 Okay, good morning. I hope you're doing well Thursday 20th of February. Let's get straight into the briefing for today So I could talk a little bit about Gold the reasons why that has been moving in the way that it has obviously some really sharp upward movement as to then See the headline that we've got this morning on Bloomberg Gold trading at a seven-year high Bloomberg kind of solely pinning it on the virus of which I think is a contributing factor But I don't think that that's the only thing and the reason why Gold has been doing what it's doing. So I'm going to touch upon that in a bit more detail I'm going to talk about oil prices. You had the API inventories last night Remember the president's day holidays or the infantry data is pushed back a day. We've got the DOE's later this afternoon So how did oil react? We've then how does that subsequently impact the idea of an early OPEC meeting? We can then look at some Aussie jobs data from overnight. We had the FMC minutes from yesterday evening And then we'll look at the calendar for The session ahead so let's just have a quick recap of the overall charts and the asset classes and how they're shaping up at the Open this morning You probably can see a bit of a v-shaped pattern generally in your equity markets and We did print fresh record highs, of course yesterday in US indices and Then in the age of Pacific session We actually squeezed out even a little higher before then we started to move back down Only to recover halfway through that session So yeah, a little bit of volatility overnight, but I'd say the open this morning is is relatively calm I don't think it's outright bullish or bearish is fairly neutral In that respect and I say that with looking at other asset classes gold is pretty flat for the moment as it trades 1611 and The US 10 years pretty flat as well early up about two ticks or so at the moment So all in all I wouldn't look an overinterpret too much that kind of dip and recovery seen in equities The point being is is the equity markets still remain relatively elevated for the moment. I think that's the take-home point Let's have a look then a couple of different things and As I said, this is the headline that Bloomberg are kind of running this morning gold hitting a seven-year high And you know, let's just look at the gold chart on a much longer time frame and have a look at a few different things And there's a few points I want to discuss here when it comes to gold and the reasoning why I think it's It's had such an aggressive upward move of late and obviously this was two days ago You know from a symbolic point of view the $1,600 level is around here and that's when the markets really jumped up quite sharply But if we start looking then this is a monthly chart in gold And I think this is quite interesting because if you look at a few different things You got the high here. I mean as as per the headline on Bloomberg, you know, you got to go back to the beginning of 2013 You can see that high that we printed there and now it's about well The question mark is from a technical point of view. Where can gold go from here? And I would say these levels here are probably the the biggest higher time frame levels to be looking out for in terms of upside movement You got the 1700 level that also coincides with that high Back in Jan of 13 and you can see the reason why the markets finding a little bit resistance on this last push Because that puts us back to that level on the high of March and then above there Obviously you've got this kind of triple top on these tests going back 2011 2012 Which should be a massive level up at around the 1800 level now Can we get up there? Well, you know this sort of movement doesn't happen Overnight, but I mean as you can see a breakout from some of these areas here, which were holding price back sub the 1600 so here and here, you know when gold starts to really Make a move it can move very quickly. I mean about 60 bucks here only in the course of a Month or so in terms of price activity now one of the reasons behind this well a couple of different things First of all, I want to talk about gold from a behavioral point of view I think the breaking of 1600 is very symbolic. I mean you can see here We haven't really been at those levels for several years and when you're targeting these big round figures It tends to have this type of reaction if I just put a line on 1600 You can see here when it moves through there just really blasts through that level now What was quite interesting was what two days ago? We were trading quite an area of Consolidation when we had we're kind of edging up at the time There was a little bit of volatility on the initial open on the new on the nizy that was what that quite extreme wick was here And then there was that big push-up that came thereafter now People obviously talking about the virus. That's the easiest thing I think to look at because that's the latest in a string I think of potential risk factors for the global economy now the one thing is I think to be You know pinning it solely on that in terms of the move that's happened right now I mean, don't forget the virus has been happening for the last three three and a half weeks So it's not like a new thing here But you know gold has been Grinding