The politics of how the UK is set up to leave the European Union remains a key driver of negative sentiment on financial markets. Add in the slowing global growth trends, the US/China trade dispute and the argument over the Italian budget and there are plenty of reasons to be negative. We consider the outlook on forex, equities and commodities. 

1. Weekly Outlook
Monday 26th November 2018 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.
Key Economic Events
WHEN: Friday 30th November to Saturday 1st December
LAST: n/a
FORECAST: N/A
Impact: There had been precious little dialogue between the
US and China for months until a phone call between
President’s Trump and Xi (handily) in the run up to the US
mid-terms. They now plan to meet face to face at the G20
this week. The trade dispute has been a key driver of dollar
strength and Emerging Asia woe since it all ramped up in
April this year. Markets will be keeping a close eye on how
both presidents react as they come out of the meeting. Will it
herald moves towards an agreement to resolve the dispute?
Markets will certainly react if so. Dollar corrective and risk
positive would be the likely move.
Date Time Country Indicator Consensus Last
Tue 27th Nov 1500GMT US CB Consumer Confidence 135.5 137.9
Wed 28th Nov Tentative UK Bank Stress Tests
Wed 28th Nov 1330GMT US GDP (Q3 prelim) +3.5% +3.5% Advance
Thu 29th Nov 1300GMT Eurozone German CPI +2.3% +2.5%
Thu 29th Nov 1330GMT US Core Personal Consumption Expenditure +1.9% +2.0%
Thu 29th Nov 1900GMT US FOMC meeting minutes
Fri 30th Nov 0100GMT China Manufacturing PMI 50.2 50.2
Fri 30th Nov ALL G20 Annual meeting in Buenos Aires
Fri 30th Nov 1000GMT Eurozone CPI (Flash headline / core) +2.1% / +1.1% +2.2% / +1.1%
Fri 30th Nov 1330GMT Canada GDP (MoM) +0.1% +0.1%
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1N.B. Please note all times are British Summer Time (BST) i.e. GMT +1. Data: Reuters
Macro Commentary
Oh Brexit! It is possible that in years to come the word “Brexit” will be appropriated to become a swear word in the
English language. Domestically, the situation is a complete mess. The UK has a deal agreed by the EU-27 (after
some wrangling from Spain at yesterday’s EU Council Summit meeting), however with passionately vocal dissent
from all sides in the House of Commons, it is becoming increasingly apparent that the deal could be hugely (and
embarrassingly for Mrs May) defeated in the vote on 11th December. The problem is that a renegotiation looks futile
as the EU position appears to be firmly set and unlikely to give the UK enough ground to turn a defeat into a vote
that Mrs May can win. At least it would need the Irish backstop to be dropped in order for the hard Brexiteers and
the DUP to even contemplate voting for the deal, something the EU will not accept. So in this event, the two binary
options become increasingly likely, either a No Deal Brexit, or no Brexit at all. The latter option is becoming ever
more popular as an option in a divided Parliament but would require either another general election, or a second
referendum to be achieved. I remain dumfounded that very few people seem to understand that it would only take a
simple majority in a Parliamentary vote of no confidence against the Government that could trigger Mrs May’s
downfall and a general election. The DUP currently lend their “confidence” but will this continue if Mrs May’s deal
suffers what will surely be a catastrophic loss? The UK is legislated to leave the EU on 29th March 2019. Tick tock.
Must Watch for: G20 meeting – President Trump meets with President Xi
US dollar and CFTC net dollar futures
The market remains strongly long the dollar since May, since the
trade sipute with China really took off.

