 Hi there, I'm Anthony Chung and I'm the head of market analysis here at Amplify Trading. Every weekday morning I'll deliver a fundamental rundown ahead of the European Open. But if you subscribe to the channel, you'll also get content from the rest of the team. So, let's begin. Hi guys, Anthony here. I hope you're doing well. It is Wednesday the 16th of September. Just a reminder, we will be covering the FMC completely live, me and the rest of the team from 6.30 London time today. So, giving us enough time for a full fundamental technical kind of preview ahead of the event and then watching the actual live announcement and how the guys are trading it. So, look forward to speaking to you then. But just having a look over at the charts this morning at the European Open, just gone through 7 AM here in London and relatively quiet ahead of a big event. It's quite typical in terms of the normal behaviour that we'll see. So, it could well be a fairly quiet European Open. We have had some data already this morning in the form of UK inflation metrics, but as per UK data in the context of timing, I would say right now, given all the other things that are going on, both from a fiscal and monetary expectation point of view in terms of the Bank of England's tomorrow, not expecting too much there, but in terms of then what decisions they might take towards the back end of the year, after what the government does, but a lot of its fiscal policies that have been put in place during the pandemic, which obviously come up for expiration, most importantly furloughed in October. And then you've got the Brexit saga kind of ongoing at the moment. Not too much new to mention on Brexit, lots of headline national news talking about the various different private conversations Johnson's been trying to have in order to stop the revolt within the Conservative Party before we get to these further kind of procedural hurdles for his internal market bill. But I wouldn't see any of that as to destabilizing short term for right now this session for the British pound, which is likely to be more driven by particularly later on the movement and reaction in the US dollar. And then subsequently how those major effects pairs perform in respect to that inflation metrics this morning from the UK just to tie them off. The CPI numbers were touched highly expected in terms of the core year in the year 0.9% against expected 0.6. The month the month reading was minus 0.4% expectations were for a slightly deeper minus 0.6 but there's no real movement being observed here in the British pound on the back of that. Otherwise in terms of the equity index futures we're pretty flat overall. It comes after what was generally positive finish on Wall Street gains were up NASDAQ outperforming up around 1.4 but pretty flat elsewhere the Dow unchanged S&P up about half a percent. I'll talk about Apple in a moment but I think really too exciting there I'd say is the main takeaway in their shares finishing broadly flat. Otherwise WTI crude continues to remain quite bullish and we had quite a surprisingly deep draw of nearly 10 million in the API infantry's release last night that of course comes ahead of some of the upcoming data this afternoon and that does come after with crude what we've seen is an improvement in some Chinese data, New York Fed manufacturing yesterday in the US so some of these demand type signals on the global economic front helping and then with the supply side draw down that we've had last night and a bit of pre-positioning ahead of the DOE numbers later seen oil recover back to a 39 handle. As you can see here down at the bottom we're already trading back to a 39 which is the R1 up to shy of a dollar already on the session. Fixed income is flat the Dixie is flat so again major currency pairs pretty quiet overall in the overnight session and very much awaiting the Fed. With the Fed just going to quickly go over a kind of top level summary I guess I don't want to go into too much detail because I've prepared some slides which I'll go through in depth later on when we do the Fed event for live but just giving you an overall assessment here of some of the things you're looking out for. The Fed is expected to maintain a dovish stance at its policy meeting of course coming in the coattails of having adopted now average inflation targeting or AIT. Officials are expected to project interest rates staying near zero through 2023 and that's likely to be ratified in the fact that they're updated latest summary of economic projections and importantly that dot-plot matrix which plots then at the end of this and subsequent years where interest rates will be according to FOMC members that now is inclusive of 2023 for the first time just given whether we are calendar wise now and that means then the interest rates very much expected to remain where they are on ground zero if you like for the foreseeable future. However do note that with those projections does come things like growth inflation these types of other metrics and overall the expectations are that the Fed will produce a rosier set of economic projections on that front than what they did in June given some of the economic data that we've had of late in recent weeks. The main kind of sweet spot that most people are looking at is of course forward guidance and it's likely to be a major focus of the press conference with Jerome Powell and the chairman is expected to be asked on how much and how long of inflation overshoot would the Fed be willing to tolerate without then taking action because before it was much more uniform it's kind of here's your two percent line of inflation that you're targeting as it comes up to it then the action then gets taken but if you're talking about then a period where it can go below and then go above but you're looking at an average over time well what is that over time period and will they be more explicit. Here's a couple of good pieces I clipped out of the DFT this morning which talks about then looking at the actual nuance of language and they said a phrase in the FMC statement to watch whether the central bank changes is its commitment to maintain rates close to zero quote until it's confident that the economy has weathered recent events to something a little bit more firmer another is whether the Fed will maintain its pledge to assess economic conditions relative to its quote maximum employment objective and its symmetric two percent inflation objective. Some economists then have suggested the Fed might tweak that to