The political risk from Donald Trump's increasingly chaotic presidency continue to concern financial traders. Resignations and rumours of resignations have been pulling markets around recently amid concern over the impact it has on President Trump's ability to substantially achieve anything in the White House. Markets will continue to focus on this but also look towards the Jackson Hole Economic Symposium this week. We consider the outlook for forex, equities and commodities.

1. Weekly Outlook
Monday 21st August 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: Thursday 24th / Friday 25th August
LAST: n/a
FORECAST: Draghi avoiding monetary policy
Impact: Jackson Hole is traditionally an event to stir
markets from a summer slumber. Key policy moves
have been alluded to by central bankers and with major
policy shifts in the months ahead will this year be
another key event? ECB sources suggests that Mario
Draghi will not discuss monetary policy on Friday and
avoid speculation of any hints at the timing of tapering.
However Fed chair Yellen will also be talking on Friday.
She will be discussing financial stability on Friday too.
With little else of note on the economic calendar Draghi
and Yellen will be closely watched.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 22nd Aug 10:00 Eurozone German ZEW Economic Sentiment 15.0 17.5
Wed 23rd Aug 09:00 Eurozone Flash PMI - Manufacturing / Services 56.3/55.4 56.6/55.4
Wed 23rd Aug 14:45 US Flash PMI - Manufacturing / Services 53.3/54.9 53.3/54.7
Wed 23rd Aug 15:00 US New Home Sales 615,000 610,000
Wed 23rd Aug 15:30 US EIA Crude Oil Inventories -8.9m
Thu 24th Aug 09:30 UK GDP (Q2 – second reading) +0.3% +0.3%
Thu 24th Aug ALL US Jackson Hole Economic Symposium (and Fri)
Fri 25th Aug 00:30 Japan CPI (core YoY) +0.5% +0.4%
Fri 25th Aug 09:00 Eurozone German Ifo Business Climate 115.5 116.0
Fri 25th Aug 13:30 US Durable Goods Orders (ex-transport) +0.4% +0.2%
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1N.B. Please note all times are British Summer Time BST (GMT+1), data source Reuters
Macro Commentary
In late 2016, the “Trump Trade” was coined as Treasury yields, the dollar and US equities all rose strongly on the
back of promised deregulation and fiscal reform/stimulus. Although the “Trump trade” has been steadily unwinding
throughout 2017 with yields and the dollar lower, US equities have been holding up, helped by improved corporate
earnings and reduced expectations of the speed of Fed tightening. However, in the wake of the terrible and morally
unacceptable events in Charlottesville, there seems to have been some sort of line crossed by Donald Trump. In
failing to entirely denounce the white supremacist/Nazi protestors, Trump has effectively validated them as part of
US society in the 21st Century. This is something that many feel is utterly abhorrent. Erstwhile supportive CEOs
have taken flight, whilst market sentiment was hit by the erroneous rumours of Gary Cohn’s resignation. Cohn is
Trump’s economic advisor and a key component in Trump’s tax reform. Steve Bannon’s resignation has shored up
Cohn’s position but if he leaves too then Trump’s credibility crumbles further. Trump has become a liability (if he
was not already), and with Treasury yields falling, the dollar lower and US equities selling off, suddenly the “Trump
Trade” could be seen as a negative sentiment trade. Trump has been smug to link himself to the strength of the
equity markets, but this could easily turn into a decisive reverse mode if someone like Cohn does actually resign.
Must Watch for: Jackson Hole Economic Symposium
Bund/Treasury yield spread and the EUR/USD
The yield spread widening again in recent weeks as the Bund
yield has fallen. This has been dragging on EUR/USD.

