 Okay, very good morning Thursday 11th of July. I hope everyone is is doing well a quick overview What we're gonna cover in the session this morning gonna have a look obviously in the aftermath of drone power the Fed minutes What exactly happened and how did the charts look this morning and a couple of thoughts and insights into that matter And what the Fed are gonna do in the future We're also gonna have a look at well a number of different things actually related to oil from further tensions Brewing in the in the Gulf with Iran specifically, but also a developing weather pattern Happening with an anticipated storm to hit the Gulf of Mexico. I believe there was quite a few headlines And I was off the desk yesterday, but a few things I can update you on on that matter And WTI crude is seen a little higher as well this morning about 40 cents Then we can have a look at the the calendar ahead. Remember what I was saying yesterday ahead of power speaking It's not just your own power. It's not just the minutes. It's also US CPI So another critical kind of component that the central bankers at the Federal Reserve will be looking at in order to make The best possible decision going forward But importantly for us giving hopefully more clarity about the aggressiveness or not of future rate cuts So quick overview of the charts this morning very much kind of the dust settling after what was a particularly Busy day yesterday in a dovish sense. So the dollar depreciating as to yields moving lower And consequently equities higher on the basis of the fact that the Fed are going to continue to lend support to the global economy One of the big comments I thought jumped out initially not only about the deterioration that power explicitly said to the House Financial Services Committee about the global economy Kind of softening but weak inflation They said would be more persistent than they currently anticipated and that's kind of being the one sticking point where you remember a few months ago the Fed were quite Quite persistent in this idea of transient Conditions for inflation and that actually any weakness was only going to be temporary in nature But now this is kind of an admission if you like of the fact that weak inflation is more persistent than they originally thought and as such you know triggering, you know that very Violent move at the time equities moving higher gold popping Tea notes to the upside. So kind of a classic monetary policy play in the response to further support from the central bank. So in this case a Non-classical economic move By this what I mean is stocks and bonds rallying at the same time on the back of this headline So on that point, let's kick things off and discuss a few things As to where we go from here So this is the kind of headlines you're reading this morning during power flagging rate cut Global chill outweighs good US news So the good news obviously is in reference to the jobs report the non-farm payrolls that we had at the end of last week Which on the headline figure certainly exceeded expectations by a large degree, but on the balance And trade is just one of the growing risks to the world economies and the ongoing trade war But also the softness in other elements of the US economy and inflation being one of those as we just mentioned The other thing though was that we had the Fed minutes last night Now the Fed minutes show many saw a stronger rate cut case And if I jump to this screen here, I know it's a bit small So let me give you the the overview This was some of the main points that came out of the minutes last night Uncertainties risks regarding global outlook. So trade war being mentioned a decline in business confidence The spread between the 10-year and three months treasury yields have turned negative the continued shortfall in inflation Risks a softening of inflation expectations Down revisions of estimates for the long-run normal rate of unemployment So there's there's plenty of ammunition here to support the argument that given the current state of play the central bank should Be easing at this point. I don't think that was really debatable I really don't think that there was any chance that July was going to be taken off the table Given the market pricing of a hundred percent that that was going to occur That would be a radical miscalculation or miscommunication on the Fed's behalf So they're kind of going as you'd expect at that point, but this was quite interesting and this was something that Eddie who Works to amplify he was he was messaging me at 11 p.m. on a Wednesday night I think Eddie you should get a social life Rather than messaging me on what's that about research reports on the AI Model of Nordia Bank research team and What this is so let me just give you a quick summary here. So basically what Nordia have is a Algorithm that basically reads the words of every Fed minutes And it basically assigns it kind of like a scoring system But it reads all of the words and it generates a kind of composite scoring And it's read all of the Fed minutes going back historically for decades And what happened was That using this technology that signal in Nordia's Algorithm has punched out that the minutes have taken a big enough material shift that it's giving the most dovish