 All right, very good morning. It is Wednesday 19th of June. Hope you are well Joined here by as you can see the kind of chain effect to special guests to men that caused a large degree of market movement yesterday Donald Trump and Donald Trump pointing the finger of course at Mario Draghi Tweeting that Mario D unfairly propping up the German Dax and weakening Manipulating their currency But yeah, what we had yesterday was obviously a really interesting day lots of large movement Derived on the back of a surprisingly to start with Hawk. Excuse me dovish Mario Draghi where he came out and effectively said in terms of ECB policy They've got the options available to them such as cutting rates Restarting quantitative easing Changing their language, you know, there was lots that came out that caught many by surprise and obviously Created quite a meaningful move in European assets that being a lower euro Supporting of not just European but global equities, you know The the eurozone area being so pivotal and does that set the stall out now for the Fed to follow suit And move in sympathy with making some you know equally dovish noises we'll find out later on tonight But that was then followed by of course the US president kind of playing his usual Flip-flop on the China the way he feels about them at this particular point in time and obviously equities have had a bit Of a rough time of it of late So help propping it up and giving it a second injection if you like to the upside yesterday and also helping at least short term Mitigate any growing demand concerns for commodities because we saw a very strong move as well in WTI crude oil Talks with China seemingly progressing again ahead of the G20 where there was some Speculation around whether or not the two would even meet given the recent fallout over Huawei and the technology names and what it's been happening with Mexico But the point being is that both sides are confirmed that they've had a telephone call It was positive They're going to look to have an extended and at length discussion at the G20 coming up at the end of the month And in fact, they're even going to go as far as having Preparation kind of discussions ahead of that as well. So yeah firm close yesterday Quite positive moves, of course now one thing that has come out since that point this is a Reuters exclusive and I believe the comments that came out just given the tone of this article from Reuters I would imagine it was indeed Bloomberg that broke the source story or the initial comments in regards to Mario Draghi and so Reuters have come out and they've taken a slightly different Perspective they've basically contacted their sources and the sources are saying that okay We've had some of these discussions about the options of easing in various different forms But we're nowhere near any type of consensus And actually we've been caught a little bit blindsided by the fact that the president Mario Draghi has even started talking about this yet so I guess this is a little bit of this isn't the sources Criticizing or talking out against Mario Draghi. This is definitely much more a case of the ECB looking to just realign things a little bit It's kind of normal mechanisms of how they communicate So that all options are left on the table and and the market doesn't run away with itself that the ECB are in all out assault dovish mode But yeah, quite interesting that they've reigned it in a touch You would say by the what this Reuters article has been suggesting So Euro's kind of steadied out if I flip over Momentarily to the charts so you can see Euro top left. It's kind of flattened out It's consolidated of anything holding on to a large portion of the loss from yesterday equity markets you can see the DAX Equal kind of price movement after the aggressive rally yesterday We're kind of again being in a sideways range similar case for the US indices as we kind of Await the next queue and that ultimately is not going to come until this evening when we get the FMC announcement So oil the same buns the same as well If anything where we left off from the European close yesterday, we've kind of remained at around similar levels A few other things then to have a look at This of course was Donald Trump's Tweet that moved the market yesterday. This was that Conversation where the extended meeting next week at the G20 in Japan Respective teams will begin talking prior to the meeting What was very interesting actually was that even though he set made this quite conciliatory tone in his tweets He actually had a campaign rally where he formally announced his running for the 2020 presidential race And in I think it was Orlando, Florida. He then started criticizing China again. So It's just quite such an amazing era that we're in he kind of Equities looking a little fragile. He gives it the Trump bump up It goes and then he gets in front of the Joe public in America. I hate China. China are taking advantage of us and so they're very much is a Donald Trump who communicates in order to appease and influence financial markets And then there's the Donald Trump that communicates to the public in America to try and You know kind of cajole sentiment around his, you know, his policies and his agenda and so on But markets haven't reacted to that what he said last night on Orlando We know that effectively when push comes to shove more likely or not He's going to want to manage this situation all about timing, of course And as we're going to discuss It's this idea about generally market consensus of the belief that Trump It's a necessity for him to manage this in an appropriate way so that equities don't collapse and the economy doesn't suffer That has led to many big Wall Street banks Goldman Sachs being probably the most notable name all thinking that the Fed will not cut rates this year Despite the market pricing because of the management of these types of big top-level risks, but we'll get to that in a second Talking about the Fed, of course, this really is the main event of this week, you