 Hello and welcome to CMC Markets and this month's non-farm payrolls webinar on Friday the 6th of July. Before we get started I have to get the small matter of some revised risk warnings out of the way so we will do that bit of housekeeping now, been slightly amended since the change of regulations that took effect at the beginning of this month so just quickly make our way through those so that you can digest them and then we can get started on the order of business for the day which is obviously the US payrolls report now we have got a bit of a flavour of the payrolls report when the ADP June numbers were released yesterday they came in slightly below expectations were expecting a number in the region of 189,000 came in at 177,000 but to offset that the previous month's numbers were revised up so the net change on the two-month period was minus 1,000 so I don't think there was anything particularly to be concerned about with respect to the US labour market it still appears to be in fairly decent shape certainly US policy makers overnight didn't have any concerns apart from the fact that they were a little bit concerned that the US economy might be running a little bit hot as I lead up to the payrolls numbers I'll obviously be looking at the data we also have Canadian payrolls as well so I'll obviously have a look at them and look at the key numbers to expect there particularly in light of the fact that we have a Bank of Canada rate meeting on the 11th of July next week and I think a decent payrolls number on Canadian jobs would pretty much guarantee a rate rise from the Bank of Canada next week because over the course of the past few weeks Canadian jobs data has or Canadian economic data rather has been fairly positive and I think the Bank of Canada will be reluctant for that gap between US rates and Canadian rates to get too wide and the Bank of Canada hasn't raised rates this year whereas the Federal Reserve has raised rates twice so I think against that backdrop unless we get an absolutely diabolical Canadian jobs figure then I think the Bank of Canada could be minded to push rates up by 25 basis points when they meet next week on the 11th of July despite concerns about NAFTA and obviously the implementation of tariffs which Canada has put on Chinese Steel in response to the US tariffs on pretty much everybody else's steel and this is I think one of the one of the concerns it's likely to continue to linger over the course of the next few weeks the tariffs on US goods and Chinese goods have both taken effect China basically followed up the US measures pretty much soon after despite threats from President Trump in Montana that if China responded to US tariffs that he would implement the potential for another 200 billion dollars on top of that and another 300 billion dollars on top of that Marcus don't appear to be overly concerned about that at the moment and to be quite honest I don't think they need to be because any implementation of new tariffs is going to take quite some time to come to pass and a lot of water can flow under the bridge between threatening to impose tariffs to actually getting them implemented and if you think about where we are now and where we were in April May it's taken a while for the current tariffs to come into effect so that's not to say that the mere prospect of tariffs won't cause a little bit of risk aversion and that's what I really want to talk about I think over the course of the next few minutes ahead of today's payrolls report because ultimately whatever the tariff situation is the prospect for further gains in equity markets is I think likely to be fairly limited while we have that overhang and at the moment we are pushing against some very key resistance levels on the DAX and on the FTSE 100 and these are quite clear in my chart forum post earlier this morning I highlighted that with respect to the DAX with a resistance level around about 12,554 and that was quite significant that particular point simply because it also was the lows that we saw in May and technical analysis is always the study of support and resistance reversing roles what have you and basically acting as support and resistance levels trading levels over the course of a given time period so what we've got here 12,554 on the DAX if we break through that then I think there's a decent chance we could potentially break up towards 12,750 while we're below that then the risk reward would suggest that the market is going to struggle to push it back above those particular levels now we have seen a bit of a rally this week on the back of a report that the American ambassador to Germany talked to German car executives about the possibility that the US might suspend threats of tariffs on autos if the EU removed equivalent blocks on US vehicles well you know that is that is all well and good but unfortunately that's not something that they can do unilaterally it's certainly against WTO rules for the US and Germany or even the EU for a start it would have to be it would have to be agreed at EU level and I think there's some doubt that smaller European countries would agree to a sectoral carve out for German and French automakers on the basis of US tariffs because ultimately it would be once again Germany and France getting special treatment at the rest of the EU and that's something that Angela Merkel the German chancellor sort of talked about in comments that she made to German German parliamentarians yesterday so for now what we've got is resistance levels coming in on the Dax around about 12,550 we're pretty much down towards the lows of the day we've drifted down into negative territory for the day we could head back to around about 12,450 but albeit we are in positive territory for the week the economic data by and large has been fairly positive this week so if we didn't have all these trade concerns I think the outlook would be much more much easier I think to predict for equity markets it's a similar sort of story on the UK 100 ladies and gentlemen look at this channel that I've drawn in here on the footsie it's a beautiful channel it really is and we've got a really nice resistance level up just above these peaks here around about the peaks that we saw earlier earlier this week around about 7,707 we can see that just by clicking on this little cross here rolling across to the actual candle itself and if you look in the top left corner here you've got open high low close box there so I'm just highlighting over that and we can see the height for that particular day is 7,707 so round about if we get a rebound today in the footsie 100 up to around the 50 day moving average and slightly above that there's certainly resistance around about 7,650 on a rebound higher it does happen to be the highs of the week so I think the Yosef is getting up there are pretty remote but if we do then certainly I think there's an opportunity to maybe take profits on any long positions that you might have moving on to the dollar because I think once again it's it's a usual refrain on my part but I think the most important data point today and if we look at the dollar index we can see that here and the most important data point today is going to be the wages numbers and in