away, and I think the the price gets exacerbated on those key key technical breaks But if anything the virus overnight there was another Revision in the numbers so they look a little bit higher, but overall actually there was a bit of flapping out in the The kind of epicenter if you like in Hubei province where the origination of the virus came from so if anything the virus Yes, numbers are going up still, but it's still fairly manageable in that sense in that if anything numbers have leveled off if those Data points are to be believed for me. There's a few other things. I want you to think about when it comes to gold and These are that I think gold provides a pretty pretty healthy alternative as a Exposure for an investor or a trader in this current environment if you think about it equity markets are at all time highs But there are quite a few key risks out there There are risks about the impact that was very hard to quantify as yet that the virus is going to have on the global economy There is this kind of idea that perhaps the the stock markets a bit over kind of pumped up on this idea about Potential fiscal promises in the future from say the US for example So, you know if anything I'd say people a little bit apprehensive about whether or not equities can continue this This really quite amazing incline that they've had I mean I just bring up the S&P here on a daily continuation. I mean the When you look at it like this You start looking at just year to date or not even year to date if you look at the S&P from This month, I mean it's pretty incredible the rally that we've had so as you can see here The the wicks are almost getting a little bit smaller and for us at some point to have a Pullback of sorts. I don't think would be unreasonable for an equity market trading at these levels So with that being said then rather than taking the risk of jumping into the equity market at these extreme levels Why not just have some exposure to gold on the premise then that this could go higher going forward? So, you know, these are the this is the other factors other than the virus. I think that are particularly Important. The other thing is don't forget about geopolitics and geopolitics I think you can look at you know the situation in the Middle East that hasn't changed You know those issues in tension in the Middle East still remain then from a trade-broad perspective Although we're fairly Comfortable with the notion that they've secured phase one for the time being and it might be unlikely of if anything There's a bit of a de-escalation But that's still a considerable risk for markets going forward, you know We already had just what two days ago the US talking about Despite more olive branches coming from China the US still being talking tough on Huawei and other technology firms You know and then you've got the idea that the central bank the Federal Reserve if anything is still in a fairly accommodative mode They're not gonna they're nowhere near Hiking interest rates if anything if we flip over here to what markets are pricing in fixed income the overall Expectation is is that the Fed are gonna have to cut rates by the end of the year And if you're looking at the federal funds rate futures The tip on the balance is for a cut to come just slightly more favorable in the summer. So for me, it's not just the virus for me gold is it is just a Logical asset to be exposed to in the current conditions that we trade in February of 2020 It's kind of littered with potential Landmines or hand grenades that could then create new spike in volatility and I was looking at a few volatility measures and there some of them are incredibly depressed in some different products and when that typically happens, it's almost asking for an explosion in in Volatility at some point the idea though being that we just don't know the catalyst But in history shows when volatility levels decreased and get to an extreme low level It always is followed by an episode of extreme movement And so in that situation you can kind of hedge yourself by just saying well The balance is probably to a negative shock and therefore exposure to gold seems the most The most appropriate so that that's my kind of assessment of gold from it from a top level I don't you know someone like will for example He you know, he's been you know, he's always got some gold exposure And I know he was long the gold miners and they all exploded high yesterday with some of the recent recent moves that we've had Now with gold What's been quite interesting though with gold is I was looking at this and this is the dollar So you're getting a bit of a breakdown as well of those traditional inverse relationships where typically dollar appreciation You would see gold move lower And when the dollar fluctuates and moves lower gold would go up, but at the moment the dollar is It was really strong And you know, this isn't something new for us to talk about we've we've discussed the fundamentals at length in that the Current economic picture in America is pretty robust Certainly when compared to say the eurozone now There's a couple of interesting things here this graphic that Bloomberg was sharing this morning And it was looking at the dollar index and the dollar index is coming back up to challenge where