 Hello, good afternoon, and welcome to CMC Markets and this monthly non-farm payrolls webinar on Friday the 2nd of February and this preview of the January Employment report out of the United States first and foremost before we get underway a little bit of housekeeping rules with a risk warning The obligatory risk warnings that we have to undertake for every one of these For every one of these events Basically what I'm going to try and do is show you where the key chart points are the key levels that I'm looking at in the context of What the next possible move is likely to be in equity markets and currency markets? As well as commodity markets, and it's certainly not been a particularly Good week for the US dollar, but then again Hasn't really been a last good six weeks for the US dollar I think I think the big question that's really dominating investor sentiment at this point in time is Whether or not the dollar can continue to fall now ultimately I think When you look to put a trade on and what I always tend to do when I put a trade on is to look at What's the lowest risk trade in terms of where markets are in the context of support and or resistance? And I think in this context We've heard an awful lot about the fact that the dollars a week and yet US bond yields are hitting multi-year highs if we look at the two-year yield for example That's around about 2.15 2.16 percent. That's the highest levels. It's been since 2008 The 10-year yield is back at levels last seen at the beginning of 2014 at around about 2.8 percent Yet for all this strength in yields the US dollar has continued to languish very near The lows of the last two or three years That's born out by this dollar index chart, which I've got in front of you here right now Now those of you who are regular attendees of my webinars know that I place a great deal of stock in the correlation between the dollar index and the euro dollar and the simple reasoning behind that is because Of the constituents of the dollar index Euro makes up around about 57 percent of that index. So there's a very distinct correlation between the two and We've had another go at the 125 level in euro dollar And we've had another good go at the support that we saw in January around about 88 45 88 50 on the dollar index now The trend is quite clearly lower in the dollar index at this point in time We can see that born out by these progressively lower highs, but we are starting to find a little bit of Support coming in around about this sort of area here and about this this levels around about 88 40 So I think for me in terms of the risk trade Then trying to sell the dollar when it's a three-year lows Is a fairly risky trade that's not to say that it wouldn't ultimately be successful But you might get squeezed out on a significant bounce. We are at the lows of the week We're also at the lows of the last three years And while we have seen some rebounds and the rebounds are getting shallower I Would not be prepared to sell the dollar aggressively at these sorts of levels because on a risk reward basis It the numbers don't really add up now if we close below 88 45 88 50 then obviously the risk reward Ratio shifts slightly towards further dollar losses But when I look at the US dollar and the fact that it's languishing down near these lows You have to ask yourself why that is happening and ultimately what we need to look at is obviously the political backdrop The political backdrop for the dollar is a little bit uncertain on the 8th of February We could well get another US government shut down because the funding extension that we have that we got at the end of January We only basically funded the US government up to the 8th of February next week So that could be a debate that dominates sentiment next week Are you going to go short of the dollar ahead of that ahead of a weekend? I'm not convinced that you will given the fact that also euro dollar long position Are at their at our record levels? So that suggests to me while everyone thinks the euro is going to go higher That's not to say that they're wrong. It's all about the timing So for me the timing is key if we look at euro dollar here We can see that term that's 123 20 area As acted as a decent area of support for most of this week Why because it was the previous highs, but also we've got the 120 170 area Which was also coincidentally The 50% retracement of the entire down move from the 2014 highs to the 2016 2017 nose So we're also near 126, which is a 61.8 Fibonacci retracement level as well So even if we get a move through 125 35 40, which is the previous highs We're still running into a big chart point around about 126 And I'm not convinced at this point in time that we've really got the sufficient momentum To really take us through that towards 130. So on a risk reward basis I'm a little bit uncomfortable being overly long euros at these levels It's very much a case of buying the dips. So if we get a dip back to around about 123 20 I'll probably be more than happy to buy a dollar down there But not around about 125 the numbers for me the risk reward Just does not add up. It does not make sense. So really and that's this really what is this is all about I always trade what I see I look at where the key levels