know this month Kind of trade talks aside this it really is the major influencing factor for markets So definitely there's plenty more to come for the rest of this week for sure on the coattails of whatever we here tonight So just to stress I'm going to be covering this live on our YouTube channel Coverage will commence at 6 30 p.m. So if you subscribe to the channel turn on your notifications You'll get an alert push on your phone and also an email as soon as that session goes live It's going to have a chat facility. So me and the team I'll be covering. I'll be giving you a full briefing I'll analyze it in real time as it happens post analysis both myself and then technically from Sam And it's going to be an ability to chat to the team as well as it's all happening So hopefully you can join us you can do it on the move on your mobile as well as your desktop So hopefully that suits everyone but I'm going to go into that The kind of Fed preview in much greater detail later on this evening What I'm going to do here is give you a brief overview of some of the key points that we're looking at So really it is Kind of decision time markets We know we've discussed this many times a priced quite aggressively for interest rate cuts Not so much an interest rate cut in this particular meeting Federal funds rate futures are priced at about 20% for this meeting. So possibility but low But very much so price for a 25 basis point cut in the next meeting Which is at the end of July and then possibly subsequent cuts thereafter So what are we looking out for within this? So there's a couple of graphics here one is The kind of statement now the statement could be particularly important because the types of words used around the descriptive nature of what federal reserve Members are describing for the US economy could be very telling for the future course of action So, you know, let's stick with the base case here. They don't cut rates But the question is then what happens next and so a couple things one Downside risks you can see here You know the economy has as far as economists views to the risks to growth and inflation Has soured since the last time that we got the summary of economic projections as you can see here the black bar Has got increasingly larger over time And we've kind of had a distinct shift from where we were in September before the kind of rural Q4 route that we had in markets to where we are today So with that being said then we are expecting some download of visions in the likes of growth going forward Inflation that's been one of the main reasons why kind of tepid inflation of why people have been pricing in these cuts now Interestingly though, this is a Why so on Bloomberg this morning a traffic light policy conditions I can't say I've seen one of these before but I kind of like what it's suggesting What it's looking at here are a couple of different indicators You know possibly that the Fed will look at in terms of market pricing But it gives you an idea of where they're at where the economy is at And why or not there is a need to take action So let me just quickly explain going from left to right is time So if you go all the way back, this is when interest rates in the US were sat at 0.75 percent And this was then when interest rates the red ones are when interest rates have changed and in this case gone gone up So here you can see as we've raised interest rates the S&P is being, you know, really strong Now how all these color codes work is the more red it is the more indicative It is that the Fed should be tightening policy the more green it is the more the Fed should be Loosening policies or cutting so here you can see inflation was the only thing that was relatively Soft at the point of which they were raising rates still though Given the strength of the stock market and giving some of the other areas like the unemployment rate that was dropping at the time The financial conditions index was picking up warranting That they were showing the economy was improving and heating up so rate hike rate hike rate hike We take us all the way to where we are at the moment now You can see here the stock market is quite a noted noticeable difference Every time and what has been a very clear pattern has been this pretty one-dimensional and consistent Stock market increase we had the wobble at the end of last year and the beginning of the year But then a really significant turnaround a pretty flat at the moment the other thing is Here the unemployment rate remains particularly low and one thing is if you actually look at the stock market as of now Just given the rally we had yesterday and as I said the belief if this China trade war gets managed correctly Well, then that would all Suggest and why the need to be so aggressive in the action you're taking now a lot of the commentators have said That why would you cut? Right now in this meeting some people believe that might be the case But the risk here is that if they were to cut now that would be very pre-emptive action and the question mark Even though you might get an initial quite positive response in markets that the Fed to being proactive I think in the medium term once the dust settles the market will start asking the questions Why have the Fed felt that they've needed to take such drastic a media action? What is wrong? Why are they seeing this and I think that in itself would instigate a degree of more Uncertainty and more panic and I think that would backfire as a strategy In terms of how the Federal Reserve will want to manage this and hence the reason why I believe they won't cut tonight But they will be signaling a July cut so yeah looking at here, it's the inflation figures and Obviously the inversion of yield spreads or pushing towards that They're looking at the two's tens here that would all be things that would say that not only is inflation conditions low and low unemployment isn't really influencing that in its traditional sense, but These indicators that have been good precursors of impending recession