we were in Around September October of last year getting close to 100 and also the 50 day moving average is creeping up to the 200 Which would typically be the golden cross when looking at those moving averages So here looking at the euro That is quite interesting because this week of course has been very meaningful for a continuation of this really definitive trend that we've had In the euro and that being then the the commencement really of February has seen a quite strong move down from North of 111 down to real testing and flirt now with 108 And any move below there certainly then does start to open up the potential For much more weakness to come in the euro the kind of bigger higher time frame areas that I'd be looking at would be here Which would be the kind of end of April of 2017 You had that area of consolidation there at the end of March as well and the test in mid-march before the eventual push Up that we had so that does open up, you know quite a clear move down to the 107 type region And so here it's been quite technical in terms of how quickly it's moved having broken through that Macron gap that we've talked about before so let me just transition my charts This is what I'm talking about here in the euro dollar. That's that move that we've had the February Continuation with the deterioration generally in economic data in the euro zone in the contrast to the US the break Then through those key technical levels of 2017 and this is that downside area I'd be looking at here over the kind of a multiple-day kind of period would be a target going back to those March levels of That were more relevant at that time if I just shrink my chart and move that up a little bit You'll be able to see what I'm talking about. So just above my camera feed there So yeah interesting that these correlations then have changed You know the the usual way of just thinking dollar is gonna move commodities in one way I think is a little bit broken and that's why you've got to be Objective and reanalyze conditions day-to-day correlations are constantly in flux and flux and they're not consistent in that way And so you've got to be adaptable to current market conditions in that respect the other thing then that has been moving of late Which is why I think go why you can't just pin the virus on gold because equities are at all-time highs and Oil's been bouncing quite Significantly well that doesn't spell a market that's got risk off because of the virus So I think pinning that alone for the gold move would be incorrect To make that assumption. So here looking at oil. I've put a rectangle around this this wick here I don't think really that's too much to look at to be honest but it does set the reference point for the Doe numbers that we're gonna get later on this afternoon These were the api is yesterday and I guess the number that jumps out That's caused a little bit of this reaction is the gasoline figure was particularly large drawdown 2.7 million against expectations actually for a build. However, the headline crude number was a little bit bearish against expectations All in all one thing is when we start looking on the daily here for crude And we start looking back to those areas that we've been in so let me just again remove one of these charts They go so you can see everything So here You've had a real nice bounce now off that key threat. You remember we were talking about a week ago It looked really quite precarious for oil prices potentially to see quite a concerted push to the downside However, I would say a bit of a stabilization in the the general feeling in markets being quite sanguine about the issue with the virus Spreading at least to a point to create panic I think we've got over that from a markets point of view for the moment But additionally the verbal rhetoric from OPEC plus I think did the job and this was as we exactly what we were talking about and now what's come out overnight OPEC have confirmed the March meeting date and they've canceled any idea about an early meeting and that's exactly The strategy that we were talking about their job is done. The price has recovered They've averted at least for now any run down into the mid 40 type price per barrel level and as far as OPEC plus is concerned particularly Russia is absolutely no need at all for them to have a meeting ahead of schedule now So upside if oil does continue to recover Obviously, you got that high that was coming in from late Jan That would probably be your your next upside obstacle of resistance there for any further bounce in prices On the daily, of course, what's going to be important? And we're just having a bit of a test here of that overnight Asia-Pacific lows So the oil market very much mimicking that equity v-shaped movement seen in the Asia session So here just coming down to test that next kind of levels down would be then the pre API release that we had last night But likelihood is I think pivot will probably provide a pretty decent floor for price You can kind of see here if you put a rectangle on that price activity the pivot and That previous area here of those highs and support that kind of area I would say probably be where if we did remain heavy here We would find a level of natural Support ahead of them the data coming out later from