Markets are focusing on a few key factors this week from the major economies. A further look under the bonnet of the Chinese economy comes with this week's growth data which will have an impact on risk appetite. The US Presidential Election continues to draw near and the final of the three debates between Trump and Clinton will also impact markets, whilst the European Central Bank monetary policy decision could help to mould further expectations and risk. We look at the impact that this will all have on forex, equities and commodites. Oh, and of course expectations of how Brexit will pan out are also continuing to impact.

1. Weekly Outlook
Monday 17th October by Richard Perry, Market Analyst
Forex and CFDs are high risk leveraged products that can result in losses greater than your initial deposit and you should
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 14th October at 1330BST
LAST: 0.0% refi rate, -0.4% deposit rate
FORECAST: 0.0% refi rate, -0.4% deposit rate
Impact: The ECB is not expected to make any formal
change to its monetary policy. In the September
meeting the ECB slightly cut inflation and growth
expectations but also seemed to be give themselves
room to redesign QE and a continued commitment
towards hitting the inflation target of around 2%. Will
this month be when this redesign is announced?
December is more likely and this could turn out to be a
wait and see meeting. Previous rumours of a taper to
asset purchases could also be in focus but expect the
ECB to remain cautious.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 18th Oct 09:30 UK CPI (core) +0.8% (+1.4%) +0.6% (+1.3%)
Tue 18th Oct 13:30 US CPI (core) +1.5% (+2.3%) +1.1% (+2.3%)
Wed 19th Oct 03:00 China GDP +6.7% +6.7%
Wed 19th Oct 03:00 China Industrial Production / Retail Sales +6.4% / +10.6% +6.3% / +10.6%
Wed 19th Oct 09:30 UK Unemployment / Average hourly earnings (x) 4.9% / +2.1% 4.9% / +2.1%
Wed 19th Oct 15:00 Canada BoC monetary policy +0.50% +0.50%
Wed 19th Oct 15:30 US EIA Crude Oil Inventories +4.9m
Thu 20th Oct Australia Unemployment (employment change) 5.7% (+15,000) 5.6% (-3,900)
Thu 20th Oct 09:30 UK Retail Sales (ex fuel YoY) +4.8% +6.2%
Thu 20th Oct 12:45 Eurozone ECB monetary policy (refi / deposit) 0.0% / -0.4% 0.0% / -0.4%
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1N.B. Please note all times are BST (GMT+1), data source Reuters
Macro Commentary
Just over three months since the referendum the impact of the UK’s impending Brexit beginning to show. The
sterling sell-off from $1.50 against the dollar just prior to the referendum result has resulted in an 18% decline, (c.
16% on a trade weighted basis). There are various arguments to be made of the impact of a weaker sterling, with
the most bullish being that the depreciation of sterling can combat the large current account deficit of 5.6%.
Cheaper sterling means imports are more expensive and exports are cheaper, helping to rebalance the current
account. However, studies have shows that currency depreciations do not have an automatic stabiliser for current
account deficits. In August, input price rose at their highest level since December 2011 and this week we will find
out the data for September. This has driven a spat between Unilever and Tesco, with the food producer arguing a
10% increase in its wholesale prices. Inflation is coming. Bank of England Governor Mark Carney has already
stated that the Bank will tolerate higher prices (i.e. keep monetary policy accommodative) to protect economic
growth and jobs. This is likely to keep a lid on any sterling recovery. However, also a disorderly sterling decline
(such as, I don’t know, a flash crash?) could jeopardise confidence of foreign investor investing in the UK,
something that would be negative for the current account deficit. The economics of Brexit currently do not look rosy.
Must Watch for: ECB Monetary policy
German 10 year Bund Yield
Yields have rallied again with 0.1% a key resistance area