have also been kind of flashing The course of action is probably going to be prudent to loosen policy The thing then that this will come down to In terms of the initial headlines that we're looking out for could well be just the numbers associated with the with the dot plots Obviously with this is the March dot plot now This looks significantly out of date because of how things have changed the purple and white lines here are basically overnight index swaps and the Fed funds futures and as you can see they're much more Doverishly priced I Interest rates could be a touch low at the end of this year and then dropping there after at the end of 2020 and 2021 the big question mark here about how Hawkesh or dovish the market will react is about if this is the current market pricing and this is where we are in the Fed dot Plots, how far does the Fed come towards where the market is there is a distinct risk? I feel that the markets have got too carried away with this dovish pricing And what's going to happen is the Fed do become more dovish but not just quite as much as the market We're looking for as a net result. It's not that they're hawkish But you get a kind of hawkish reaction if that makes sense But again, we'll go into this in much more detail in specific assets and how they'll react later on this evening This is those major banks. I just wanted to give you a bit of a flavor. You can see here city Goldman's MS UBS. They're all expecting no rate changes at this point for the rest of this year Quite on the contrary though Barclays the most aggressive Barclays are looking for multiple rate cuts and they're looking for the big one They're looking for them in July Barclays believes the Fed are going to pull out You know the 50 basis point cut and then follow it up with another 25 Bank of America JP Deutcher Looking for more graduated type moves But Deutsche and Barclays looking for an end game with a much lower value by the end of the year looking for three rate cuts Bank of America JP to the rest on the top line none Okay, well, that's it on the the Fed side one thing I would say is a word of caution for any of the new traders you probably Will see relatively barring anything unexpected quite quiet markets this morning That will be largely in anticipation for what has become now a very important event for financial markets Two months ago. This was seen as a bit of a non-event. The world has changed quite rapidly market expectations have changed in accordingly And now it's up to the Fed. Do they meet those you know those kind of lofty dovish expectations or not? Elsewhere, let's have a look at something else We had of course the second Ballot of the conservative MP race for who's going to replace Theresa May and you saw Boris Johnson has even improved further I think it calculates out about 40% of the vote that he's capturing at the moment Dominic rab The most hard Brexit got the chop. So he's gone Siji Javid just barely made the cut Rory Stewart's had the one with the greatest momentum Going from 19 in the first round to 37, but he still resides back in fourth place Now we did have the televised debate of course last night Let me just give you a flavor of that I'm not sure if anyone watched the BBC debate last night, but It's embarrassing It's all I can say it's a I Don't know. I don't want to get too political and start giving my my personal views, but Yeah, I'll leave it at that but the one thing I think that was quite clearly evident There was no real standout performance and importantly Boris Johnson who appeared really for the first time facing questions in a live environment and against his Competition didn't put largely a foot wrong. He didn't make a big mistake I guess that's just a crisis averted as far as Boris Johnson goes So all things remaining equal I think Rory Stewart didn't put in such a kind of surprising performance of strength that he did before I thought Siji Javid did a better job this time of asserting himself a little bit better I thought hunt and gove Were pretty much repeat performances of the first time round and Boris Johnson Didn't make any mistakes. Not that he was particularly strong. So all things remaining equal. I Would say if there's gonna be a cut here I still think that as much as it seems like the the social media space has really rallied behind Rory I really do think that he's gonna get the the cup sooner or later as to all Saji Javid I really think it goes then down to Johnson hunt and gove in the end And then I think it's gonna be hunt and Johnson still is my kind of base case view because the necessary Puppet masters behind the scenes will make sure that it's not a gove Johnson Which I think gove is generally a little bit more pressing as a character and a little bit more aggressive in his Debating skill and that will be something the Johnson camp will want to be severely avoiding because if you poke Johnson enough I'm sure he'll come out with something that he shouldn't say so I think I'll be a hunt Johnson story The process we know now is that basically there's gonna be another baller that's gonna happen and Then another baller the day after all the way until we hopefully by the end of the week should get down to the point Of where we have the final two candidates that then takes another couple of weeks in the end of July We have our leader so again as per the case what we saw yesterday the pounds not reacting to any of this I mean if there were a risk event It was that as well as describing this time yesterday that Boris was gonna make an almighty mistake Then and that just didn't happen. He's kind of reigned it in and try to stay rather quiet It's probably the best tactic if he wants to keep his hopes alive Other things final headlines then I'll hand you over to Sam Oil markets, you know, definitely had a decent move to the upside yesterday Some good technical breaches of levels on the upside nice momentum behind some of the movement when it was breaking those points in addition to the fact that Monetary policy stimulus helping