 Hello and welcome to CMC Markets on Friday 8 March and this quick look at the week ahead beginning the 11th March and the recent rally in European markets appears to have finally run out of steam. This week investors have started to take profits over concerns the macroeconomic backdrop is much weaker than was thought to be the case a few weeks ago and the whatever the outcome of a US-China trade deal which is still expected to be signed off at some point over the course of the next two to three weeks it won't be enough to mitigate a broader economic slowdown now we can see this we can see how this has played out in equity markets over the course of the past few days we weren't able to get above this 11,700 level that I've been that I was talking about two to three weeks ago and that I was targeting for a move higher in the DAX we've seen a significant pullback off that and above that obviously the 200 day moving average is also acted as a significant resistance level as well it looks quite likely that we could well post a bearish engulfing week on the weekly charts and that could well be potentially negative in the longer term as the DAX looks to test the trend line from the lows that we've seen in December if we look at the S&P 500 we've also seen a similar failure on that at that 28-20 level that I again highlighted a few weeks ago we've run into a little bit of a wall up there and we've now also dropped back below the 200 day moving average so while momentum is still fairly positive I think there is potential for further losses back towards 2700 in the short to medium term so so that's I think really the outlook for equity markets more broadly a little bit of weakness potentially a little bit of sell the rally is starting to creep in and I think we do need to be cognizant of that going forward if we look at again the FTSE 100 again we found a little bit of a peak out around about the middle of February we have moved lower to around about just above the 7,050 level and we haven't been able to get back above 7,200 now that's not to say that we can't get back above there but if we drop below 7050 then we could be in line for the weakness on the plus side the shorter term moving averages the 50-day moving averages are starting to slope upwards so it would be surprising if we saw a significant thrust lower but nonetheless we do appear to be consolidating at these levels and as such we could find further upward progress a little bit difficult until such times as we take out 7,200 it's also been a very difficult week for the Euro in the light of the announcement of the new TLTRO which is due to start in September later this year and the thing that struck me about that ladies and gentlemen was the fact that the ECB felt that they needed to pre-announce it which would appear to suggest that they don't have an awful lot of confidence that there will be a significant recovery in the Eurozone over the course of the next six months which suggests to me that we could be in line for further Euro dollar weakness now obviously a lot will depend on what the dollar does with respect to that and this afternoon's non-farm payrolls at the moment as I record this video I don't have sight of those numbers but I would be very surprised if they weren't or they didn't at least hold up to the levels that we've become used to around about the average of 200,000 jobs per month we did see a big jump in January jobs to 304,000 fairly decent number but I think a large part of that number was skewed by a big jump in part-time workers as a result of the US government shutdown we've got a whole host of US economic data out later this coming week with the latest US CPI numbers and US retail sales now US retail sales for January should shed some light on the really shocking number that we saw in December we saw a 1.2% decline in December there could be an adjustment to that number but even so expectations for January retail sales on the 11th of March are for a 0% reading it's also important to remember that this coming week US economic data will be out an hour early as US goes to daylight saving over this coming weekend so all US data that's normally out at 1.30 it will now be out at 12.30 GMT so it's important to be aware of that US CPI is out on Tuesday on the 12th and that's for February and that's expected to remain steady at 2.2% so I think in terms of US inflationary pressures generally keep an eye out on the US numbers for signs of potentially wage inflation and that's something that I'll be keeping a close eye out on the payrolls numbers but I'll also be looking to the UK as well because it's a big week for the UK economy when isn't it a big week for the UK economy you may ask and that is certainly a very good question because we've got we've now got or we expect we expect to get another attempt at a meaningful vote on Theresa May's Brexit deal we also have the UK spring statement and certainly in terms of the economy tax receipts have been fairly robust despite the fact that there's been an awful lot of skepticism around being able to arrive at some form of deal now it is true business investment has dried up and it's not likely to get freed up any time soon but all the dark warnings that we've had in the run-up to the June 2016 referendum and the aftermath have thus far failed to materialize the Chancellor does have fiscal headroom the spring statement is on the Wednesday it's on the 13th of March but I think it's we're going to be very hard for the Chancellor to really give any indication as to what his spending plans are likely to be given the fact that I think all the focus is going to be on any potential meaningful votes and any attempts by MPs to try and push through an extension to article 50 and that's very very high bar because ultimately as things stand at the moment the default position is the UK leaves the European Union on the 29th of March under statutory under the under the terms of the staturally legislation that is currently in place MPs will need to coalesce around a a majority to overturn that overturn that outcome and that's a big bar that's a high bar and I certainly don't think it's something that the markets have even closely remarked closely started to price in I still think there's an expectation that somehow they'll push it through but what we have seen in euro sterling is a significant break lower in the cross sterling strength euro weakness so I think that is likely to continue until such times as we're able to push back above 86 20 86 30 while we're below 86 20 86 30 the direction of travel is for further sterling strength for the euro weakness now how that plays out you know really isn't a problem or isn't something that really dominates my thinking for me it's about the price action and while we're below 86 20 86 30 then the downward projection or the downward move that we're seeing in euro sterling is likely to continue we look at these lower highs we look at these lower lows the direction of travel on a break below 85 20 is likely to be further losses down towards these last lows here the euro is looking structurally weak at this point in time it is not a zero sum game and no deal Brexit it could be equally as damaging for the euro area but there are concerns that obviously all of this paralysis over Brexit concerns about China US trade concerns about EU US trade because now there's concerns the US may implement tariffs on EU exports is having a significantly negative effect on overall market sentiment and that's before we even start looking at the latest Chinese data which is due out later this week in the coming week rather Chinese retail sales Chinese industrial production now it's very important not to read too much into this February data we saw the latest Chinese trade data very disappointing for February but we have to price you have to set that against the fact that is Chinese lunar new year an awful lot of the country was shut down and as such that will have a significantly negative effect on the Chinese numbers for retail sales and industrial production for February which are due out on the 14th of March so it's not going to make things any more positive but also it doesn't necessarily mean that China is falling off a cliff so I think this needs to be a certain amount of measured analysis when it comes to the China data but certainly I think it's unlikely that we'll see a significant pick up there we will also expecting to see a number of fairly low key earnings announcements they will be on the weekly market update so look at look out for that on the website but as we look to the week ahead the key events that I'm keeping an eye out for this week are in summary the UK the next potential UK meaningful vote on the withdrawal agreement a potential article 50 extension the UK spring statement UK GDP industrial production manufacturing production for January US retail sales China data and US CPI so that's it for this week thank you very much for listening Michael Houston talking to you from CMC market