sentiment scoring since The financial crisis basically so you can see here you had the dot-com bubble and When this this Fed sentiment scoring hit its overall all-time low here on this graphic The financial crisis got very close to that and the shift that we've seen For a month to month to the last minutes from the mid-June ones we saw last night apparently now are indicating the most Dovish sentiment that they've seen since the financial crisis opening up, of course a lot of debate of Is 50 basis points still on the table for the Fed and I guess the best thing to look at would be well What is the markets? Expecting let the federal funds futures tell you that rather than guess and them and the the calculated Probability of a 50 basis point rate cut remember before Powell spoke yesterday The 50 basis point was kind of seeing some slight fluctuations, but more broadly speaking was basically 23% it's now 31% so there is now a certainly a real prospect Potentially 50 still being on the table. I must admit that myself Again, I'm gonna sound quite central banking, but dependent on incoming data and information Unless something changes. I don't think that they would do that my base case Thinking here is that very different from this period here and this period here Is that interest rates were well over double digits in this period and interest rates prior to the financial crisis? Were north of 5% interest rates now or at 2 and a half so for me I don't think the Fed will want to To utilize that much ammunition so much up front in advance of time I do get the point that maybe they want to send a signal But I think even that signal is difficult to manage because if you go 50 I think the market almost it's a counterintuitive reaction by the market panics and all of a sudden now You're chasing your tail having to deliver more and more easing because the market think well if the Fed are panicking What are they panicking about there must be something bad looming on the horizon? So personally, I think no no 50 for end of July not unless there's a Massive miss in the inflation number later on today And unless there's another big episode of fallout in the trade war situation between now and July 31st That's how I see things for the moment. Obviously subject to change So again, that's kind of a summary of where we're at on the Fed side So As as per the Asia Pacific session very much taking on the baton from where we finished on wall street And this morning, I think we're kind of holding on to some of that move But really it's interested to see now, you know, where do we go from from here now that we've gone and pushed back up to near record levels in In us indices, you know, is this enough to really push on again? Or are we still going to see that kind of fade from that initial that initial push up now? We know the latest status from the Fed Okay, other things I want to discuss As I said, Sam as usual will look over the charts in more detail. So I'm just covering the news But this is one of the big headlines that a lot of the media or financial press are covering this morning Um, British navy was forced to intervene to stop Iran blocking a commercial oil tanker This is from BP on its way through the Persian Gulf in an escalation of tensions between the two countries. So there was a Cargo vessel carrying as much as one million barrels of oil. Apparently it was being followed by um, a military ship of the united kingdom, which then had to kind of put out Threats to say to these Iranian vessels to back off But the whole point here is that although nothing actually physically So much happened It's just increasing risks in the straits of hummus, which we know is such a strategically important choke point For the seaborne going traffic of oil and so, yeah This is just another Sign that tensions around Iran definitely have not gone away. Remember about a week ago I was talking about how people were so g20 focused so fed focused Iran have kind of dropped off the map As far as the hierarchy of news and the press coverage, however, this is right back in investors minds right now So definitely we're keeping an iron oil going forward on the back of this interestingly But I would say unsurprisingly Iran's president Rahani has said the uk will face consequences for seizing the iranian tanker Describing operation is very cheap wrong and a mistake. This is very I guess classic rhetoric from the Iranian state Given how they would normally as well Comment on the us and they have done in some of the recent episodes of those vessel attacks and drone Being shot down as well. So again still being fairly inflammatory though with these comments So a situation worth keeping an eye on and just to boot If you think about all the major players in this issue Trump Of course threatens new iran sanctions over the nuclear program Warning comes as us draws fire over world powers on their tyrant strategy. So yeah, definitely a hotbed of Potential issues that could quite rapidly flare up and cause a very meaningful and sharp reaction in oil So I would definitely be keeping an ear out on the on the score because we go through the day Not only that remember yesterday. You had a drawdown of what 9.4 9 9 million In the supply situation the regular DOE infantry. So