the infantry's perspective Okay, a few other things just to quickly look at and to address one is Some Aussie data. I mean it's worth keeping an eye on the Aussie actually if I just bring that into Into my screens We are observing now Starting to see a little bit of risk off trade across the asset So I'll circle back to that in a second But just keep an eye on the overnight Asia Pacific low in the Aussie The Aussie did get hit in the overnight session And so you're aware Australian unemployment climbed despite a full-time employment surge and so the Aussie's coming down here to test the key level from overnight and And The other headline I wanted to just quickly address is the one about the Fed minutes These did come out last night And I don't really want to dwell on this too much because it didn't really create much in the way of any interest The Federal Reserve Officials indicated they could leave interest rates unchanged for many more months amid concerns about a persistent Undershoot of their inflation goal potential room to further boost employment and risk stemming from the coronavirus and trade So all in all the Fed aren't really doing anything at this point in time. There's the main takeaway point from that All right Quick look back at the charts and then review of the calendar as I said Starting to get a little bit now of a more classical risk off Feel to market movement from a correlation point of view So equities have just had another little bit of a dip on the downside Lifting the US 10 year above its overnight high and R1 and gold seeing a bit of upside movement now So yeah, just keeping an eye on these these things if then let's say I keep an eye still on Euro dollar We'll be on the watch list today If the dollar remains strong then any downside break. We're still at a fairly key level here a Big level in fact for the Euro to make a decision. It's kind of make or break time. You feel coming up the next two days and then Yeah Calendar, what have we got for the session ahead? UK retail sales is coming out if we actually look at the pound the pound in itself is also Quite interesting for the moment. So here it is We're coming down towards The lows that we were printing back on the 10th of February if I look at this on a daily It probably makes a little bit more sense this rectangle here. So these are a few markups that we had This was a discussion I was giving to a few people Last night. So just to make things clear This was the election here when we had the bump up in the pound now We've had this inevitable almost decline as we're getting closer towards now more of an emphasis on Brexit and To kind of a short-term momentum on any relief in economic data starts to kind of lose a bit of that Momentum so to speak so here keeping an eye on that 10th of Feb low And then you've kind of kind of got the range low which dates back then to some of these previous highs going back from May and June So I think it's quite a key area here between 28 30 and 85 to watch over the next day or two Any confirmation on the break below there and don't forget you've got retail sales today You've got manufacturing and industrial production tomorrow from the UK if they are exceedingly weak figures in respect then to the fact that the conversations this week between Europe and Britain have gone as You would imagine they're not very well then it does open up the prospect then do we start to see the Opportunity for a deeper move if we start to see continuation as well of dollar strength It's almost the perfect storm with the technical break of quite key areas in the the currency pairs okay from a Data perspective then Rico retail sales 9 30 ECB minutes coming out at 12 30 I don't really expect a great deal of reaction on the back of that if I'm if I'm being honest But of course I would be watching out for that one thing I did see a couple of the newer traders doing yesterday and just as a reminder things like UK retail sales I definitely wouldn't Generally have a position on you know UK retail sales is quite a volatile data set It's just not worth having additional risk on the table at that point So if you're constructing your trade strategies, I would try to operate around that data rather than through it in that Respect if you're trading in the intraday short-term environment Into the US afternoon the Philly Fed Figure is coming out business index. You've got the weekly jobless claims New housing price index coming out from Canada as well, then you've got European consumer confidence to flash reading the olive and treating numbers Don't forget will be at 4 not 3 30 as is always the case after a holiday From a speaker's perspective easy beats the Gwindos the kind of number two if you like It's speaking European Banking Federation Committee at 10 30 It's quite a bit of supply coming to market as well to be aware of for any boom fixed income traders But I'm gonna leave it at that I think Sam and Alex can jump on shortly and they can talk over things a little bit more from a technical perspective But I'm gonna leave it at that and I wish you guys a good day ahead Any questions though? Just feel free to put them in the trading live chat room or on the video on YouTube Happy to address those throughout the day. All right. Thanks very much guys