As we move into the final quarter of the year, traders will be looking for Q4 to be somewhat more interesting that a rather subdued Q3. With the problems at Deutsche Bank causing swings in sentiment, markets will begin to now look seriously at the increasing importance of the implications of potential outcomes of the US Presidential Election and how it will affect risk appetite.

1. Weekly Outlook
Monday 3rd October by Richard Perry, Market Analyst
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therefore only speculate with money you can afford to lose. FX and CFD trading are not suitable for everyone. Please
ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such
transactions. You should first carefully consider your investment objectives, level of experience, and risk appetite and only
invest funds you are prepared to lose entirely. For our full risk warning, please go to the end of this report.
WHEN: Fri 7th October at 1330BST
LAST: 151,000
FORECAST: 176,000
Impact: The Fed will not raise rates until December at
the earliest. That means with no imminent prospect of a
hike in the next 10 weeks, for this months and next
month, good news will be taken as positive for the
dollar but also risk positive by markets. Consensus
says that a headline of 176,000 is expected and this is
bang on the 6 month average. Yellen claims that this is
still reflective of a positive labor market but watch the
unemployment rate and participation. If they both rise
this would suggest there could still be slack in the labor
market, especially if wages again disappoint.
Key Economic Events
Date Time Country Indicator Consensus Last
Mon 3rd Oct 09:30 UK Manufacturing PMI 52.1 53.3
Mon 3rd Oct 15:00 US ISM Manufacturing PMI 50.3 49.4
Tue 4th Oct 02:30 Australia RBA Monetary Policy +1.50% +1.50%
Wed 5th Oct 09:30 UK Services PMI 52.0 52.9
Wed 5th Oct 13:30 US Trade Balance -$40.0bn -$39.7bn
Wed 5th Oct 15:00 US ISM Non-Manufacturing PMI 53.0 51.4
Wed 5th Oct 15:00 US Factory Orders (MoM) -0.2% +1.9%
Wed 5th Oct 15:30 US Crude Oil Inventories -1.9m
Fri 7th Oct 13:30 US Non-farm Payrolls +170,000 +151,000
Fri 7th Oct 13:30 US Unemployment & Average Hourly Earnings 4.9% / +0.3% 4.9% / +0.1%
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1N.B. Please note all times are BST (GMT+1), data source Reuters
Macro Commentary
Deutsche Bank (DB) CEO John Cryan has claimed in a memo to DB staff that liquidity is not a problem at the bank,
which remains well capitalised. However, a $14bn fine issued by the Department of Justice looms large and needs
renegotiating lower otherwise the bank will need to be re-capitalised. There clearly is a problem with hedge funds
which are by all accounts talking their own book resulting in Credit Default Swaps soaring. With Angela Merkel
facing re-election next year amidst accusations of being soft on immigration, she cannot appear hypocritical to her
stance on Greece, so this could not come at a worse time. The prospect of bailing out DB is the last thing she
would have wanted but can Merkel really stand aside if one of Europe’s biggest banks slips towards bankruptcy?
With European banks hardly the flavour of the month anyway, contagion is a problem. However, unless the
situation at DB spirals out of control this should not cause a market meltdown. For that, perhaps we have to wait
another five weeks for the Presidential Election. The first debate went to Clinton, but as Al Gore will attest to in
2000, winning the debates is not everything. I will go into more detail in the coming weeks but in a nutshell, Hillary
Clinton is seen as a safe pair of hands and fairly market neutral, whilst a Trump victory would drive uncertainty
whose protectionist policies would send shockwaves across global markets, and markets hate uncertainty.
Must Watch for: US Non-Farm Payrolls
Non-farm Payrolls
Headline expected to pick up towards the 6 month average