you've got a drawdown. You've got tensions rising in the middle east and now We are in hurricane season. So hurricane season In the states typically kicks off in june But this is really the first one of any magnitude that we've seen develop in this year's season And so one thing to refresh your memories. That's very useful to use as a tracker for weather conditions This is the national hurricane center the nhc And what you can do on here is basically it picks up weather formations across basically What we're most concerned with here the Atlantic You can look at other things like central pacific and east northern pacific But if you look at the Atlantic, you can see here There's a potential tropical cyclone 2 that's been forming Now what the national hurricane center will be doing is using quite advanced and sophisticated satellite technology to pick up weather systems in their most Kind of infant state if you like weather patterns precipitation that could then potentially in future turn into a tropical Storm cyclone and then a hurricane going up the kind of the the ladder Now looking at a few other things if you actually click on these individual These x's where the where the pattern is. So this is why it's such a A meaningful weather system for crude traders because of the proximity of the the gulf of mexico Well, then here this is the The overview of what we're looking at A tropical depression expected to form on thursday Over the northern gulf of mexico and here's a nice breakdown of what we're looking for It gives you anticipated likely times of arrival But to make that much more visually or aesthetically pleasing Here's a much more clear map Where you can see the exact distinct time Forecast of when we're expecting landfall But remember with weather systems when it comes to trading commodity products Um, particularly this what we've seen with hurricane harvey hurricane urma Uh, this is very much a six Can be up to a six to ten day ahead weather looking procedure that these energy traders will Will do which is trying to pick things up and they will trade Basically well ahead of time based on the mapping of the forecast on the direction of the weather pattern So you can see here This is the gulf of mexico and this is the coastline which encompasses all of the major facilities That contribute to a large proportion of output out of this region To give you an idea the u.s. Department of interior bureau of safety and environmental enforcement said yesterday The gulf of mexico drillers have basically shut 32 of oil production and 18 of natural gas output here ahead of the storm So again As we map this whether the weather system intensifies the more ramification that could have Or could it change direction and not actually hit kind of right through the middle of louisiana Which is really the the sweet spot of the activity of oil and gas production within this region If it tails off and goes somewhere else, well that can have a A pricing out effect of the impact it can have So point being you need to be now mindful of this particular system going forward if you're trading crude oil All right, quick look at the the canada for today And then i'll hand you over to sam on the on the charts So as of this morning You've had a couple of european cpi numbers, but these are final prints. So they're not having any type of meaningful impact on price Going through the morning bank of england financial stability report 1030 That's not a market mover. That's more of just an update on proceedings so to speak So i wouldn't be looking for any trade on the pound on the back of that the one thing that could be more interesting though Is the ecb minutes Just given the general status quo of much of central banking at the moment erring on the side of caution And inevitably then leading to becoming increasingly dovish. I think the ecb minutes could be particularly interesting So do keep an eye out for that at 12 30 then fed pal this time delivers his semi annual testimony to the senate But this is nearly always A copy-paste repeat of what he said to the house yesterday I would be expecting that to be very much the same case And so i wouldn't be looking for any type of similar type of reactions what we had yesterday But it does have a q&a session with the politicians this time of the senate However, I would not again look for too much as i remember From yesterday much of what the politicians were really asking pal about it was about the new cryptocurrency That facebook has and his thoughts on that so really not important for the assets traditional assets that we're trading The biggest probably event is going to be uscpi So uscpi today expected at 1.6 percent. So a Decline from 1.8 previously says definitely This is the reasons why the fed are seeing weaker flation more persistent You know the weaker this number is today We've got a range of 1.5 if it comes in us inflation down at 1.4 1.3 Then that's only going to further fuel the type of moves that we saw yesterday And will increase the prospect that that 50 basis point option will probably start rising from 31 up to 35 up to 40 percent Which definitely makes things, you know, definitely more difficult for the fed Do we have to hear them communicate further to clarify whether that