are and then basically why up the probabilities from there on in So looking at this would suggest to me that ultimately the upside in euro dollar is limited on the basis I think that If we look at where us yields are does it's likely that We could see a little a little bit of a poor backboard also I think we could see a little bit of a rebound in the dollar. Let's face it. We've closed lower for Six weeks in a row. The likelihood is we're going to close low for seven weeks in a row But much will depend on obviously on how strong today's payrolls numbers are and in particular, I think the The wages numbers. I think the wages numbers are probably going to have a greater weight than the The actual headline payrolls number. So Let's look at what we're expecting this previous is wrong here It's number here on the year-on-year number It should be 2.5 for the previous number if we get a number come in anywhere above 2.5 2.6 Then that's likely to be dollar positive in the short term and probably push euro dollar back down Similar sort of thing with respect to the pound against the dollar which is currently running into a significant area of resistance Just below 143 around about 144. We can see that borne out by this chart here again regular viewers We'll know that I've been watching this 144 on the 200 week moving average for quite some time While the euro dollar is above its 200 week moving average sterling has as yet not been able to get above it We've also got a trend line resistance coming in from the 2015 peaks Which currently comes in just above the level of where we are now. So certainly in the context of The pound against the dollar we're finding decent support around about 139 80 Why because that was the Fibonacci 38.2 Fibonacci resistance level on the way up Now acting as support on the way down. So again here I think if the pound does go up towards around about one one forty one forty two Fifty one forty two seventy or towards this this trend line then we could find a little bit of selling interest heading into this Heading into this number. So a weak number You'll probably see euro dollar spike higher on the average earnings and cable spike higher Towards one forty three. Will it have the momentum to take us through to one forty four on a Friday when the market is probably Net short dollars It's debatable, but again, you know, this is why we have stop losses if we look at the client sentiment on Cable we can tell we could see that client positioning is 50 50 in terms of where the pound can go to next So there's no real guide there as to how clients are positioned It's an even split between the two if we look at your a dollar that split is probably a little bit more Geared towards the upside and that's what makes me a little bit suspicious about being overly long of euro dollars These significant market highs ultimately. I think if you're heading into the weekend With a payrolls number coming up Then you probably if you're being sensible want to pare down any euro dollar long positions so So as I say looking looking at headline numbers This is the number I'm interested in in particular the wages number and headline number hundred and eighty thousand You know if we come in at two hundred two hundred and ten again That's likely to be modestly positive for the US dollar a weak number around about one thirty one thirty five It is January. We did have a big freeze in January. So That may impact the headline number. It didn't impact the ADP number That was very very strong But given the frozen weather that we saw in January that could prompt a weaker headline number on the beat up from the bureau for the labor statistics on the unemployment number 4.1% no no great no great surprises are likely to come out of of that particular one But in terms in terms of wages, I think the wages number is probably going to be the most eagerly watched number Over the course of the next few months because we've had a number of stories out of the US a big US companies paying bonuses And giving pay rises Starbucks FedEx Walmart JP Morgan All given their their staff significant pay rises. So in that context a very strong payrolls number could push Could push the dollar higher now This is a bit of a strange one here because the dollar has been going up consistently against the yen all of this week But not against the euro and against the pound and I think that's a large part of that particularly over the course of the last 24 hours Is because the Bank of Japan Decided to put a cap on Japanese yields and that has weakened again The Bank of Japan has taken a unilateral decision to try and cap the yields on its 10 year And as a result that has weakened the yen pushed the dollar up against the yen And we could get a move through this one ten twenty area if we get a move through one ten twenty on dole yen on a decent wages number then We could see it move back to around about one eleven So dole yen is acting slightly independently of all the other dollar majors And that's usually that's largely as a result of the actions of the Bank of Japan Over the course of the past few weeks. They're trying to or the past few days rather They're trying to put a lid on the 10-year yield because it's rising too fast too quickly in