mitigate global growth concerns this kind of whatever it takes mentality coupled with of course Donald Trump easing trade war tensions in the short term So oil moved higher now obviously we continue to monitor the situation in the Gulf Particularly between Saudi and Iran we heard yesterday that you know new US troops are gonna be deployed to the tune of 1,000 1,500 to keep peace in the region the latest thing that's happened There's being reported from overnight a rocket hit an area of Basra It racks oil and gas hub that houses several global oil companies earlier this morning Coming amid rising tensions between the US and Iran. So, you know, just more potential De-stabilization in the in that area is something to be aware of that sort I mean this headline itself not having a a one-and-done kind of reaction in markets But you know things are definitely simmering away And obviously having just more US military presence in the region should should create more Stability but obviously if you're from the other side of the table You could be seeing this as a hostile move and activity and therefore it could ignite things even further So definitely a fluid situation that needs monitoring very closely if you're an oil trader Okay, quick look at the calendar. What have we got coming out because before the main event the FMC? There certainly is a few other things that are going on So we just have a look you got UK CPI That's gonna be at 930 Now we are expecting year-on-year CPI to fall slightly 2% back from 2.1 a range of 2.2 At the high to 1.8 at the low This is just a quick graphic of year-on-year CPI in the UK And you know, this is why when we hear from the various central banks this week, we've got the Fed We've heard from Draghi. We've got the Bank of Japan We've also got the Bank of England, of course tomorrow And it's actually the Bank of England are probably gonna sound the least dovish And one of the main reasons is is that you're xing out the impact and uncertainty surrounding Brexit Which obviously is the main focus then actually the unemployment rate the job situation the wage situation As a consequence the inflation situation these would all be on the balance more hawkish indicators for policy So yeah, definitely going to be a lot more even-handed rather than being dovish like we'd like me to hear from some of those other central banks of late, but Overall from a market reaction point of view if you're trading sterling I wouldn't be looking for to greater movement on the back of the CPI traditionally a tier one release But as for the aforementioned macro Risks predominantly focused on Brexit. It's hard to really put too much weight on these economic indicators If anything, I would say you've got to be looking at numbers pressing down at really 1.6 on the lower bound or 2.4 on the upper bound for it really to be something of more magnitude where you might get a bit more of a decent run in the currency I would say Back to the the calendar other than that other than inflation indicators out of the UK at 9 30 It's pretty quiet for the European morning. We then get into the US session again equally pretty quiet We get the DOE all infantry numbers So while Sam is on the mic doing the technicals, I'll populate the chat with the API numbers from last night But I believe it was a drawdown if I remember what I saw last night before I went to bed And then you've got some Canadian numbers as well for the currencies Speaker-wise the ECB forum in central Portugal continues. I believe this is the final day So again, I'll post the schedule of when any major speakers are going to be talking I'll pop that in the chat room as well after this briefing otherwise It looks like on the calendar the closing remarks are going to be given by Mario Draghi at 3 p.m So I would be mindful of That event ECB's co-er also speaking and mounted Schlager throughout the day as well from that same meeting The ballot vote if it's going off the same process for the elimination round of the conservative race That would be at 6 p.m. And again, I wouldn't really see that as a market moving event to be quite honest I'll just update you again tomorrow morning in the briefing All right, that is it Let me hand you over to Sam He can talk you through a couple of the charts and as I said I'll pop a few few things in the trading life chat room in the meantime Okay. Thank you very much guys Hi guys, hope everyone has had a good Good morning so far Quick look over the charts at how we're trading some some levels to be aware of after yesterday was a pretty good day opportunity wise certainly into the afternoon as we saw The stocks really push on so just having a quick look at today. I wouldn't get too excited trading stocks In really up until the build-up for the FOMC likely to be pretty range bound trade Wouldn't be too aggressive looking to get in really unless we maybe came back down to the pivot to be honest Which is obviously quite a key point as you can see here Other than being the pivot it was previous high from yesterday And of course the previous high that we had back on the 11th of June So unless we were to really come back to that, I wouldn't be too interested in getting in and Historically when we have had a day like that where we're up, you know, whatever percentage it was only a day before a FOMC meeting Only two of the ten times that happened at the next day finished positive So I read what you want into that but likelihood is we're just drift sideways really In stocks and I think there'll be you know better opportunities later on if at all I just You know while sent them and right now favours the upside following yesterday whether you'd want to get too aggressive or not I'm you know before the Fed. I'm not too not too sure couple of interesting markets on the longer term You can see just how Great the support level here was on the Aussie Let's bring this into picture the the load of the the year the flash crash load pretty much to The tick that bounce off that if you remember Australian dollar going