is truly an option? Because the fed will be going into their blackout period in the coming days that period of seven days before a fed announcement when they cannot speak Otherwise you got jobless claims But again non-event in comparison to the fact that it comes the same time is uscpi and that really is the The main ticket for today all right One final point Aside from pal you do have feds williams at 4 p.m feds barker at 5 30 feds boss stick at six williams again at 6 30 You know a lot of this is As I pointed out before pal spoke yesterday the kind of protection policy that the fed has In order for realigning market expectations, but I think overall Don't think there's much of a necessity to really move the needle too much from what pal said So although worth monitoring Again, I would expect them to largely reiterate what their general Consensus or communication was from pal yesterday Okay, guys That is it from my side. Let me hand you over to sam and I wish you a good day ahead and for some of you Who I'll be seeing later at the the traders event. I'm speaking out in london I look forward to seeing you this evening. I hope you have a good a good night Take it Hi guys. Good morning. I hope we're all doing well. We'll have a quick look over the the currency markets to see in the the DAX Come back towards its pivot the key level just before we do go currencies You would say it's just above that pivot the previous low of the morning Which broke through on the open 22 minutes ago. So that'll be the key Key area to keep an eye on there on the DAX just above the pivot And how that holds or doesn't I will obviously be key for where this market goes and that's just coming through Now I'm just testing that area. So keep a close watch on that just by finding a bit of resistance We'll come back to that shortly as of course that's testing as we speak euro yesterday decent push to the upside as Did most dollar pairs and just having a look at where we're trading now quite key just from a Previous range there that we were in going back to the beginning of the month and you can see quite a few of the lows Coming to this area just above the the high of the day today Where was the high of the day pretty much the low of the morning of the fourth as a zone goes pretty key Especially you know going back to that area from the second and Obviously third fourth and then the breakdown as well quite a key zone and and very much the same for most dollar pairs and Just before the breakdown that we had on Friday And so Thursday Wednesday Tuesday Lows for example are all just being tested now the Previous low that we had of this week Obviously marked up quite nicely with the the 18th and and since then we've just drifted back higher. How long this will last Time we'll have to tell every time we think the or you may think I should say that the euro is going to push higher it Evidently doesn't and comes back down After a sharp breakthrough looking more intraday here At the euro obviously got yesterday's high which for a couple of the pairs is acted as Then support for potential push higher. So that's One to keep keep an eye on not just in this but I know the Aussie dollar is currently on its On its previous high as well Just having a look you can see a couple of trend lines coming in from those previous lows Quite where respected it would be one of those cases where if you're long and You know using the previous higher today, and yes, there's that area you'd be happy to hold that as long as it stays above that trend line That would be would be my advice going forward If we were to to break down there Obviously you've got the the lows of the day and then around the pivot looks quite key As well that price could drift down to above the the higher day above the r1 Obviously all of those lows back from the beginning of the month would be somewhere you'd want to keep at night Just going to the Aussie as mentioned that is on the or just tested the previous high of yesterday You can see there with a couple of ticks above. So nice area of support for the Aussie There which has held well and then if we just put that on that longer time frame you can see Quite a bit of resistance would be found around that r1 the breakdown before we'd push lower on The h on on monday as well So r1 pretty key keeping a close watch on that should this higher the day from yesterday actually hold If we were to to get a break lower In that again similar in that around the pivot looks quite key and then of course you have all of these previous highs from Tuesday and wednesday morning But they would obviously it would take a big move for us to to get to That area really having to look over at the pound A bit of a relief yes save for any pound traders Any pound balls they say obviously helped of course purely by the the dollar weakness and that's come back up to an area now similar to The euro in in testing some quite key resistance just above where the highs are of the days You've got the the high there of the eighth and it was also the low the pre non-farm payroll Low on the 11th on friday So that would be certainly somewhere i'd have marked up as a key area resistance above that And certainly on the hourly time frame there could be a bit more room to go Up towards 126 