term rates have been edging higher, short-term rates in the form of two-year rates have actually been lagging quite some way behind the five and 10-year rates, well that actually changed somewhat at the end of last week. And even though when we look at the five-year and 10-year price we can see here that prices remain below the 200 week moving average on the 10-year and the five-year, which means that essentially on yields, they're above the yield charts. The yield charts are actually above the 200 week moving average. On the two-year, they actually haven't actually done that yet. Let's look at my Bloomberg chart here. For the first time since 2007, US two-year yields are trading well above their 200 week moving average. Now, I know about you, but that is potentially fairly bullish for US rates. So what does that essentially mean for the US dollar? Because everyone has been talking the dollar up for the last six months and everyone has really been getting slowly and slowly squeezed, particularly against the euro and particularly against the pound. Against the yen, it's probably not been such a factor because dollar yen generally tends to move in lockstep with five and 10-year yields and five and 10-year yields have generally been pushing towards the upper end of expectations and every pullback in five or 10-year yields has been signaled by a weakness in dollar yen. You've also got a factor in the prospect of further monetary easing from the Bank of Japan, so that is going to limit any upside in the yen to a certain extent. So what does this move higher in two-year yields mean? Well, it really begs the question as to whether or not we've seen the high in euro-dollar. And certainly if we look at the candlestick charts on a variety of different indicators, we can see on the dollar index here that we've had a bullish engulfing week on the weekly chart for the dollar index. And that is potentially bullish. What we really want to see, I think, on the dollar index is a break above this series of highs over the past three or four weeks here. And that really equates to around about $137.5 on euro-dollar, which is around about the lows of the last couple of weeks. So let's move that out of the way and let's look at euro-dollar because what I want to see is a confirmation from the euro-dollar of that bullish engulfing week on the dollar index because euro-dollar makes up around about 57% of the dollar index. So we can see straight away from this chart here, we've had a strong down move. Let's look at the weekly candle and that suggests to me a bearish engulfing week on the dollar index. Now, it's only on the dollar index, the euro-dollar. Now we did see one here. It didn't last very long. We came lower. We saw one here. We came lower. We saw one here. We came lower. So that does seem to suggest that maybe we could well see some short-term weakness in euro-dollar. You can certainly see that from my analysis on the chart that I put on the chart message with the chart forums here. We've also got trend line support coming in from the twin lows around about 1.27.5. So again, that is a key support level around about 1.36.5. Now at the moment, any rallies in euro-dollar have been restricted to around about 1.38.30. I'm still of the opinion that euro-dollar should drift lower while we remain below 1.38.5. There or thereabouts, 1.38.5 we could get pullbacks to in or around that level. At the moment, we're a little bit sticky around about 1.37.50. I would ideally like to see a move below 1.37.50.60 to kick on towards that trend line that I've drawn on the weekly charts on that chart there. Let's drill down a little bit further into that and look at the 4-hour chart. So the 4-hour chart, we're finding support on this 200 event moving average on the 4-hour chart, which we found support on on a fairly regular basis over the course of the past few weeks. So we can see this moving average here is acted as a fair degree of support, as well as obviously this low that we saw in the middle of last week. We'll look at that level there. It's around about 1.37.49, 1.37.50. So if you're looking at euro-dollar and you're looking to play it from the long side, then any stop losses are likely to be below 1.37.45. So I think if 1.37.45 gets triggered, then we could well see further stop loss selling to around about these lows around about 1.37.05. So in the short to medium term, based on the analysis of the dollar index and euro-dollar, there is a distinct possibility that we may have seen the highs in euro-dollar. Let's see how that equates across to other dollar pairs, because we've also seen some evidence that maybe we've seen a top in the Australian dollar as well. Similar sort of setup, we've got a bearish engulfing day in the middle of last week. We've also got the 200-day moving average. Now let's look at what happened in October when we got a bearish engulfing day against the 200-day moving average. We did initially try and push through it, but we weren't able to sustain a move above it. We've got a similar sort of scenario playing out here. So once again, we are