2. Weekly Outlook
Monday 21st August by Richard Perry, Market Analyst
Foreign Exchange
The dollar remains under pressure as political headwinds from a calamitous Donald Trump presidency and
dovish hints from the Fed have stopped a recovery that had previously been forming. The dollar had been
recovering after positive retail sales earlier last week, but the dovish Fed minutes revealed that the FOMC is
increasingly concerned by the persistence of declining inflation which puts in jeopardy the prospect of a third
rate hike in 2017. Fed funds futures currently price around 40% probability of a December hike and the dollar is
unable to sustain any notable upside traction. However, could it be a correction on the euro that gives the dollar
a relative boost? The ECB minutes from its latest policy meeting suggests that the Governing Council is
concerned over the strength of the euro. The speech from Draghi at Jackson Hole will not contain any reference
to monetary policy in a deliberate attempt to prevent speculation of a tapering announcement at the next
meeting on 7th September. The euro has been threatening a correction in recent days, but the dollar weakness
from Trump is helping to hold up EUR/USD. The underperformance in sterling has come as UK grwth data has
disappointed and inflation recently rolling over takes the pressure off a rate hike by the Bank of England.
However, news of a softer stance on Brexit would be supportive with just a week to go before Brexit talks
resume with the EU, whilst any surprise in the second reading of UK Q2 GDP will also drive volatility.
WATCH FOR: Trump updates will be key for the dollar and focus on Jackson Hole speeches
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2
FX Outlook
USD/JPY
Watch for: The key 2017 low at 108.11 is a
crucial test for the market
Outlook: The selling pressure remains in play as
the market once more drops back towards recent
lows. The concern is that with the negative
configuration on the momentum indicators and
downside potential, the market is positioning for
a test of the big support of the April 2017 low at
108.11. This support marks a floor for what is
really a trading range of the past 6 months.
However a closing breach would re-open the
downside once more. Last week’s low at 108.60
is initial support and the importance of these key
lows will not be lost on the market. The bulls
have a big task to change the outlook, with the
resistance at 111.00 strengthening.
EUR/USD
Watch for: The market continues to drift towards
the four month uptrend.
Outlook: The support of the long term breakout
at $1.1711 is still on the minds of traders, with
several intraday dips below failing to see a
closing breach. This comes with momentum
indicators drifting. This all points towards a
market that is just unwinding a position that will
be supported above the four month uptrend
which comes in between $1.1585/$1.1640 this
week. A retreat into this trend would be a chance
to buy for renewed upside potential once more
for the euro. There is little to suggest that the
bears of EUR/USD are mobilising to any
sustainable fashion and subsequently
corrections are a chance to buy.

3. Weekly Outlook
Monday 21st August by Richard Perry, Market Analyst
Equity Markets
Suddenly it seems as though traders have woken up to the fact that a President Trump will be able to get
anything achieved. His divisive politics may play right in his head, but not in Congress where leading
Republicans are increasingly speaking out against him. The question marks over Gary Cohn’s support ha
seemed to be a turning point as ex-Goldman Sachs banker Cohn ha been leading the moves for tax reform.
Healthcare reform has been a disaster, the huge fiscal stimulus is fanciful at best and now even tax reform
could be in doubt. US equity markets have subsequently sold off and this has echoes on major markets. On the
longer term charts we are now seeing key uptrends being broken. The 14 month uptrend on the DAX may have
already been broken (and also now being used as a basis of resistance, however the malaise has now spread
across to Wall Street. The S&P 500 has been in a well-defined 9 month uptrend but as a result of Thursday’s
sharp decline to a five week low the market has not only broken the trend but also started to form lower highs
and lower lows. The support of the major breakout support at 2405 is now key. There is also a move on the
FTSE 100 back to a key medium term support around 7300 but the move has also broken a trend dating back
to February 2016. US earnings season is now broadly done and despite over 10% earnings growth, the S&P
500 has made no overall gains. If Trump’s negative headlines continue, then the correction could be expected
to continue this week, a move that would resonate across the major markets.
WATCH FOR: Trump driven news to drive general sentiment for equities. UK growth could impact on
FTSE 100, but Jackson Hole could also be the main factor.
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3
DAX Xetra
Watch for: The failure of the bulls at 12,300 puts
the market in a longer term corrective outlook.
Outlook: The long term uptrend may have been
broken for the past couple of weeks, however
the failure of the rally last week around the old
support at 12,300 has been a key stake in the
ground now for the bears. The confluence of this
failure at the old pivot but also at a nine week
downtrend is key for what is an increasingly
corrective longer term corrective outlook. This
downtrend falls between 12,275/12,200 this
week and will be watched, but the longer the
resistance around 12,300 remains the bears will
gather confidence. Momentum indicators are
increasingly negatively configured and a retest of
11,934 could easily be seen.
S&P 500
Watch for: With lower highs and lower lows
rallies suddenly become a chance to sell.
Outlook: The strength of the bear candles and
posting of lower highs and lower lows is now
putting the pressure on the downside. Initially,
the old support at 2438 becomes the basis of
resistance to watch, however the bulls would
now need a move back above 2475 (last week’s
high) to regain control What is noticeable is that
the momentum indicators have turned corrective
and if the sellers gather momentum this week
there could be a test of the key support at 2405
which has been a key long term pivot throughout
the first half of this year.
Index Outlook

