 Hello and welcome to CMC Markets on Tuesday the 5th of May and the weekly market update and we've got quite a big week coming up. Not only do we have the UK election to digest the results of, we also have US non-farm payrolls and obviously we also have the ongoing saga that is the Greek debt negotiations. Now last week I looked at the pound against the dollar and suggested we might see a move higher towards 155. What I didn't anticipate that we get the move to 155 much quicker than I anticipated but it sort of speaks to a wider narrative that we could well see a weaker dollar. I also talked about the possibility of a short squeeze in the euro and we also got that on the breakthrough one ten and a half and I'm going to look at whether or not we're going to get further gains there and also to finish things off I'm going to have a look at the German DAX because a couple of weeks ago I suggested we might have seen a significant reversal. The more I look at the charts on that particular market the more I'm minded to think that we could well see further declines in that particular index. So in that context for this week's weekly market update I'm going to be looking at the pound against the dollar. I'm going to look at UK gilt prices because they're on a key support level which could suggest that we could see higher yields. I'm also going to be looking at euro dollar. I'm going to also have a look at the correlation that we're currently seeing between the German DAX, the euro and the German Bund and if I've got time at the end I'll try and squeeze in an Australian dollar chart as well which feeds into my narrative of a weaker dollar. So I'm going to make a start with the pound against the dollar because I think one of the key imponderables of the recent move higher in the pound against the dollar has been the fact that despite all the uncertainty that we're seeing as a result of the deadlocked polls in the UK election is the fact that the pound has pushed higher from the lows that we saw in the middle of April. Now I've drawn some Fibonacci retracement levels off the peaks that we saw just below 155 and we have seen some weakness in some of the more recent UK data. Now I would probably put that down to businesses delaying investment decisions ahead of the outcome of this week's election which would suggest I think that we could see further weakness but the key level for me on the pound against the dollar is that 150 level that we broke above on the move higher towards 155 and I've basically put that in with a horizontal support and resistance line on the daily chart which you should now see in front of you so we can see from the current price action there is potentially further downside on this particular chart but I don't expect to see a significant decline much below 150 because on all of the other metrics that I've seen and looked at the US dollar I think the potential is for further dollar weakness over the course of the next few days and weeks. We've also seen rising yields not only in UK guilt markets but also in German bond markets so let's start with the UK 10-year guilt we've seen guilt prices start to decline and they have been declining for quite some time now and they're approaching a key support area on this daily chart which currently comes in around about the 117 70 level that also coincides with the 200-day moving average now we've broken the uptrend that we've been in for quite some time since the middle of last year and that makes the 200-day moving average a very key support level in the context of whether we see lower prices and higher yields now if we see higher yields then that could actually help underpin the pound relative to the US dollar simply because US 10-year treasuries are currently trading in a broad sideways trend between 2.2% and 1.9% and have been for quite some time now let's talk about Euro dollar now there's a number of key factors at play in the context of why I think there's potential for the Euro to go higher and it's not only to do with the Euro dollar it's also to do with the German bond and it's also to do with the German DAX now we've seen a significant reversal on the weekly candle charts for the German DAX what we've also seen is a similar reversal on the monthly candle chart on the German DAX it's a bearish key day reversal now that suggests that the German DAX could fall further now what were calls that well for me what would cause a lower DAX will be a higher Euro and we've seen a similar bullish reversal on Euro dollar on the monthly chart so we can see actually by looking at the monthly German DAX chart and also the monthly German Euro dollar chart that there is what I would call significant correlation between the two charts so DAX weakness could well equate to Euro dollar strength and now we've broken above that 11050 level the prospect of a move to 115 remains on the cars while we stay above 110 further reinforcing the bullish Euro narrative we've seen a significant monthly reversal also on the German bond chart and again I've highlighted that here on this monthly candle chart in front of you right here so that's further evidence that we've seen significant monthly reversals in the in the German bond the German DAX and the Euro dollar when you have that sort of what I would call confirmation then I think the risks of a significant dollar weakness Euro strength not panning out starts to sort of drain away somewhat going to quickly finish up with the Australian dollar now the RBA cut rates overnight by 25 basis points to 2% another all-time low despite that the Aussie has had great difficulty in pushing lower which suggests to me that the weakness could well be on the US dollar side and we could well see further gains on the Australian dollar again we've seen a monthly bullish reversal which suggests that we could well get a move back through 80 towards 82 or 83 cents over the course of the next few weeks and months so that's it for this week it promises to be a very interesting week don't forget that we've got non-farm payrolls webinar on Friday between 115 and 145 it promises to be a very busy day notwithstanding the fact that we'll probably know the results of the UK election even if we don't know the flavour of government so we'll have plenty to talk about not only with respect to the non-farm payrolls data but also any fallout from the UK election so if you want to log on to non-farm payrolls on Friday just basically click on the link here and log in and ask us any questions until then thanks very much for listening this is Michael Houston talking to you from CMC markets