back Well a few well a couple of years 2017 2018 pretty much the same Is a double top there really strong? Resistance turned here now to the lows looking to the low Sorry a decent level support Really you're gonna want it to get above 6919 certainly on the daily chart for for this to be a sustained recovery But a decent hold here off that that first test of of those lows and really you know nice Nice move higher for following that and helped I guess by just a bit of profit-taking as well It's having a look more intraday See looking and favouring that 6919 or so that the previous low from the 13th You could argue the high of the 14th morning as well That's certainly a point that I would we keep marked up to the downside any potential target should we we break that low would probably be Best targeting so have a quick look Trendline wise Not a bad way here you see you've got your your free tests of this around to towards the s1 and this trendline could certainly be Something to focus on there for the Aussie But the key level remains near that R1 That's certainly where I'd be be looking at having a look at the yen as well pretty range pound overall despite having a really strong push in the morning yesterday and then as the equity markets Soared higher we did come lower But those lows have held firm you can see here the s1 and yesterday's low It was certainly talked about a good level for a range trade in the morning whether it could have got there or not was Anyone's guess it did however held firm and also the high of the day marking at the top end of that range And maybe for the better opportunity here. It's just going to be waiting for Either of those to come into play or to break midpoint here pretty much You could argue the pivot previous resistance from from yesterday evening You can see just below as well So you're lying in the sand for maybe a move higher or lower this sort of zone here Where you had the previous higher today the higher of yesterday evening and the pivot as well Acting as a bit of support potentially now the pound Obviously got the data to coming coming out the higher third the day Pretty much the low that we had back on Monday morning as well So I'd still be keeping a close eye on that should we get through and certainly there's some good Opportunities technically anyway for for the short a bit higher up You've got the breakdown area here on the futures one twenty six thirty nine And of course the R1 R2 sorry and the higher that we had From well from the week so far you're lying in the sand if you just have to have that drawn up probably 125 88 just a bit below the pivot Could be somewhere to keep an eye and you can see how we found support From what was previously a resistance level around that 87 88 89 So if we were to get a break below there, and then we can start looking at pressing towards yesterday's Lows euro which obviously we can following Draghi's comments has been pretty range-bound since I'm not that I necessarily think we can get up to our one without a reason behind it But if we were to have a slow gradual grind and before the Fed Technically looks quite a nice place to get in but for now Range-bounder because he keeping an eye on that that double bottom from yesterday if that was to to break a quick run down So the S1 is always you know one to to keep a Eye on Also, just making this onto a 15 minute chart. You can see the trend lines Here well respected from yesterday evening to tonight this morning and then to just a well about 39 minutes ago On the hour the top of the hour that for euro so above that could get a bit of relief back towards the pivot Where we saw a decent enough price action yesterday a bit wiki But along with that pivot could offer some resistance going forward gold as well, which Did the similar move to the yen But what an opportunity it was for anyone that that fancied the pivot or around that yesterday to get long That is obviously pushed through As well if we were to have a strong push higher at any point today And of course ahead of the Fed will be on there that might go through these levels But you can see this trend line perhaps perhaps matching up near that R2 As well as a sort of an extremity for this move to the downside Really the it's pretty range bound on that low if we were to get below that Another good opportunity for that range bound long around s1 yesterday's low still remains to be a half decent trade So I'm a quick look at the 17th low on that trend line here you go You can see we just found this trend line here that obviously already just come into play You've got your third test of this is quite interesting. You've got the low here Monday Tuesday afternoon and then just now as well along with that low of the day So one to keep an eye on if we do find support and push higher if we were to break this trend line You can imagine there being a faster money move targeting really down towards the s1 the pivot higher the day Containing price for now to the upside so have a quick look over European equities following You know decent push of the here of the open pretty range band That summarizes what is most likely to be the case in the build-up to the central bank meetings today As well have a quick look at oil following the The draw yesterday not as as big as expected, but still a draw down for the headline number there We are stuck within a bit of a range as well failure to push higher Be keeping keeping tabs really 5408 to the downside Maybe even calling it 54 and then 5450 54 to the upside unless we were to get a break out of that Not too interested in getting involved in this market ahead of the DOEs Later any questions as usual, please do let us know obviously 840 so in Just going back you've got 50 minutes now until the UK numbers and and as and mentioned not expecting too much in the way of Significant movement from that just considering everything that's going on and even with the Bank of England tomorrow as well I hope you will have a great trading date, and I'll catch you all in the chat