response to some of the inflationary pressures The markets think is coming down the line and we're certainly seeing it reflected in the ISM surveys We saw that in manufacturing yesterday 72.3 Five six year high highest level in terms of input prices similar sort of story. We're in respect of the pound So I'm looking at the pound against the dollar at the moment. It's around about 142 Probably going to find a little bit of support around about 141 50 140 160 topside around about 142 80 143 Euro dollar 125 35 on the topside on the downside Probably see a move back towards around about 124 20 124 30 If we do break one through 125 50 on Euro dollar We could head back to around about 126, but I'll be surprised to move it much below that on equity mark It's going to quit do a quick summing up on these the decks has broken lower Over the course of through its through its lows from the last few months at the moment It's finding a decent area of support Just below 12,800 at 12,800 level which was this low here, but ultimately what we're seeing here is a little bit of weakness if the euro dollar comes off As in response to a strong number then we could see that start to which higher again But we are starting to see evidence of a little bit of breakdown in equity markets, but looking at the S&P There's a decent area of support coming in around about 2800 Keep an eye on that level if we do break lower than we could see further weakness going forward What is worrying for equity markets? And this is something that I did touch upon a little bit in my morning note is the break below tooth that below 7600 and the footsie 100 of these series of highs here actually to support initially we've now broken below that We're touching the 200 day moving average We could see a little bit of a pullback Towards 7500 the fact that we've broken lower on the footsie is a little bit of a worry and could that be a leading indicator for further stock market declines and Potentially drag US markets down as well Dollar Swiss has broken a very key support level on a long-term basis and again that's symptomatic of a little bit of dollar weakness This is the weekly chart here Any rallies on dollar Swiss are probably going to find resistance at 94 50, right? It's time for the payrolls numbers Let's sit back and absorb what the numbers are going to be And here they come 200,000 for non-farm payrolls The previous number of rise up to not point six the average the wages numbers ignore that that is wrong Average hourly earnings have risen 2.9 percent year on year Very dollar positive number was right to be cautious about being long of euros We've seen that come off the dollar has rebounded 2.9 percent average earnings year-on-year well above Expectations so the risk-reward ratio or the risk-reward what I was talking about earlier trade what you see the long dollar The short dollar position was not the right position to have we were right to be cautious on it And now the big question is how much can the dollar rebound in response to those numbers because ultimately what that number will prompt I think is What's that how many how many US rate rises are we going to see? Between now and the end of the year at the moment the market is pricing in between two three rate rises if If wages start to head towards three percent and move beyond three percent Then maybe there's a perception that we could see four Rate rises this year. We've already got one priced in for March Will we get one in June when we get one in September or we get one in December? These are all the Fed meetings that currently have a press conference unlikely that we'll get more than four rate rises But certainly I think markets will start to price that in dolly end looking at a one ten twenty area I was talking about earlier. That's a very dollar positive number Will that give us ammunition to move higher in terms of In terms of dolly end towards around about one ten and a half one ten seventy. We've already seen the US ten-year Treasury yield move above 280 on that number so US bond yields are already pricing in the prospect of tighter US monetary policy That's likely to have us that's likely to have a negative effect on gold and a positive effect on the dollar And yes, the dollar is indeed starting to break high if we look at gold prices Gold prices are likely to leg lower If we look at look at this here, we can see that We are near multi-month highs so again the risk reward here is for to be longer dollars and shorter gold Simply because that the momentum dictates that The more likely movie is to be to the downside then to the upside and it's a similar sort of story for commodity prices as well, which have started to show I've started to show a little bit of softness over the course of The next few days we can see that here. Is this what is this the beginning here of Head and shoulders reversal. We've got a we've got a Left shoulder here. We've got a head here formation of a right shoulder here with a neckline at 68 46 Right. I'm being asked. Where do you reckon these numbers take you a dollar? Well ultimately, I think I think we should we should test The downside it as long as we stay below 125 euro dollar should drift lower So for me, I think ahead of the weekend decent payrolls