2. Weekly Outlook
Monday 26th November 2018 by Richard Perry, Market Analyst
Foreign Exchange
Since at least April this year the dollar has been a key outperformer in the forex space. Against both majors and
exotics the trade dispute with China has allowed the dollar a sense of safe haven appeal that has driven
significant gains to take the Dollar Index from 90 to over 97. The index continues to trend higher and in the past
few months there has been an uptrend channel formation which continues to underpin the dollar above 96.
However there are cracks that are beginning to show. There are major factors behind the dollar outperformance
other than the trade dispute. Donald Trump’s tax reform has enabled economic growth and relative
outperformance (versus the Eurozone and UK especially) that has allowed the Federal Reserve to consistently
tighten rates while other banks procrastinate. However, a fourth Fed hike for 2018 is still on the cards but 2019
is more questionable. Especially when considering that FOMC members such as Kaplan and Clarida are
suggesting the FOMC should be data dependent. At the moment, Fed fund futures suggest two hikes (the dot
plots still say three) next year. With yields showing signs of getting stuck (10 year yield topping out at 3.26%) it
could be a struggle for the dollar traction higher to continue. Disappointing Eurozone flash PMIs and Brexit
uncertainty suggest the economic outperformance could continue but will this week’s G20 meeting between
Trump and Xi lay the groundwork for a US/China agreement and begin to reverse the dollar gains?
WATCH FOR: Eurozone and US inflation. Trump and Xi at the G20. Brexit political newsflow for GBP.
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2
FX Outlook
GBP/USD
Watch for: Brexit remains a key driver with
elevated volatility on increased political risk
Outlook: Sterling remains volatile amidst the
political uncertainty of how Brexit will pan out in
the coming months. Technically, Cable has
actually settled down relatively calmly in the last
week but trading with negative medium term
momentum configuration would suggest that
rallies remain a chance to sell as the bulls failed
to gain any decisive positive traction. The
resistance band $1.300/$1.3070 is pivotal, but it
will be newsflow which drivers the outlook going
forward. Pressure continues to point towards a
test of the medium term range lows at $1.2660,
$1.2695, $1.2720.
EUR/USD
Watch for: A continued failure under $1.1500
and failing momentum means that a retest of the
November low is preferred.
Outlook: The euro remains corrective as the
early November rebound has fizzled out under
$1.1500 and the momentum in a run lower looks
set to resume. The downtrend channel since the
end of September has been questioned but
essentially remains a drag of the market lower
and therefore, near term rallies remain a chance
to sell. This is pointing towards a move back
below $1.1300 and a retest of the November low
at $1.1213. It would need a decisive move back
above $1.1500 which is a medium term pivot, in
order to change this corrective outlook.

3. Weekly Outlook
Monday 26th November 2018 by Richard Perry, Market Analyst
Equity Markets
Major equity markets around the world have been under huge pressure in this sell-off of recent months. Almost
all are now in correction territory (considered to be a move of over 10% lower) and there is little sign of the
situation improving. Rallies continue to be seen as a chance to sell as major charts are a litany of downtrends
and bearish momentum. So can traders in the US come back from a Thanksgiving break with a more positive
frame of mind? There is so much to be negative about at the moment. A global economic slowdown is
developing and the flash PMIs of last week have done nothing to improve prospects as even the US is starting to
catch the cold. I am trying not to mention Brexit but this is certainly something that plays into the falling
confidence in Europe. However, is there potentially some good news on the near term horizon. The G20 meeting
between Presidents Trump and Xi has the potential to lay the groundwork for an end to the trade dispute that
has had a key negative impact on risk appetite. The DAX will be a key market to watch here. The sudden and
sharp bear market in the oil price has also been a key market to watch, investor sentiment is never happy to see
any key market drop like a stone. The oil majors which have been such a key factor behind the strength of S&P
500 earnings are certainly geared towards a stronger oil price. So attention will turn towards the OPEC meeting
for the potential to put a floor under the oil price once more. In the run up to the meeting there will be chatter
about production cuts and who’s in/who’s out. If oil can begin to settle then it takes away a key factor behind the
negative sentiment on equities. FTSE 100 is heavy with oil majors. The S&P 500 will be key on both factors.
WATCH FOR: OPEC chatter on production cuts, Trump/Xi meeting, Brexit driving FTSE 100 volatility.
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3
DAX Xetra
Watch for: Bear trends continue to suggest that
near term rallies will struggle for traction
Outlook: The DAX has been trending lower
since June and in that time a series of lower
highs has formed as the downtrends have
accelerated lower. However, suddenly with a
couple of positive sessions the immediate
negative outlook is being questioned. It is still
difficult to see a recovery from changing this long
held negative outlook and so should give
another chance to sell this week. An eight week
downtrend is being tested and momentum
ticking higher, but the amount of overhead
supply (initially at 11,400/11,500) is still likely to
restrict a recovery this week.
FTSE 100
Watch for: Negative momentum points still
towards a test of the October low in due course
Outlook: The bearish run of lower highs and
lower lows on FTSE 100 is being tested by an
initial rally on Monday morning, but can this be
the beginning of a decisive recovery? The
medium term overhead supply is significant
around 7200/7300 and initially the resistance
comes in around 7100 which could be restrictive
of a recovery. Unless Brexit is resolved smoothly
it is difficult to see a sustained FTSE 100
recovery and this means using a recovery for a
move back towards a test of the key 6851
October low could be seen. Near term
momentum is mixed but there is still a negative
bias which should ensure that rallies are sold
into.
Index Outlook