include a reference to an average two percent inflation objective over time so not so much let's say time specific but just moving the goalpost slightly to be referencing over time reflecting that new policy framework. There has been other things where contingent tied kind of policy movement on the on the rate i.e kind of like what we saw Mark Carney at the Bank of England many years ago adopted with his strategy of defining say a metric like unemployment hitting x means policy reaction y i think that's unlikely but this is going to be the bulk of where a lot of the focus will lie. Several regional Fed presidents Bostick and Chicago's Charles Evans have said that there's no rush to provide additional clarity with markets anticipating a long run of near zero interest rates and therein lies perhaps a quite a key point to look at when we're trying to ascertain how the markets might react and subsequently how to trade this event is that there's a risk that the Fed doesn't deliver on these market hopes for more detail so explicit on forward guidance and that risks unwinding some of the goodwill that's been created in markets over recent months that's led to arguably one of the main reasons for underpinning this this big rise we've had in equity index futures exing out the slight dip that we had more recently. Another area that could be watched as well quite closely is about the FMC could tweak its rationale for the purchase of treasury and mortgage backed securities to say the program is intended to stimulate the economy not just smoothing market functioning so you're kind of very subtle referencing whereby you're going from it's a mechanism used to control and impart stability into the market as what they've done with the new adoption of QE of course since the initial pandemic hit back in kind of March April but moving away from that talking about it being more of a stimulative tool with intention to do so rather than just a smoothing out of markets while an increase in buying or a shift to explicit cap yields isn't expected some of course are looking for a little bit more and the other thing is is that with the Fed ramping or generally with the US ramping up its fiscal spending that's led to more debt issuance out of the US Treasury and that typically has been quite short dated by nature meaning then that the net kind of bond holdings that the Fed have are quite short but as the bond issuance of the treasuries come out excuse me it's been more longer dated than it's a little bit out of kilter from the Fed's holdings of being more short dated so do the Fed ultimately need to start buying more longer dated bonds in that instance could be another thing to look out for as well as they try to control the kind of yield curve further out to facilitate then the economic recovery so again a lot of this I'll go over in way more detail later but hopefully that's just a bit of an overview just remember from a market's point of view for this morning it could well be relatively quiet as is normally the case ahead of the event as participants sit on their hands and just wait often the most optimal strategy given the fact that you know something big could happen albeit I think it would be a relatively controlled event later on this evening but as I said risk for a potential disappointment for markets given how just generally expectful they are of continuation of Fed kind of guidance through their their policy communication okay some other things I want to talk about is the Japanese Yen so Suga was voted Prime Minister by Parliament's lower house overnight and has vowed to stay true to abonomics monitoring policy or monetary policy and fiscal spending has to remain largely unchanged however some of these articles this morning on Bloomberg suggesting attention he will focus on the third arrow which is more about structural reform the reason really I wanted to bring up the Japanese kind of headlines was because technically the Japanese Yen is a fairly interesting place you can see here that the Japanese Yen has been strengthening through yesterday's session you can see technically quite a nice break here in yesterday to technical levels being a breakthrough of where we were trading back on the ninth and the breakthrough of that it went through with some speed and then came back up to around a relatively same point of where those candles closed and with the daily pivot yesterday before resuming then the downward trend one of the things here I was looking at was a chart that was being flagged on Bloomberg which was this this is looking out now on a daily continuation chart for the Japanese Yen and there's obviously quite an interesting area that we're within touching distance of now which is really around if I just make this a bit bigger around here which around the 105 handle now the 105 handle of course brings in this trend line which dates back to the depths of where we were trading back in the height of the global kind of set off during the initial pandemic but also starts to encapsulate some of the upside areas of a trend line that's been in place since June retested and held all the way through really months of September so far but layer that in with the 105 handle also with that low that we printed back in mid-august and late-august and you can see there's quite a lot of relevance here on that level so one to watch we're within like 20 pips or so of that at the moment so definitely is within distance of being reached in the near term and then if we look on a weekly obviously if we start breaking down through those levels around 105 well then 104 is that on now weekly continuation chart a very important area which we were discussing which remember got tested when we had that unexpected resignation of Shinza Abe due to health reasons and then this fear of the unwinding of our binomics to some degree creating then a bit of restricting in the Japanese yen so yeah technically I think just keep an eye on the dailies we're right there at the moment that 105 which then could be quite interesting for near-term price action then anything deeper should we break through then we'll be looking at 104 with great interest as well for the Japanese yen okay elsewhere apple well as I said we've had a pretty flat finish overall in the Asia-Pacific session little changes seen as the market really waits then the latest FMC announcement the S&P 500 although gains yesterday were fairly moderate it did mark the third consecutive session of a higher close gains were seen in technology offset a bit of