 Hello and welcome to CMC markets on Thursday the 19th of May in this quick market update And what a difference 24 hours makes because 24 hours ago I think market expectations of a Fed rate rise was certainly a lot less than they are this morning We've seen a significant rebound in the dollar on the back of Some very hawkish minutes from the most recent April meeting of the Federal Reserve Potential for a June rate rise, June was mentioned six times in the minutes last night And coming as those minutes did on the back of some fairly hawkish commentary from a number of Fed policy makers already this week Namely Robert Kaplan of the Dallas Fed, John Williams of the San Francisco Fed and Atlanta Feds Dennis Lockhart, sentiment has shifted somewhat towards the potential for a rate rise in June Shifted from 4% a week ago to 32% or nearly one third now And that shifted sentiment towards the dollar which had been on a bit of a downward track We've now seen significant rebound in the greenback and we've also seen a significant decline on from equity markets over the last 24 hours as well So what does that mean for cable, Euro sterling and more importantly equity markets in general Certainly there's a much more risk off sentiment prevailing markets at the moment And I think the complacency that had been afflicting markets with respect to a June rate rise appears to have been mitigated somewhat And maybe that's why Fed policy makers have been talking up the prospect of a rate rise in June They may not push rates higher in June but they wanted to shift the expectation in order that they can become more nuanced in their messaging when the June meeting comes around For me I think it's still unlikely the Fed will move in June but I think they wanted to move those rate expectations away from below 10% to significantly further towards 50% And I think that's more a case of why we've seen the shifting sentiment over the past few hours The fact is with a Brexit referendum coming up eight days later the Fed will need to be very confident that there won't be any significant market turmoil in the lead up to that vote And I don't really see how they can be completely confident about that So what does this mean for the pound against the dollar? Because we've actually seen the pound shrug off an awful lot of this dollar strength over the last 24 hours And a large part of that has been as a result of that poll that came out yesterday giving the remain camp a 15 point lead And it wasn't just more than one camp that posted a significant shift in voting intentions, it was two or three So we've seen cable rally for four days in a row, we are approaching the previous highs that we saw at the beginning of May And I think that's likely to remain a very key resistance level in the short to medium term If we look at the four hour chart we can see from here that after a brief period of consolidation after making those highs yesterday We've made a new high today on the back of those retail sales numbers which came out much better than expected A decent March revision and a decent number in April so consumers don't appear to be holding back with respect to their spending patterns ahead of the June referendum Despite an awful lot of the scaremongering that's been going on in the press So the key levels I think for me on the pound against the dollar are just below 146 at 145.80 The big question I think here around this particular price pattern here is whether or not this is a little bit of a flag or a pennant Signalling a move higher, I would only dismiss that pattern if we dropped significantly below the lows of this particular candle here Which currently comes in at 145.60 So looking on the downside to support around about 145.60, 145.70 Looking for a retest of this resistance level here just above 147 at 147.20, 147.30 The positive effects of that poll have also fed through into euro sterling which we looked at yesterday Again that does appear to suggest we're probably going to see further sterling gains here After we broke below the neckline of that head and shoulders that I talked about yesterday We can arrive at a price target with respect to this breakout Now this pattern has formed over the last two or three months so any move lower could take at least two or three weeks to unfold But basically we measure the distance from the head here to the neckline and then from the breakout point Which ultimately brings us down to around about the 200 day moving average as a minimum price objective over the course of the next few weeks Moving on to equity markets is very very important Given the ranges that we've been in that we keep an eye on this very key support level on the FTSE 100 Around about the 60.60 area Potential head and shoulders there, keep an eye on that And there's a similar sort of pattern also on the S&P 500 Talked about that at length in previous videos Right across here that payrolls, non-farm payrolls low there Keep an eye on that around about 20.30 So that's it for today Thanks very much for listening. This is Michael Houston talking to you from CMC Markets