4. Weekly Outlook
Monday 26th November 2018 by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
Gold has been edging higher as the relative dollar strength has been waning in recent days. However it could
be too early to call the end of the dollar outperformance and if so, the gold bull run may struggle for traction.
The key October/November highs around $1236 are a major ceiling that would need to be overcome otherwise
a ranging phase may start to form on gold. The downside looks to be limited on gold though with so many
reasons to generate an outlook of risk aversion across markets.
Oil remains under pressure amidst rising production. US oil output is moving ever closer towards 12m barrels
per day whilst according to Bloomberg, Saudi Arabia is also currently pumping upwards of 11m bpd. This all
comes as sanction waivers over Iranian supplies mean that supply has not been taken out of the market as
much as had been expected. With global growth slowdown fears impacting ion demand expectations the price
has suffered. Traders will be looking towards what OPEC will do at its bi-annual meeting on 6th December. Cuts
of as much as 1.5m bpd may be necessary so look for any hints in the coming days.
Focus is on inflation measures and their impact on bond yields. With inflation still failing to take off in the US,
core PCE will be watched this week. The US 10 year yields has stumbled at 2.5% and threatens to roll over as
US economic data has started to disappoint. If so it is difficult to see sustained dollar strength continuing.
WATCH FOR: Inflation for the Eurozone & US, Trump’s meeting with Xi at the G20 key for sentiment
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4
Gold
Watch for: An uptrend channel is positive above
$1217 but can momentum hold up?
Outlook: The uptrend channel of the past three
months continues to pull gold higher and holding
above the pivot at $1217 will be seen as a key
near term gauge this week. A test of the $1236
long term pivot is still on the cards but the
momentum indicators are beginning to drag. This
could mean that whilst $1236 could be tested a
breakthrough of the key resistance could be a
struggle this week. A close below $1217 would
be a disappointment for the bulls but the support
band $1208/$1217 is there to prop up a
corrective slip. The bottom of the channel is now
above $1200, with $1195 the key medium term
support to prevent a renewed negative outlook.
Markets Outlook
Brent Crude oil
Watch for: A move back towards $53/$55
cannot be ruled out.
Outlook: The oil price has been smashed from
pillar to post in recent weeks and the moves are
becoming more volatile and vicious to the
downside as this bear market enters a stage of
maturity. An acceleration in the selling on Brent
Crude in the past week has seen the market
sharply below its seven week downtrend
suggests that the bulls are losing all faith.
Breaking below the support at $61.10 effectively
now opens the October 2017 low at $55.05 is on
this week, but $53.00 which is an old key pivot is
also possible. Momentum indicators are hugely
negatively configured but equally the market is
hugely stretched. The bulls are facing overhead
supply between $61.10/$64.50.

5. Weekly Outlook
Monday 26th November 2018 by Richard Perry, Market Analyst
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5
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