 Welcome to Tick Mill Weekly Market Outlook for week commencing the 29th of June with me, Patrick Munlow. The return to better functioning of the wholesale US dollar money markets and the floor of dollar liquidity has reinstalled a risk on dollar off regime. This can be seen for example with the rising negative correlation between the S&P 500 and the dollar crosses. The biggest current threat really to that risk on regime probably comes from the unchecked rise in US COVID-19 cases and the response at the district, state and federal level. Renewd lockdowns stand to delay the US recovery as seen in the sell off on Friday in the S&P 500. But we also know that Congress and the Fed have a light trigger finger when it comes to fresh stimulus. At some point, will investors start to identify the second wave as a problem unique to the US, meaning the dollar does not receive the typical boost on bad news. In terms of data, the weak head culminates in the 3rd of July public holiday on Friday, but we'll see much data and Fed speak beforehand. Thursday sees the release of non-farm payrolls, where we can look for a slightly above consensus 3.5 million jump in hiring as April's 20 million jobs decline continues to be reversed. We should also see a good manufacturing eye as a print, perhaps even hitting the 50 level and reasonably strong consumer confidence data. FOMC minutes of the 10th of June meeting will also be released and a host of Fed speakers will be on tap. If you have to pick, you'd probably look at Williams, Fed Chair Williams, who's speaking on a panel with the IMF on Monday and Jerome Powell and Secretary Mnuchin testifying before the House on Tuesday. It's been a good quarter for risk, 20 to 30% gains via S&P and NASDAQ respectively, so a little profit taking, which probably started on Friday, may continue to be the theme as we head into this week. From a technical perspective, the dollar index has put in a reversal of the reversal coming into last week. We saw that short reversal and we then countered that move. Whilst we hold this 9640 area, what I look for now is an equality objective at the 9628 symmetry swing resistance there versus this swing coming in at 9840. And we also have trend line resistance coming in there. So any move up into this 9820 to 9850 area, I'll be watching for bearish reversal patterns to set short positions looking for at least a move to retest the year to date. It goes at 9460 on route to an ideal equality objective at 9360. In the Eurozone, one worrying development for the Euro has been the US reconsidering sanctions against European goods. Negotiations on tax on the digital industries have not been going well and a much larger threat looks to be in the making over Nordstrom too. It's clearly in US interest for this pipeline delivering Russian gas to Germany and Europe not to go ahead. But the EU looks like it's prepared to stand up to US interference in domestic energy policy. A term for the worse in news flow here could undermine some nascent European optimism on the subject of optimism. Angela Merkel and Emmanuel Macron meet on Monday as they try to finalise the plans for getting the EU recovery fund over the line. The Eurozone data calendar sees June CPI and some final June PMI releases. Germany also sees June unemployment figures where the rate is expected to rise to 6.5% from a technical perspective. Whilst we trade below this 11360 area, I'm now looking for a test of symmetry swing and equality support down to 11050 to 111. Watching for bullish reversal patterns in this area to set long positions, targeting a retest of the year to date highs just below 115 on route to an ideal equality objective at 116. It's a fairly quiet week on the UK data front with final Q1 GDP and June PMI readings having little impact on sterling. Instead, the focus will be on a series of policy speeches over next week from the Bank of England officials. Economists look for further clues on possible shifting policy preferences between QE and negative interest rates. Following Governor Bailey's comments on the sequencing of between rate hikes and unwinding the balance sheet. Also watch for a speech by PM Johnson on Tuesday outlining a massive infrastructure stimulus plan. Other than that, the prime and overriding driver for sterling remains the UK-EU trade negotiations. Expect little progress during the summer months, keeping the uncertainty about UK growth and trade outlook in place, in turn having some weight on sterling as probably one of the G10 effects under performers. The deadline for the UK to request a transition period for the extension will pass this week. The impact on sterling should be limited as the UK government already indicated it won't opt for it. From a technical perspective sterling looks to be testing now the symmetry swing and equality support at the 122.50 to 123.20 area. I'm watching for bullish reversal patterns in this zone to set long positions initially looking for a move back to test the 125 handle from below. Failure to find support at the 122.50 would open a move to retest 122.60. In thinning summer markets there's been some focus on whether soft banks divestment of shares in US telco team mobile could have been responsible for hitting the dolly end last week. Soft banks stake is worth around 30 billion and corporate finance activities are already underway as part of soft banks plan to buy back 2 trillion shares in Japanese yen. M&A flows typically only have a temporary impact on spot markets. This may have been a factor behind the recent dip in the dolly end. In the week ahead the Japanese calendar sees retail sales and industrial production for May on Wednesday. The second quarter released in the Bank of Japan's Tanker and Business Survey. This is expected to fall heavily as the impact of the second quarter shutdowns are factored in. Their consensus for a large manufacturing rate at minus 25 is quite a way off the minus 50 lows seen in 2009. We'll also be watching Japanese buying of foreign bonds mentioned this last week with three consecutive weeks of strong buying. Unless we are going to see some sort of paradigm shift to a bearish US story driving the dollar lower, dolly end for now is likely to remain range bound. Also an outside risk are the developments in Hong Kong trying to look set to sign a new security legislation to law this weekend which could prompt some further retaliation from the west. So in light with that theme of range I'm looking for the dolly end to move back up into the 108 area where I will be looking for bearish reversal patterns to ultimately target a retest of the 106 lows, a breach here opening move down to the quality objective at 104.20. You'll note we saw a similar decline in recovery after the March spike and so I'm looking for that pattern to play out again over here and then a grind lower into the back end of the summer. The Australian dollar keeps tracking global sentiment without a clear idiosyncratic direction due to the lack of key data releases in central bank activity in Australia. This should continue to be the case this week although we don't expect to jump in infections in Australia may start to show its mark on the currency as the notion that Australia had successfully contained the virus was one of the factors that helped the Australian dollar build its recent resilience. Australian Prime Minister Morrison has shrugged off the new outbreak and pledged to continue with reopening the economy. Should the number of cases grow at a higher pace, markets may start to price at least a slower easing of the lockdown. Looking at the calendar, retail sales on Fridays expected to show a double digit rebound and the Reserve Bank of Australia's Debell speech on Tuesday may clarify the bank's position on the Australian dollar after lows comments last week. From a technical perspective, as we hold the 69-70 area, I'm looking for a test of the quality support at the 67 handle watching for bullish reversal patterns in this area to set longer positions, initially targeting a retest of the price of 70-60 on route to an ideal objective of 70-150. Failure to hold support at 67 will open a deeper corrective move back down to the 65-30s before another bid opportunity will develop. That concludes the weekly market outlook for week commencing 29 June.