2. Weekly Outlook
Monday 17th October by Richard Perry, Market Analyst
Foreign Exchange
Can the US dollar continue to rally? There are a series of key factors that will drive volatility this week on forex
markets and could also help to determine the direction of the dollar. Three factors from the world’s three largest
economic areas, China, the US and Eurozone will drive volatility on Wednesday and Thursday. Economic data
out of China was mixed last week with a surprisingly bad round of trade data counterbalanced by a surprising
improvement in inflation. So coming into this week with the current outlook for China in the balance a series of
key data points will drive appetite for risk across Emerging Asia currencies and the riskier extremes of the
majors (i.e. the yen and Swissy safe havens, and the Aussie and Kiwi commodity plays). China GDP is unlikely
to cause too much of a stir at 6.7%, but in conjunction with industrial production and retail sales the data will be
watched for implications on global growth and hence risk appetite. Wednesday evening (US time) the 3rd
Presidential Election debate will be held and with Donald Trump floundering in the polls will this be his last
chance to make up meaningful ground on Hillary in this most acrimonious of campaigns. A positive showing for
Clinton tends to drive the dollar higher and also benefit risk appetite. However, the diminishing returns of the
second debate may mean a limited reaction. The ECB meeting on Thursday is unlikely to hold many surprises
but Draghi was fairly steadfast last month and a repeat of this could again support the euro.
WATCH FOR: UK inflation and unemployment to drive further Brexit talk, US inflation impacts the dollar
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FX Outlook
GBP/USD
Watch for: Support at $1.2086 helps to protect a
larger correction back below $1.2000
Outlook: Although the bulls are still unable to
get much of a foothold in sterling, there have
been signs in the past few days of a basis of
support. The higher daily lows of the past few
sessions suggests that the support at $1.2086 is
strengthening. However the technical outlook
remains very bearish and even if sterling was to
start a drift higher, it is likely that the move would
simply be another chance to sell. All factors
fundamental and technical point to downside
pressure on sterling and a breach of $1.2086
would resume the sell-off. With little or no real
support the psychological $1.2000 lies between
here and another possible abyss. A 100%
Fibonacci projection of the original Brexit sell-off
is at $1.1260.
EUR/USD
Watch for: The pair is showing underlying euro
strength in the face of a bullish dollar
Outlook: A breakdown has finally been seen,
one which has changed the medium term
outlook and could now see pressure back
towards the key support at $1.0800. The longer
term traders will be noting the breakdown on the
euro below the pivot band $1.1050/$1.1100
which has ben a turning point for so many
moves in the past year and a half. This now
becomes a basis of resistance this week. It also
means with momentum indicators negatively
configured that $1.0950 is set to be tested and a
breach opens the Brexit day spike low at
$1.0910. A breach of that would open $1.0800
which was a floor during Q1 2016.