numbers wage growth at 2.9 percent well above expectations 2.6 that's a dollar positive story It should put a floor under the dollar and under the dollar index and prompt a little bit of a short squeeze Into the weekend in terms of the dollar And and push it higher against the pound push it higher against the yen and push it higher against the euro I don't think we're going to see a significant move lower on the euro dollar But I think what it should do I say it should do is it should it should keep it below the highs so far This year, I mean we look at euro dollar and what it's done over the course of the last week or so and we are on the highs We're looking at yesterday's lows yesterday's lows around about 1.23 80 I would certainly expect to see a move back to around about 1.24 20 on the back of these numbers As long as we don't get any short squeeze back through 125 but certainly I think as far as this particular number is concerned I Would expect euro dollar to start to trend back towards the 1.24 level. Hopefully that answers your question, sir There's anyone if there's anything else that Anyone wants me to cover specifically just send me a question over more than happy to Answer a question on any currency pair that you see fit in terms of the dollar CAD Obviously, that's very positive for dollar CAD. It's going to weaken the oil price It's going to push the US dollar higher against the Canadian dollar and push it back towards this 1.24 level again, we're in a downtrend here But it has been starting to find a little bit of a base here around about the one twenty one twenty two and a half area and The strength of those numbers is likely to push the dollar up against the CAD back towards the one twenty four area the one twenty four ten one twenty four twenty Over the course of the next few hours with respect to stock markets High yields generally tend to mean Particularly this week they're likely to put Further pressure on equity markets and that certainly does appear to be the case in the case of the S&P 500 Decent set of wages numbers, but no surprise there. We've seen a push lower keep an eye on those Lows that we saw early this morning around about 2795 if the market is unable to Get squeezed higher on the US open in the wake of those earnings numbers out of Apple Amazon And Google last night, and I think there's a good chance We could see a further test of the downside in equity markets And it does strike me as rather strange that given the health We've had such a decent January that February should be getting off to such a disappointing start, but This is something that I've said before this chart does look a little bit cluttered. So what I'm going to do is I'm just going to take some of these Drawing lines off, but if we look at equity markets on a weekly basis The weekly close here for the S&P and the Dow is going to be very very important in the context of where we could potentially go to next so This candle here this weekly candle could potentially be a key day or key week Reversal so where we close Tonight could be a important indicator of where we go to over the next couple of weeks or so We're well overdue a correction have been for quite some time now We haven't really seen a significant down move on a weekly basis for over a year So we're well overdue one. So we do need to be very very mindful That at some point we're going to get one and I think this could be the beginning Of a correction markets have been gearing up for one for quite some time Ultimately an awful lot of people have got squeezed out every time they tried to gear up for one But I think there was a good chance that given What we've seen over the course of the past few minutes We could be heading up for a little bit of a move lower or a consolidation particularly in US markets Which are a little bit expensive. So If we close lower on the week if we close below 2,800 and that's what I'm really looking for in the S&P Then we could go for a little bit of a move towards 2,700 and 2,600 we could certainly squeeze back to 2,830 2,840 Even if we do close below 2,800 this week But overall I think there's a potential for a little bit of a momentum shift a little bit of a consolidation over the course of the next few days Right, okay. I've been asked a question about the platform with respect to chart saved You only get that chart saved option When you save a chart and put some lines and what have you so when you first open a chart You don't necessarily have that option available if you've never opened it before but once you've saved Various options to that particular chart. So let's take an example. I'm going to look for something in the library Currency pair or something like that If I can actually Get it to come up. There we go. So let's let's choose something like AUD So we can do that so the chart option is not available But as soon as you open the chart and then you put Technicals on it or you put the chart type on it change it to a candle maybe put a Oscillator on it Underneath change that like so and we put the oscillator on there Once it's in a watch list and it needs to be in a watch list for you to be able to save it If it's not in a watch list, it won't save. So you need to create your own watch list copy