2. Weekly Outlook
Monday 3rd October by Richard Perry, Market Analyst
Foreign Exchange
After an incredibly quiet few months, can forex markets begin to find some sort of direction in Q4? The quarter
surely promises to be one of far more volatility, however will there be some decisive moves? Unless Non-farm
Payrolls shoots the lights out on Friday, the US dollar may continue to struggle for inspiration this week. The
FOMC has made it abundantly clear that there will not be a hike in November and I continue to see December
as increasingly needed from a reputational standpoint. Unfortunately, this will mean that the dollar will struggle
again for direction this week. Technically the major pairs are somewhat rangebound, with EUR/USD continuing
to bore the pants off traders between $1.1120/$1.1325, Dollar/Yen between 100/102.80. A strong payrolls
report could generate some near term direction on Friday but the uncertainty of the US Presidential Election will
increasingly become a concern for traders. As the election date (8th November) draws near, the volatility stakes
may begin to ramp up, especially if the prospect of a Trump victory (which surely cannot be ruled out, despite
Clinton’s lead in the average polls), however, for now traders are likely to keep their powder dry. Cable is a
different story though as sterling is coming under pressure again as fears of a hard Brexit are increasing as
Theresa May suggests Article 50 could be triggered by the end of Q1 2017. The Reserve Bank of Australia
monetary policy is not expected to cut rates but could try to jawbone the Aussie lower.
WATCH FOR: ISM data and Non-farms will be key for the dollar, as PMIs drive volatility across majors
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2
FX Outlook
GBP/USD
Watch for: Will Cable break below the $1.2796
key July low this week?
Outlook: Over the weekend, Theresa May
suggested that Articles 50 would be triggered
possibly by the end of Q1 next year. This seems
to have sharpened the fears of sterling traders
and the selling pressure has ramped up after a
week of consolidation last week. The market has
been trading in a sideways range for the past
three months but the pressure is now really
ramping up and the multi-year low seen post-
Brexit of $1.2796 is now being eyed. A breach
would be a range break of around 650 pips of
implied downside target in the coming months.
Selling into strength is increasingly the strategy
with resistance at $1.3060.
EUR/USD
Watch for: Can the euro finally find some real
direction this week?
Outlook: The low volatility continues on the euro
as the converging trendlines continue to signal a
neutral outlook. Holding above the $1.1100 pivot
gives the chart a marginal positive bias but it
really is negligible and the technicals are in dire
need of a catalyst from somewhere. The
resistance band $1.1285/$1.1325 is restricting
the bulls with the long term selling pressure
consistently holding the bulls at bay every time
the market moves above $1.1350. There is little
real direction from the momentum indicators and
although there is a slight bullish bias the upside
potential is limited. Perhaps it will need to be a
US Presidential Election catalyst to drive a
break?

3. Weekly Outlook
Monday 3rd October by Richard Perry, Market Analyst
Equity Markets
Volatility on the equity markets has jumped again as traders have to mull over the prospective contagion of the
sell-off on Deutsche Bank. On a day to day basis, the DAX has been swinging around wildly as market
sentiment has been pulled around by the OPEC deal and subsequently Deutsche Bank. Although the volatility
has been far greater in recent weeks after a very quiet summer, the net moves across the major indices has
been minimal. The trading ranges that have been in place for the past few months remain intact. Despite this
though the upcoming weeks may provide us with more of a clue of how markets will be moving into 2017. My
expectation is that the US Presidential Election will prove to be negative for Wall Street. Whichever candidate
wins it will hit sentiment as you either have on one hand Clinton who is set to close tax loopholes for hedge
funds and impose a levy on wealthy, or Trump whose anti-trade policies could impact across the world. The
market would react better to the prospect of a Clinton victory as support on Wall Street to her positive
performance in the first debate shows. But as the weeks go on the market will have to begin to contemplate
Trump far more as the election is likely to go right down to the wire. The second Presidential debate is on
Sunday 9th October. For now though positive data will be seen as positive for equities. The ISM data
dramatically disappointed last month for both Manufacturing and Non-Manufacturing, but Nonfarm Payrolls has
been mixed to positive in recent months.
WATCH FOR: The Presidential Election will increasingly attract attention of Wall Street and this could
be a drag. The ISM data and Non-farm Payrolls will be key for direction this week.
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3
DAX Xetra
Watch for: Volatility is high with the lower highs
now forming
Outlook: What a wild ride for the DAX in the
past few days as the difficulties at Deutsche
Bank have weighed on the technical outlook.
The DAX has also been underperforming with
the lack of weighting in oil stocks and
subsequently there is more of a corrective
outlook on the DAX compared to the FTSE 100
or Wall Street. Momentum indicators are neutral
at best but the near term corrective configuration
is weighing on the market. Key resistance at
10,802 has been supplemented by a lower high
at 10,705, but last week’s resistance at 10,575 is
a near term level the bulls need to beat this
week to get back in favour.
FTSE 100
Watch for: Despite the corrective outlook on the
DAX, the FTSE 100 is still eying the key highs
Outlook: A weaker sterling is positive for the
FTSE100 and Footsie is strongly outperforming
the DAX as the volatility that has hit the DAX in
recently has passed the FTSE 100 by. The
exposure to oil has also help to support FTSE,
but today’s gains means the market is seriously
testing key August resistance at 6955.
Momentum is strong would suggest the bulls are
ready to make their move to breakout of the
medium term range and perhaps if negative
headlines surrounding Deutsche Bank go away,
the move could gather pace this week. A close
above 6955 opens 7070 but the all time high at
7122 could also be within range.
Index Outlook