to the downside similar sort of trend lines you can see for that euro We really squeezed in overnight Where's that trend line gone there you go and you can see a decent push ahead of that And similar to the Aussie and similar to the euro very correlated this morning yesterday's high Is acting as that support so definitely one to keep an eye on from a correlation point of view Any retest of these trend lines from the pennant Would be worth keeping an eye on and similar obviously if we were to come lower the pivot remains pretty key Having a look at the yen Didn't hasn't made it to yesterday's high So quite a decent push higher here for for the yen and while we still have similar To the other currency pairs and we're just hitting resistance from previous days levels of supports We are just perhaps just drifting lower a touch Now and i'll be keeping an eye on All the previous highs so the higher the eighth around the r1 good price action around this point Just from a level to to be aware of That i'd have marked up on the chart however just Keep an eye on what happens around here Just in case we were or we are i should say to to get a sort of third test of this trend line And if that was to hold Then obviously could hold the key as your your sort of line in the sand and may change your mind wherever you want to go Long r1 or not at all having to look over then to well have a quick look back at the the dax to see what happened there So you can see that that resistance level holding firm on that first retest So we had good support one two three breakdown and the first retest offering That resistance point having looking over now at the s&p the all-time high traded Yes, they little pop through we had another go this morning at trying to get there not quite Having it for now just having a Update of those levels so just above the high of the day obviously you would want to be careful of going long Because of how close yesterday's high is just come back down to test this trend line here in the In the s&p one two three fourth test here So quite a key trend line to have to have marked up a break of that could see further run down Of course you've got three thousand there on the futures just below which is also a high from this morning But it wouldn't be too surprising If especially the dax was to to continue lower not saying that it will because obviously this trend line is Good enough in its own where the dax was to maybe lead the way a further break down towards the pivot Which obviously looks quite a key zone of support just going back from yesterday and even previous days Around there as well. So quite a quite a key level. I've been monitoring should we push lower I think for the s&p in terms of going long if we can get anywhere around the pivot that would be Obviously a good opportunity For that but for now that trend line acting pretty well And then as that you can see similar In that we have just trended higher and a decent Pull back just from pushing lower Initially quick look at golden oil to to wrap things up Gold another push higher yesterday from the the dollar weakness as you would expect We did just drift down a bit but we found support On an area where overnight we did so as well to the upside If that's what you're you're favoring here We know what gold is like when it can break these trend lines Can we get a third test of this one and a breaker that would lead to a decent push to the upside for the downside I'd only really feel comfortable In going short should we break out This neckline if you long yesterday's high this morning's low Almost tested it again there. So I would say short below there long above there for now would be an opportunity that I'd be prioritizing For that oil Hang on was I just looking yeah oil. I'm going to say they look very similar this morning But oil pushing above that 60 dollars helped fire a decent push Above that monthly or last end of month last month's high And you know what was not too long ago looking down near 50 dollars. What a push higher It has been in terms of a key level We have just broken above it. This is you know massive In terms of the sentiment especially if we finish the week back above what was the the high that we had from The back end of last month beginning of this one was the lower the third of what looks like may So above there and yeah, well it can continue to push up from a technical point of view Intraday where's a good point to to get long where you'd still consider 60 28 as an area for sure And if it got down below towards the pivot, you might not fancy as much just because The importance of this level so to be back below it. You may be put off Slightly so I'd say that's your your line in the sand 60 28 for now Anyway, just having to look to see if there is anything else I'd be interested in Not right now. I would say for oil just having to look at that As usual any questions, please do let us know We'll actually be in the chat throughout the day and some Decent speakers into the back end of the afternoon and obviously some important data In and around 130 at the US of those inflation numbers Should be a good afternoon. If not a relatively quiet morning But as usual any questions, please do let us know and I hope you'll have a great trading day