a late slide in financials one thing to be aware of by going to apple is that Trump did say that a vaccine shot would be ready within four weeks but again context is always super important when you're trying to pick through the noise of what the president is saying he was speaking at a town hall hosted by ABC news so very much the moment creating the type of rhetoric that you would imagine in that respect do note that AstraZeneca's COVID-19 vaccine study remains still paused in the US pending a regulatory review and we remember heard at the beginning of the week that was due to be lifted around mid week and that hasn't happened as yet but still early days yet I don't think the market will get too spooked by that so apple what do they do obviously needs to have a quick review given this one of the world's largest companies and obviously such a significant component of what generally drives equity direction day today in the normal kind of price action ensued really as soon as the event begun they started unveiling their various different parts of what they're announcing and the share price generally started to fall it's quite quite common really there's obviously one big exemption of what didn't get announced last night which was the eagerly anticipated and kind of 5g related iphone that's not expected to be announced until next month after the executive said it would look its launch has basically been delayed by several weeks because of the pandemic related disruptions have been seen so here it is then here's a few things that did come out you can see this this this picture here I've caught a bit of a freeze frame from an apple highlight video and it looks awfully peloton ish which you probably recognize so basically they rolled out a new fitness service and a bundle of all its subscriptions and the latter is being quite aggressive they're pricing in what's called the apple one bundle which is tv music and games is actually quite aggressive in terms of the price point comparative to to other competition Spotify came out started making complaints yesterday immediately after the announcement about competition practices being breached given that they're trying to then use their branding to upsell unfairly that of apple music which obviously is in big competition to something like Spotify and then yeah peloton obviously would be watching out for the fact that apple are pretty much just copying their service which is being incredibly successful for them other things included quite a lot of focus on the new apple watch series 6 that monitors blood oxygen it doesn't require either pairing for the first time to an actual iphone device and it was refreshes for the ipad and a few other tweaks to chips and so on used in a number of products but yeah overall a fairly unexciting event i would say the share prices as i said kind of drifted south and then came back up to to finish brought broadly kind of flat and minor positive so all in all the event kind of came and went i wouldn't say it created a great deal of fireworks in all honesty okay we've talked about trump and the vaccine so let's move on to oil here are the actual numbers from the ipad from treason last night crude was a draw of 9.517 million analysts were expecting actually a bill of around 1.27 hence the reason why you've had quite a bullish reaction seen not just at the time of release but in the overnight asia-pacific session even as europe has come in this morning it oils caught another bit of a bid tone that's because of the the surprise miss the deviation away from what was expected uh cushing a draw of around 800 000 gasoline there was a bill of 3.762 million distillers a draw of 1.123 million um otherwise quick look at the calendar for today what have we got in store before the fmc well we've already had the uk data so now as far as the morning is concerned is pretty quiet um the major u.s data to look out for prior to to the fed is going to be u.s retail sales at 130 london uh so 830 new york where retail sales expected at 1 percent not too much different from the prior 1.2 what would that look like well obviously a bit of stabilization after the big variants in data that we had during the full national lockdown and then the kind of pent up demand and reopening back from being completely shut to then partially reopened and that kind of has faded over time so looking for stabilization into a slight positive uh figure of around 1 percent but there is a range of 0.1 to 4.6 um how much reaction is that going to have i think definitely needs to be watched and obviously put into context of where the charts are looking uh are set up technically at the point of release but um with the fmc then looming just a couple of hours later unless it's something spectacular in either direction it could be not too much in a way of any sustainable type of movement on the back of that for any cab traders in the fx market you've got the cpi numbers coming out for canada as well at the same time and as we go further once in the afternoon we obviously get the oil uh energy infantry numbers coming out for the doe following on from the apis last night quite a lot of expectation of course now built into the price as we continue to move higher from yesterday i mean if you go from yesterday to where we are at the moment we're we're up nearly one and a half dollars already nearly two bucks so quite a lot built in now to price particularly with the last little bump up we've had but the apis size will draw last night so be interested to see whether or not the does can sustain that move uh or not now the bars being risen for quite a large draw yeah and then the fed later speaker wise then you've got um EU commission president state of union address charting the course for the year ahead yeah the EU commission president doesn't really carry i'd say anywhere near as much clout to move market price as in european denominated assets as you say an ECB member so worth keeping in half an era on uh that speech but yeah not looking for too much and then fed's power of course delivering the press conference uh 730 after the initial statement release at seven um auction wise you've got a guilt auction uh 2030 duration and 2048 auction coming out of uh german treasury as well later on okay that is it so any questions of course let me know don't forget to uh obviously subscribe to the channel if you want to join us later on for the FMC live uh otherwise any questions just just let me know uh on the video happy to help as usual thanks very much guys