seeing a little bit of a bid tone to the Australian dollar at the moment, which is somewhat surprising given the poor Chinese manufacturing PMI that we saw out this morning. It's at an eight-month low. But I think there is an expectation, whether or not that expectation is mistaken, that China may be inclined to ease monetary policy to try and mitigate the effects of a slowing Chinese economy and difficult credit conditions within the Chinese banking sector. I think that may be slightly overly optimistic, but having said that, Aussie is trying to find some support from that. If we break above the 200-day moving average and we break above the highs that we saw last week, then obviously all bets are off and we could well go for a little bit of a run to the topside to around about 93 or 94. But while we're below the highs of last week and the 200-day moving average, then the likelihood is that we could well drift lower. Now, there is something else here that you could well be keeping an eye on, unless it's horizontal line across here, and that could well be an inverse head and shoulders. You've got the left shoulder here, you've got the head here, and you've got the right shoulder here. Now, it is irregular, but it's certainly worth something to keep an eye on, because I think if you do break above this 91-80 level, then we could get a whole load of stops get fired off on a break above the 200-day moving average and that series of highs through there, because essentially I think that would equate to a potential inverse head and shoulders and a move significantly higher of about 300 or 400 points to around about the 95 level. So that's a very interesting chart. It's certainly worth keeping an eye on. What's so interesting is when we look at the Kiwi chart and the New Zealand Central Bank raised rates last week, we had a knee jerk reaction higher on the Kiwi. But once again, there should be a bearish engulfing week there, or a bearish engulfing day there. For some reason, that chart is not showing. Oh, there it is. If at first you don't succeed, try again. So there it is. So you have a bearish engulfing day there. That seems to suggest that maybe any further rate hikes are probably priced in, or possibly even the fact that maybe we won't see another one for a while. And we could well see a strengthening of the US dollar against the New Zealand dollar over the course of the next few trading sessions as well. So what's the trigger point for a move lower on there? Well, looking at the lows of the past few days, you've got to think that maybe round about the 85 area could well trigger a little bit of a sell-off back to around about the 84 cents level, which equates to these series of highs through January and February. So January and February highs, we could well see a test back towards those levels on a break below 85. So what does that mean for gold? Because even though there's rising geopolitical tensions, I don't think those geopolitical tensions are going to go anywhere soon. And generally what happens is markets generally tend to ignore them until they start to escalate or flare up somewhere else. At the moment, markets generally tend to ignore what's going on in Ukraine. I think there's obviously, there is an awful lot of political posturing going on surrounding sanctions or otherwise. I think at the moment the story could well ebb away unless of course President Putin decides to push his luck and push in towards eastern Ukraine or even towards Moldova. Then that's a real test of what could well happen next with respect to further sanctions. But what does that mean for gold? I think gold suffered a big, big sell-off last week on the back of those comments from Janet Yellen about the prospects of potential further rate hikes. We got a bearish engulfing day, had three successive down days. We're now looking to threaten to break below these series of lows and last week's lows around about the 1320 area. Around 1320 there's a good area of support. What is actually quite interesting here is we've actually got a golden cross moving average crossover of the 50 and the 200 day moving average. Even though we've got a bit of a negative bias at the moment and there is certainly potential for gold to come all the way back to around about the 1300 area, unless we close below the 50 and the 200 day moving average, then I think it's too early to write gold off. There's an awful lot of chatter today about the fact that bearish bets on gold are starting to increase once again. And I certainly don't rule out further declines in the gold price over the next few sessions based on this chart pattern here. But I think unless or until we get back below the 200 day and the 50 day moving average, then I would be very reluctant to aggressively go short of gold simply because of the scope for further geopolitical flare ups over the course of the next few days and the next few weeks. So even though this uptrend looks as if it could well be coming to end, that doesn't necessarily mean that gold is going to fall off a cliff. I think we're still some way away from