 Hello and welcome to CMC Markets on Tuesday the 25th of March in the weekly market update. And let's have a quick look at the equity markets. They're a bit of a mixed bag. I think investors are a little bit undecided as to the future direction of equity markets. We're seeing a bit of a range starting to take hold at the moment. The S&P topped out once again around about 1885. It's finding dips pretty much well sought after. If we look at the FTSE 100 and the DAX, they're well below their 2014 highs and yet we have the FTSE MIB trading at multi-year highs. So I think at the moment it's a little bit, there's a little bit of indecision with respect to the next direction or the next move higher or lower in terms of what equity markets are doing. And certainly geopolitical risk is playing into that story. There are concerns about a slowdown in China. There's also concerns about what's going on in Russia, the Crimea and an escalation into Ukraine and possibly even Moldova. You've also got a little bit of unrest in Turkey as well. And I think that's feeding into concerns about emerging market growth going forward. Having said that, we are seeing a bit of an improvement in some of the macroeconomic data that's coming out of Europe. Unfortunately, with earnings currently elevated levels, I think investors are finding it a little bit difficult against a backdrop of a possible dialing back of stimulus by the Federal Reserve to really make a decision one way or the other as to the next move in equity markets. So essentially what we're getting at the moment is an awful lot of chop and as a result that makes trying to predict the next move that much more difficult. So I think for the purposes of this week's market update, I'm going to look at US yields in the context of what Mrs. Yellen said last week and those three words of around six months and try and establish the direction of US rates and potentially the next move in the US dollar. And I'm also going to have a look at gold in that context as well as having a quick look at euro sterling in the context of the improving economic outlook in Europe and last week's UK budget. So I'm going to start with euro sterling and euro sterling is actually managed to remain quite resilient. Despite the fact that this morning, Jens Weidmann, the chairman of the German Bundesbank, suggested that maybe QE probably wasn't as off the table as some people had initially first thought. He didn't rule it in, but on the other hand he didn't explicitly rule it out and he also didn't rule out the possibility of negative deposit rates and that has had the effect of maybe putting a slight cap in the euro. And for the purposes of this particular discussion, let's look at euro sterling and the euro sterling chart because there still remains a significant top around about the 84 level and we can see that from the chart in front of us. The 200 day moving average continues to cap. Also last week we saw a bearish engulfing day on the daily charts. We have pushed back up towards that trend line resistance from the highs in December, but thus far we are finding a little bit of selling interest around that 84 level. And when you actually look at the differing or the divergence in terms of monetary policy or potential divergence in terms of monetary policy with respect to the Bank of England and the European Central Bank, you've got to ask yourself why euro sterling is as high as it is because I think if you look at the two central banks' policy stances, the Bank of England is more likely to tighten policy and the European Central Bank is more likely to ease policy. So on that basis alone, the yield differentials should favour the pound. And the fact is economic data in the UK is continuing to improve. Having said that, inflation data came in much weaker than expected. Well actually it wasn't that much weaker than expected, but it's on a downward path, 1.7% year on year. The likelihood is it could continue to drift lower and that will take some of the pressure off the Bank of England to hike interest rates over the next 12 to 18 months. So let's move on to the path of US rates. Now on the long end of the curve, 5 and 10 year, US Treasury prices have been below the 200 week moving average. The lag at two that has been the two year prices. They actually haven't traded below and closed below the 200 week moving average since 2007. Now if we look at the daily chart which I've got in front of me right now, you can see that for the first time since 2007, we have closed below the 200 week moving average. And that could potentially signal a rise in US yields. Now we're not above the highest levels that we've seen for high four US two year yields. We saw that in the middle of 2013 as can be seen from that spike lower in the Treasury price chart on the daily chart in front of you. But you can see from the weekly chart, the line chart that I'm now just about to put up in front of you, that the direction of travel for US rates could potentially be for lower Treasury prices and high yields going forward. And that will be potentially positive for the US dollar. And that is borne out in the gold price. We've seen a significant decline in the gold price over the past week or so in light of Janet Yellen's comments last week which some have said may well have been misinterpreted by the market. But I certainly think it gives I think it gives colour to a direction of travel for US rates with respect to a slightly stronger dollar over the course of the next six to 12 months. So we broke the downtrend line on the daily chart and we're now heading towards the 50 day and the 200 day moving average. Now those moving averages have crossed over which is potentially positive in terms of a golden cross. However, when we look at the weekly chart it gives us a slightly different story. Because what it does on the weekly chart is we have a bearish engulfing week. And that's potentially a very bearish development. And we could actually see in the short to medium term a move lower towards the 50 and 200 day moving average towards the 50% retracement of the entire up move from the lows that we saw in 2013 around about $11,180 an ounce to the peaks that we saw at the beginning of March around about $1,392. A 50% retracement of that is around about $1,287. So I think there's a good chance we could actually see a lower gold price on the back of a stronger dollar. Obviously that completely discounts any deterioration in the geopolitical backdrop with respect to Russia, Ukraine and Crimea. Okay, so that's pretty much it for this week. Once again, thanks very much for listening. On a side note, just a quick reminder to you all. I will be in Bristol on Thursday for an active trader network. So if you're in the area, please feel free to drop by. There is an invitation along the bottom here. And then on Friday, one of my colleagues, Jasper, will be hosting an active trader network here in the office in London as well. And again, sign up along here for that. Until next week, thanks very much for listening. This is Michael Houston talking to you from CMC Markets.