4. Weekly Outlook
Monday 21st August by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
The dollar weakness has driven gold sharply higher again. The upside move above the June high of $1296 was
impressive at the end of last week but now brings gold to a massive resistance and the breakout is not assured.
With the key $10 pivot band between $1300/$1310 overhead. The bulls rallied twice (in April and June) but
failed at this resistance. Friday’s rally on gold to $1300 also seemed to fail, so will this $1300/$1310 pivot again
be a key barrier? The importance of a breakout would be huge and with momentum indicators showing signs of
fatigue it may need a news-driven event that hikes geopolitical (North Korea) or political (Trump) risk. The oil
price has rebounded sharply on the second week of decline on the rig count. But despite US crude oil
inventories dropping 9m barrels last week to 467m, US production continues to rise, now c. 9.5m barrels per
day with production expected to rise further in August/September. Rising OPEC production also weighs on oil.
Trump’s perceived lack of moral compass and a dovish Federal Reserve continue to be a drag on US Treasury
yields The lack of inflation is a real concern for FOMC members and could prevent a December hike. The
Jackson Hole speeches from FOMC members will be watched. Furthermore, although the ECB has already
moved to head off speculation of taper talk from Draghi, he could of course mention the strength of the euro
which would be perceived as dovish and be a drag on the Bund yield.
WATCH FOR: “Trump-watch” for sentiment and Jackson Hole will be key for yields.
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4
Gold
Watch for: The $1300/$1310 long term pivot
band is key resistance this week.
Outlook: This is a key week for gold. The rally
broke above $1296 on Friday seemed to fail
around the resistance band $1300/$1310 which
remains a key barrier for the bulls. Momentum
indicators are positively configured but are
beginning to look tired, especially if this is (what I
believe it is) a medium term range play between
$1200/$1300. Can the bulls hang on this week?
A breakout above $1310 opens the 2016 high of
$1375 long term. The six week uptrend is
supportive between $1272/$1283 this week for
the bulls to maintain the run higher. Last week’s
low at $1267 is key.
Markets Outlook
Brent Crude oil
Watch for: Can the bulls hold a break through
$53.00 resistance this week?
Outlook: Brent Crude has been trending higher
for the past two months and the market has
rallied from support on the key medium term
pivot at $50. Will this be enough to drive a break
above resistance at $53.00 which has been a
barrier throughout August? Momentum indicators
on Brent Crude are positively configured again
with the upswing that ended last week, with the
RSI above 50 and Stochastics turning up. This
suggests that corrections will be seen as a
chance to buy with near term pivot support
around $51.30.

5. Weekly Outlook
Monday 21st August by Richard Perry, Market Analyst
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5
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