that effort. So around about 1320, 1310 could find a little bit of buying interest. If we drop below the 1300 level, then obviously it's time for a reassessment of that. Looking towards oil prices, oil prices are also looking a little bit, how shall we say, soft. Brent in particular is very, very close to a very, very key trend line support. I've been looking at this chart for quite some weeks now. And I've been looking at this long-term trend line for, probably since the beginning or the middle of last year, we are slowly heading towards it and we're now right on it. It's around about 105, 106. We're just above it at the moment. Let's just get shot of that there because it's making it a little bit cluttered. It's also the 200 week moving average. So since 2012, actually well before 2012, 2010, oil prices, Brent oil prices have been above their 200 week moving average. If we break below that, then again, once more, we could well be looking at potential deflationary pressures as oil prices start to drift down towards the lowest levels that we saw around about the end of October and the beginning of November just above 102, 103. But overall, oil prices aren't really doing that much. They've been trading sideways for the past six to nine months and I think the likelihood is they will continue to do the same. And as such, I think the bias remains slightly to the downside on Brent crude prices. Similar sort of thing I think with WTI prices. It's a similar sort of setup. We've seen a strong rebound from the beginning of 2014 but that's largely been on the results of the very, very cold weather that we've seen in the U.S. over the past four to five weeks. In fact, since the beginning of the year. That should start to diminish in the short to medium term. The weather should start to warm up. Consumption should go down. Yes, the U.S. economy may be improving ever so slightly. But I think if you've got equity markets, if equity markets do start to show any signs of weakness on the top side and there's plenty of evidence to suggest that they might do that, then we could well see a bit of a slackening off in the U.S. oil price back towards the lows that we saw in the middle of this month around about $98 a barrel. At the moment we're at the top end of that. As long as we stay below $102, then I think the buyer remains to the downside in U.S. crude prices. Now we've talked an awful lot about China over the past week or so. And in particular, the copper price. The copper price is starting to look, well has been looking a little bit weak for quite some time now. It's at the bottom end of its recent trading range. We saw the breakout at the beginning of March. Very sharp move lower. We've been consolidating in a fairly broad sideways pattern at around between $292 and $302. Now the question that I'm asking myself at the moment, is this a flag that's forming on the weekly charts? If we look at the weekly chart here, we can see that this candlestick in particular here is a doji. The market is extremely undecided about where the copper price is going to go to next. We've hit multi-month lows. We've traded below the lows that we saw in 2011. But below that there's a good area of support around between $270 and $275. So even if we do consolidate and move lower, I think the downside should be fairly limited to around about $270 which was the lows that we saw in 2010. But it's certainly evidence to suggest that maybe over the course of the next couple of weeks we could get sideways consolidation before another sharp move lower. There's been an awful lot of chatter in the press about copper liquidations by Chinese corporations who use copper as collateral and rising loan defaults could trigger margin calls and a sell-off of that collateral and a push-lower in the copper price. So I think the trigger point for a further move lower in copper is really going to be around about the lows that we saw in the middle of last week and that's around about $295. So I think a move below $295 in copper could well trigger further losses towards the downside. The only way that I would revise that would be if we move back above the $3.10 mark. And I know there has been some speculation about Chinese stimulus. I still think that the Chinese authorities are going to be very, very limited in what they can do from a stimulus point of view. Certainly there's been talk about that they may reduce the reserve requirement ratios of their banks. Given that they want their banks to be responsible about their lending, then I think that's a very high strategy for them to do. The last thing you want to do if you want banks to be more responsible about their lending practices and you're worried about the amount of bad debt on the balance sheets is to relax the reserve requirement ratios. So there has been some talk about that. I would be surprised if the People's Bank of China does that. I think there's probably more potential for them to maybe pump a little bit more liquidity in. But certainly I think it's unlikely that Chinese authorities will allow their banks to relax those reserve