3. Weekly Outlook
Monday 17th October by Richard Perry, Market Analyst
Equity Markets
Volatility has ramped up again in recent days as the equity markets have become increasingly sensitive to daily
shifts in sentiment. The concern will be that during time like these, investors see the increasingly choppy waters
and decide to take their profits off the table. Markets have until this week been fairly sanguine about the
increasing prospect of a Fed rate hike, but with volatility higher, the Fed meeting minutes show that the
committee seems ready to once again pull the trigger on another rate hike. This move will not come in
November but in December instead once the dust has begun to settle on the Presidential Election. However
nerves will become jangled if the polls begin to tighten once more (although at this stage a Trump victory is still
a long shot). Therefore the debate on Wednesday could impact on sentiment. Prior to that though the reaction
to Chinese data has ramped up and so traders will be looking at the GDP and industrial production numbers to
drive implications for global growth and then risk appetite. The DAX will be reactive to this. The FTSE 100 will
continue to fly around on the Brexit news as the negative correlation to the value of sterling remains in play and
should help to underpin FTSE 100 performance if this continues. The S&P 500 survived an initial test of the
2120 September reaction low but with the improvement in oil back on track and Clinton’s standings in the polls
solid, sentiment should hold up. Earnings season will increasingly become an issue with earnings season
ramping up now. The initial results from the big banks have been mixed, but shares have performed well which
is encouraging. Results from Goldman Sachs (Tue) and Morgan Stanley (Wed) are this week.
WATCH FOR: China data will drive risk appetite. Hard Brexit is supportive for FTSE, S&P 500 earnings.
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DAX Xetra
Watch for: The resistance band 10,692/10,705
is key this week
Outlook: The DAX may have ended last week
on a high note but the bulls need to use that
platform to push on this week. So often in the
past few months, the bull moves have been seen
as another chance to sell and this means a
series of lower highs has been posted below the
key high at 10,802 with the latest at 10,692, just
below 10,705 which forms a resistance band.
There is a mild bearish bias to the choppy
consolidation and momentum indicators are
neutral at best. Bulls will point to 10,350 being a
potential higher low now and this is now a key
support this week.
FTSE 100
Watch for: Will FTSE hold on to key support
band 6930/6955 this week?
Outlook: The FTSE 100 may be the major
markets big performer but the failure to hold the
break to an all time high above 7122 is a worry.
There is an old technical analysis saying, there is
nothing more bearish than a false upside break.
Subsequently there are several key levels to
watch this week. The support band at 6930/6955
which was a series of old key resistances
through August and September is now key
support for the bull market. A loss of this support
would suggest an increasingly corrective outlook
as the MACD and Stochastics lines give
concerning bear cross signals. Next support
6870.
Index Outlook

4. Weekly Outlook
Monday 17th October by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
The dollar rally has really stunted the prospective recovery of the precious metals despite a pick up in general
market volatility which would normally help to push traders into safer havens. Gold remains stuck underneath
$1265 whilst silver has been failing underneath an old resistance at $17.80 which is back in play. However, for
now although the recoveries are unable to find traction, the sellers are also relatively subdued. The technical
breakdowns imply $1225 on gold and $16.90 on silver, however it is likely top be the negative correlation to the
dollar which drives the moves. Oil has had a choppy time of it of late, with the latest newsflow surrounding the
potential implementation of the OPEC production cuts impacting sentiment. This will continue to impact on oil
ahead of the OPEC meeting where the implementation is expected to be thrashed out at the end of the month.
Bond yields are moving higher again. Central Banks are increasingly fighting against extending monetary
easing and this is beginning to show on the yields. “There are limitations to monetary policy” is a message we
are increasingly hearing from central bankers in an attempt to persuade governments to take up some of the
heavy lifting. Yields on Treasuries responding for the prospect of a December rate hike. There is though a
concern with regards to the rise on UK Gilts with the 10 year now the highest since 24th June. The move has
been accelerated by talk of a “hard Brexit”, and Gilts selling off as sterling sells off is not a positive combination.
WATCH FOR: US data to impact on commodities, and December rate hike expectations on Treasuries
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4
Gold
Watch for: Expect rallies to continue to be sold
into this week
Outlook: A string of neutral candles with small
bodies reflects a recent consolidation. The
sellers continue to be unable to drive a retest of
$1241, whilst the bulls cannot get any traction
above $1265 resistance. The large top pattern
continues to target $1225 but a close below
$1251 would suggest that the bears are
gradually gaining control and there is little real
support until $1200. The near term stretched
configuration of the momentum indicators
suggests that a technical rally could be seen but
I am still a seller into strength in this scenario as
I see further downside potential in the bear
phase.
Markets Outlook
Brent Crude oil
Watch for: The prospect of a correction is
growing
Outlook: There have been signs that the price
of oil is beginning to stutter a touch. The
breakout above the June high could not be
sustained on Brent Crude and the negative
candles are starting to mount. As yet there has
been no significant retracement with the support
band $50.15/$51.15 being supportive. However
the momentum indicators are starting to fade
with the Stochastics close to a corrective near
term signal. Bulls will be watching the support at
$50.15 (effectively round number at $50) this
week as a breach cold open a deeper correction.

5. Weekly Outlook
Monday 17th October by Richard Perry, Market Analyst
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5
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