 Good morning and welcome to CMC Markets on Friday the 3rd of August and this quick preview of the week beginning the 6th of August What are the last two weeks told us about the direction for equity markets? Well, that's a decent question But I think the last two weeks haven't really been any more instructive than the last two months if we look at the FTSE 100 Since May we've pretty much traded sideways and ultimately I think while there's this significant amount of trade uncertainty I think it's going to be very difficult to get a clear indication of The next directional move Herding season has by and large been fairly positive. We've seen Apple once again post bumper numbers For Q3 they are now the first US based Trillion dollar company and they have to some extent helped hemorrhaging stopped the hemorrhaging of losses That we've seen in the US tech sector, but Apple on its own I don't think he's going to make the concerns that some investors have about the growth models for some of the more highly elevated tech stocks So what are we looking at going forward? We look as if we're probably going to see a negative week Which I think has offset the positive week that we saw in the wake of the Yonker Trump meeting Trump meeting Trump Donald Trump meeting at the White House. I think now attention has turned to escalating trade tensions with China Hence the rather sharp declines that we've seen here in the FTSE 100 over the past couple of days Reversing the slow gains that we've seen over the course of the past few weeks It's a similar sort of story with respect to the German DAX and if we look at this weekly chart here I think there's a I think there's a case to be made that we could be starting to see what looks like or what could be a potential diamond top Now this is a weekly chart and we've still got some way to go to determine how this piece of price action pans out But ultimately I think what we need to look at is we need to look at the trend line through the tops here and The trend line through the base here to determine the next directional move Now what could be the driver of that next directional move? Well, obviously the primary concern for the markets at the moment has been the big declines that we've seen in the Chinese Currency over the course of the past few weeks and at the moment That is front-end center of market concerns about what could happen next. We've already had the US administration Threatened to up those 10% tariffs on 200 billion dollars of Chinese goods up to a 25% tariff And I think a large part of the reason for that increase has been as a result of the sharp depreciation that the Chinese authorities have Allowed the one to decline by ultimately we've seen a big decline from the lows that we saw in June And I think there's a distinct possibility We could look at retest the levels that we last saw all the way back at the end of 2016 and 2017 So I think the weakening of the one I think has offset or mitigated some of the more negative effects of the 10% tariff that the US has implemented and The 25% the 15% increase that's being touted is is a mechanism to try and offset that So what are we looking ahead for over the course of the next few days? Well, we haven't had the non-farm payrolls data as yet But by the by I expect that to be continued to be fairly positive We've had a whole host of central bank rate meetings this week the Fed stayed unchanged the Bank of England the Bank of Japan tweaked its monetary policy As it purchased program by widening the your curve slightly and we've seen the Bank of England raise rates though you wouldn't know it to see where the where the cable is right now and We're going to start with the cable because we've got UK GDP coming out next week It's the first iteration of Q2 and One of the rationales behind the Bank of England raising rates Was the fact that the UK economy had improved from the disappointing first quarter to be honest I think it would be harder to do much worse But ultimately I think we could still see a fairly decent number from Friday's Q2 GDP numbers Expecting a number in the region of 0.3 0.4% a significant improvement on the numbers in Q1 We've also got Chinese trade I come on to that in a minute, but at the moment. I think the key support on the cable Currently comes in around about 129 and a half Which was the lows that we saw in June But I think there's potential for us to come a lot lower as we can see from this chart here What I've done with this particular Chart is take the lows that we saw Just after the Brexit vote around about one nineteen and a half one eighteen whatever you want to call it projected the move to the twin peaks around about one forty three and a half and At sixty one point eight percent retracement of that moves at one twenty eight eighty So I think there's potential for further sterling weakness towards one twenty eight eighty Now that may not be as a result of a weaker pound It could just be as a result of a stronger dollar We're certainly seeing the dollar continue to push higher pretty much across the board on an expectation That we're going to get two rate rise two more rate rises this year one in September is pretty much nailed on and The the data that we see over the course of the next few days will dictate whether or not that continues to be the case Certainly President Trump is very uncomfortable with the strength of the dollar But ultimately the reason the dollar is so strong is Directly as a result of the fact that ultimately the US economy Continues to enjoy the significant fiscal boost from the January tax cuts so moving on we've got Chinese trade numbers and these will be the numbers for July and I'll be looking in particular at whether or not the Recent tariffs have affected the Chinese export data So look I'm going to be looking very closely at the effects of the tariffs and whether or not they've seen a significant slowdown in the Export data for China trade and they are due out on the 8th of August We've also got the RBA rate decision not expecting any changes there The Australian dollars taken an absolute battering over the course of the past few Few weeks as we can see from this chart here It's in a distinct down trend looking to potentially retest the lows that we saw in June and if If the Chinese data continues to disappoint and commodity prices continue to remain weak then the Australian dollar will continue to bear the strain of That downward trajectory What up other things to watch out for this coming week are Trading updates from snap Q2 Not been a particularly great Few weeks and months for snap since its IPO and ultimately given I think the weakness that we've seen in terms of Facebook and Twitter I fear that we could be in line for further losses on snap We've also got 21st century Fox Q4 earnings city world first half and intercontinental hotels first half So that's it for this week. Thank you very much for listening. So Michael Houston talking to you from CMC markets