requirements. We'll see. But as I say, I would be very surprised if they did. Let's move back to currencies again. Looking at euro sterling, euro sterling is actually fairly resilient. We broke out to the top side, but we are continuing to struggle anywhere near the 84 level. And to be honest, I'm really struggling to see how or why euro sterling could go higher. We saw a bit of a move higher in the middle of this month. But we still remain well below the 200-day moving average. While we remain below 84, I think the bias remains towards a sell-the-rally mentality in euro sterling. What I'm looking for now is a move below 83.20, which is essentially this series of lows through here. On the Thursday the 20th of March, first put in a low of around about 83.28. There's also lows of around about 83.30 and 83.25 on these days here. So I think a move back below 83.20 is likely to see further losses in euro sterling. And a move back to around about the 82.70-80 area. And again, we've got a similar sort of setup on the daily candlesticks, a bearish engulfing day on the dailies. As long as we don't take out these twin highs here, which is around about the 84 level, then again, I think the bias for euro sterling remains for a move lower. But we need to push below the 83.20. Also looking on the slow stochastic on the daily chart, that is starting to turn negative. What I would like to see furthermore is a break below this oversold area of 80 for both lines. We've got the crossover, but what I want to see now is for it to start to drift lower and drag the rest of the price down with it. What does that mean for Dolly Yen? We talked about US yields and Dolly Yen. We're certainly seeing some evidence of yields starting to tick higher on US treasuries, not only on the long end, but also on the short end. On the four-hour chart on Dolly Yen, it does look a little bit busy. So I think it's probably easier if I just break that down and reconstruct it from scratch. We can see straight away here that we've been trading in a broad range above the 200-day moving average. We can see where the support levels are on Dolly Yen. Around about 101.20 on the downside. Let's just break that down. Here we go here. So 101.20 on the downside. Around about 102.80 on the top side. I missed that slightly. Let's just redraw that. There we go. Steady hand. There we go. 102.80. So for me, I think if you're going to be looking to test the top side in Dolly Yen, we need to really take out this trend line resistance from the highs here. So above 102.80 and then above 103.20 to retarget and move back to the highs that we saw at the beginning of this year. Now, just to recap of the highs this year, 105.50, why was that significant? Well, it was significant because it was a key Fibonacci retracement level of the entire down move from the highs that we saw in 2007 over here. 2007, 77.50, 61.8% retracement of that entire down move was 105.50. So 105.50 is a big, big level on Dolly Yen. So in the short to medium term, when we drill down into it, at the moment we've got 102.80, which is acting as a bit of a barrier. We're trading in a bit of a range at the moment between 101.20 and 102.80. As things stand at the moment, we're really in no man's land where Dolly Yen is concerned and it's certainly borne out by this 4-hour chart, which we can now look at to give you sort of a big picture look at it. As you can see, you've got the lows around about 101.20. Here, here, and here. And then you've got the peaks around about 102.90. Apart from a brief spike above that at the beginning of March, we've been pretty much stuck in a range on that between 102.80 and 101.20. And at the moment, looking at the oscillators on the 4-hour chart, there doesn't appear to be any sort of clue as to whether or not we're going to get a break out of that. One thing I would say is that the cloud support is starting to compress, but I still think there's potential for a little bit more sideways consolidation over the next couple of days before we get a break higher or we get a break lower. So at the moment with Dolly Yen, it's looking pretty uninspiring, but certainly in the context of euro, dollar and cable, I think there's potential for a move lower. Now let's look at the pound because it's a big week for the pound. This week we've got a whole host of data out starting tomorrow. CPI data for February. And again, I think we're looking for a slightly weaker reading on UK CPI tomorrow. February is expected to decline from an annualised 1.9% to 1.7%. Last week we saw average earnings rise to 1.3%. So the gap between average earnings and inflation is continuing to close and that could actually in the short to medium term be actually quite negative for sterling. We can certainly see that borne out by this particular chart here. We do not have a bearish candle on the weekly chart in the same way that we do on euro, dollar. And that is why I'm slightly more bearish in euro sterling than I am on sterling. I think there's potential for further weakness on sterling as you can see from this particular trendline break here. But