4. Weekly Outlook
Monday 3rd October by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
There is a dramatic difference in the performance and volatility of oil against that of the precious metals. Which
oil has been focuses squarely on the OPEC deal, precious metals have been performing in the direction of
market sentiment and the dollar. The agreement to cut OPEC production to between 32.5m/33.0m barrels per
day (from the current 33.24m) has pulled the oil price higher. However, there will be serious questions of the
implementation of how this works in practice. That is for another day though, in fact towards the end of
November at the next OPEC meeting. This agreement should underpin prices for now though, with $46.50
supportive this week on WTI and $48.00 on Brent Crude. Precious metals continue to consolidate but this
medium term range play is beginning to put pressure on the longer term bullish argument. Ultimately there is a
range play that continues on gold between $1300/$1375 and on silver between $18.50/$20.80.
There is a mixed outlook across bond yield curves again. The steepening of the US curve has slowed in the
wake of the FOMC monetary policy a couple of weeks ago. The US economic data will be driving Treasuries
this week so look at the ISM data and payrolls. The yield curve on German Bunds has also dropped away in the
past couple of weeks, as risk appetite has diminished.
WATCH FOR: Risk sentiment surrounding Deutsche Bank was driving precious metals on Friday and
could continue to have an impact, whilst the ISM data and Non-farm Payrolls will impact across markets
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4
Gold
Watch for: The long term bulls trends are under
increasing pressure
Outlook: The medium term consolidation trading
range between $1330/$1375 could probably be
cut to $1350 as the upside limit with a sequence
of lower highs that have been left in the past few
months and remain a barrier. However the
longer this consolidation goes on for, the bigger
the impact on the long term outlook, which is
now under strain. The long term uptrend and
support of the 89 day moving average are being
broken and the bulls are losing control. That
does not necessarily mean a downside break,
but the outlook would subsequently be in the
balance across medium and also long term time
scales. The bulls need a catalyst this week
otherwise more pressure on $1300 will be seen.
Markets Outlook
Brent Crude oil
Watch for: Can the bulls maintain the breakout
momentum this week?
Outlook: Can the oil bulls survive a bout of
profit-taking this week if the euphoria
surrounding the OPEC deal begins to die down?
The key support is now in the band between
$45.00/$45.75 and the bulls will be looking to
build support around the near term breakout
above $48.25. Momentum indicators are
increasingly positive and the bulls come into the
new quarter on the front foot for a test of the
August resistance at $51.20. A break of the
resistance will re-open the big resistance of the
recovery high at $52.85.

5. Weekly Outlook
Monday 3rd October by Richard Perry, Market Analyst
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5
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