it in there And then it should save the chart along with all your various bits and bobs like so. So I'm going to open a Trying to think of something that I don't have on my main on my main list of stocks here Because at the moment what I've got here is everything has a save chart. This is what the squiggly line means You all have saved analysis with respect to your chart So I go here and I've got knocky-stocky got the chart, but I've also got the save chart here as well. So If I do something on the line of maybe let's try Swiss again like so Drag that in there to my watch list I've already got it in there. So which is why it's not done that. So we'll try something else. Let's try Kiwi in Do that. Okay, so we can see from Kiwi in that I've just got The option for the chart on its own What I then do is open that chart Put my analysis on it on the bottom Confirm Maybe do a little bit of line drawing if I want to like so close that Go back to Kiwi in from the watch list And the settings are saved like so so it has to be in a watch list and It's fairly easy to create a watch list you go to the watch list option and you create a new watch list So that's how you save the chart Then whenever you go back to that watch list and you open a new chart your analysis is all saved any other questions Ladies and gents anything that I haven't covered. I know I know a Kiwi in not Kiwi in Stirling Kiwi is quite a favorite of some of our Customers over there. So I'll have a quick look at that before someone asks me about it and again a few weeks ago I talked about Stirling Kiwi being potentially positive lightly to remain. So It's still looking fairly fairly bullish on The basis of these daily candles here also important. I think next week. We'll have a quick look at Ford's Ford look to next week. It's Bank of England rate meeting but also it's the inflation report and the inflation report is going to be very important in the context of Expectations about whether or not we get further Bank of England rate rises later this year and in particular it's going to have a particular bearing on Euro Stirling Euro Stirling has got a very very strong base around about a 690 We can see it on this daily chart here again This is something that I talk about regularly in my morning night, which gets posted on the website Big support at 8690. We've seen progressively lower highs We are in a little bit of a short squeeze higher at the moment We probably could well head back towards around about 82 88 10 88 20 but There is I think significant interest to sell Euro Stirling in and around those levels and As such I'm still bearish on Euro Stirling on rallies back towards them back towards around about 88 20 And then obviously above that to this trend line resistance through here at the moment momentum is positive while above 86 90 We do broke below 86 90. However, it's very much a case of Watch out below because at the moment we do appear to be consolidating in a slightly tighter range One thing this weekly chart does tell me is that there's significant buying interest down there But at the moment there's also a reluctance to take it significantly higher So we're a bit range bound where Euro Stirling is Consent What else am I looking forward to next week? Well, obviously we also have the RBA We have the latest Reserve Bank of Australia rate meeting and again in that context Aussie dollar big resistance up around 81 30 But we have broken below this support here at around about 79 70 79 79 80 so there is potential for the Aussie dollar to drift back towards around about 79 20 or even 78 80 As the dollar rebounds. I think the Aussie dollar is going the RBA is going to be very uncomfortable With the Australian dollar at current levels. So there's a distinct possibility that They'll be mindful of being too hawkish when it comes to the interest rate outlook So keeping an eye on Aussie dollar and the Kiwi dollar as well. We have the RBNZ Also next week and that's likely to be a key driver in terms of the New Zealand dollar global services PMIs are out on Monday It's particularly the UK services PMI is going to be particularly Interesting given the weak construction number that we saw this morning But again, it's the inflation numbers here that I'm particularly interested in and again input prices are starting to move up So the big question there and the inflation report given the increase that we've been seeing in input prices Is will mark Carney to talk out the prospect of maybe one or two interest rate rises this year given How well the UK economy is actually doing relative to how it was forecast to be doing this time last year Let's not also forget the pound is 18 percent higher now than it was this time last year. So that should actually Against the dollar that is That should help push down That should push down inflation expectations going forward Okay, so I'm probably going to wind this up now ladies and gentlemen unless anyone has any other questions They wish to ask me We do have another webinar on Monday at 12 15 with my colleague David Madden So tune in for that if you want to get a preview for the week ahead Otherwise, I'd like to thank you all for joining me today and wishing you a Pleasant weekend. Thanks very much for listening