you can see that we've got a good area of support building up around about 162, 20, 162, 15. So I think the downside on sterling is probably a lot more limited than it is, say, for example, something like euro, dollar, which I certainly think there's more potential for further weakness given the fact that the next move on interest rates for euro, dollar is likely to be down, whereas for the Bank of England it's likely to be in the opposite direction. Also we've got retail prices tomorrow. It's going to be a slight weakening or expecting a slight weakening there on the annualised measure from 2.8% to 2.6%. More importantly than that, PPI, factory gate prices are continuing to show a significant amount of weakness. And I think that that is also important because what it does is it heralds further weakness, further down the product cycle or the inflation cycle. So what you'll have is if you've got weaker inflation in February and you've got weaker inflation in factory gate prices, you're likely to get weaker inflation in March, April, May and June. And as long as average earnings continue to push higher, that should actually, in the short to medium term, be actually fairly positive for growth in Q1 and Q2. And certainly the PMI data that we've seen so far in Q1 and Q2 has been fairly positive for the UK economy. Last week we saw the budget. It's been fairly well received. On the face of it, guilt yields continue to be slightly above US yields. Again, that's going to be fairly positive for the pound. We've got retail sales on Thursday for February. We saw a big decline in January for retail sales, 1.5% decline. But that was against the 2.6% rise that we saw in December. So February, we're expecting to see a bit of a rebound in retail sales around about a rise of 0.5%. That should in itself see the annualized figure for retail sales drop from 4.3% year on year to 2.4%. That's still pretty good when you consider that at the end of 2012, the beginning in 2013, the year on year rate for retail sales was 0.2%. So in 12 months, we've got from 0.2% to 2.4%. So again, it's about context. Here is a sharp drop, but it's still in the context of the annual figure. It's still fairly positive. And on Friday, UK Q4 GDP final revision, not expecting any surprises there. It's expected to be confirmed at 0.7% Q4. That's 2.7% year on year. I'll be keeping a particular eye out for an increase in business investment. Again, we're expecting that to come in around about 2.4%. But I think of all the GDP numbers to keep an eye out for over the next few months, it's going to be the business investment figure for Q1 and Q2 that we're going to be looking for a significant improvement on to suggest whether or not the UK economic recovery that we've been seeing thus far starts to steer away from consumption-based and the services sector and starts to build on in terms of the manufacturing sector and the construction sector because the manufacturing sectors and construction sectors still remain below their 2007-2008 peaks unlike the services sector which has recovered all of the lost ground that we saw. It lose in the subsequent crash of 2008 and 2009. So I think there's limited downside in the pound against the dollar. I think slightly firmer US rates could actually limit the upside on the pound. But at the same time, I think a recovery in the UK economy could well limit the downside as well. So I think the likelihood is we could well see a top-in around about 167 and a very slow drift back towards around about 162.5 on the wide of it. What else have we got this week? We've got weekly jobless claims out of the US on Thursday. They continue to come in around about 320, 325. That's the four-week average. We're not expecting any changes there. We've got US consumer confidence tomorrow for March. Slight improvement expected there from 78.1 to 78.6. We've got US durable goods on Wednesday. We saw a 1% decline in January, expecting to see a bit of a bounce back in February of around about 1%. And US GDP, final revision on Thursday, Q4. That's expected to be revised up ever so slightly from 2.4 to 2.7. But again, that's very much a rear-view mirror stuff. I think the overall concern at the moment with respect to the US economy is the Q1 performance. And certainly, I think there is an expectation that there is going to be a bit of a soft patch in Q1. The US Fed is obviously looking past that. And really, it's a question of how the data comes in going forward beyond that. Okay, so that's it for this week, ladies and gentlemen. Once again, thank you very much for your attention. We do have a traders workshop later this week on Friday here in the office in London. I'm out in Bristol on Thursday, hosting a traders event there. You can sign up for both events on the website under the education section. So please feel free to sign up for one or other of those. Otherwise, I'd like to thank you for your attention this week. And I either look forward to seeing you on Thursday or you turning up on Friday. Otherwise, I will speak to you all again next Monday, same time, same place.