particular this support here on the dollar index it's a very big support it also more or less coincides with around about 117,3050 area on euro dollar which is pretty much where we are at the moment on euro dollar you know you know my views on the correlation between the two dollar index if the dollar index sells off fairly aggressively then what will happen is euro dollar will go up and vice versa now at the moment we're finding decent support on the dollar index around about 94,15 and that's the equivalent of this sort of low point here we are above that euro dollar has ratcheted higher a little bit and it's pushing up against the highs of the week around about 117,25 but if we if we look if we look at a euro dollar and this is the area that I'm paying particular attention to and this is something that I've talked about in my morning note this area between 117,25 and 30 is quite a big level on the four hour chart I've drawn it in there one thing I am concerned about is that the the the lows are getting higher on the rebound up from the lows that we saw at the end of June beginning of July so the buyers are waiting a much less amount of time before getting back in so we could certainly see a move higher on a break above 117,4050 and head towards around about the highs that we saw in the middle of June or around about the beginning of June at just above the 118 area so if we get if we get a poor number a poor jobs number or a poor wages number that could see the dollar slip back and we could see euro dollar move back up to 117,70,117,80 I'm still of the opinion that this 30,50 level should hold we could well get a fairly decent payrolls number but again it will depend on the wages number and this is the number here that I'm talking about I'm just going to move this out here you see this number here keep an eye on this number here average earnings anything less than 2.8 is a dollar negative okay the highest wage monthly wage number this year has been 2.9 percent that was in January and that was as a result of an increase in the minimum wage coming in at the beginning of the year which pushed the wages number higher since then we've been averaging around about 2.6 2.7 percent so if we don't get that and in question to the morning notes it is posted on insights yes it's the morning call with respect to the average earnings I'd really want to see something in the region of 2.8 2.9 because an awful lot of the refrain that we're hearing out of employers in the in the US is that they can't fill the jobs they're advertising despite the fact that the unemployment rate is at a multi-year lows of 3.8 percent so my argument to that will be we'll basically offer higher wages and then you might get more people interested but that may take some time to filter through but certainly at the moment 1.17 25 30 on euro dollar looks like a a decent barrier we can see it highlighted their support support resistance resistance so I'll be keeping an eye on that in the event of a poor number because we could see a spike up to 1.17 50 if we do get a poor number but more importantly looking at the cable here that's suffering from a little bit of brexit relief brexit tiredness or what have you we've had a bullish reversal on cable earlier this week or the end of last week so I think as long as we hold above 1.32 on the pound then I think we could well move up a little bit towards 1.33 1.33 1.34 I don't expect that to happen today quickly got to move on to the Canadian dollar because obviously it is the Canadian jobs report today and that's the number down there 24 000 if we get a decent positive number then it's likely the Bank of Canada will raise rates next week so that means that we could get a strong Canada and a break of this key support level here at 1.30 1.30 if we get a weak US number and a strong Canada number then watch out below for Canadian dollar we could go to 1.30 75 very very quickly so please bear that in mind ladies and gentlemen with respect to these numbers here the unemployment rate if that comes in at 3.8 3.9% not really that concerned 195 again the expectation for US payrolls slightly weaker than the number that we saw in May again not overly concerned if that misses to the upside or the downside by a significant amount if it's a low number it could just mean that the US labor market is very very tight and they're not being able to job they're not being able to fulfill the jobs that are available not that the jobs openings aren't there they just can't basically get the numbers through the door and that's where this number here comes in so while we while we head into the numbers those are the those are the levels that I'm looking at quickly look at the S&P again big resistance at 2746 so I'll be looking for a few sellers to come in around about that level 2746 and a retest towards the downside with trade tensions and everything else I think it's going to be very difficult to ascertain where we're going to go to but ultimately this is all about the dollar okay so Canadian jobs have added 31 000 my numbers are late average hourly earnings came in at 2.7 so that's weaker than expected so that's dollar negative that means your dollar is going to head higher June payrolls 213 000 and that's better than expected and US trade deficit 43.1 billion here we go and the unemployment rates jumped to 4 percent in the US so all in all that's not a particularly great set of numbers for the dollar we are testing towards the upside there is slightly dollar weaker component going on here trying to find out why the unemployment rate has actually come in quite significantly higher and maybe that could be because the participation rate has gone up there could be any number of reasons for that it could just mean that more people are coming back into the workforce so I'm going to check the labor participation rate for that to establish whether or not that has been a reason the unemployment rate has gone up and yes the the participation rate has increased from 60 um no that's a Canadian participation rate let me see if I can find it 62.9 so yeah the labor force participation rate has gone from 62.7 to 62.9 that's why the unemployment rate has jumped from 3.8 to 4 percent so more people are coming back into the workforce that has pushed the participation rate up so the fact that the unemployment rate has gone back to 4 percent is it's disappointing but it's certainly not the end of the world. Canadian jobs report better than expected by the looks of it and as a result we've seen the Canadian dollar push lower and the likelihood is we'll probably can we'll probably see it start to head back towards that 130 below 131 towards 130 80 and with respect to euro dollar watching that 130 117 and a half area but overall it's dollars probably going to remain a little bit weaker for the rest of the day as a result of that weaker average earnings number and that is really disappointing because when you've got a tight labor market when you've got more people coming back into the workforce you would expect to see this number come back towards 2 point to head back towards 2.9 percent and 3 percent and maybe that's why Mr Trump didn't tweet about the jobs report this month maybe it's not a particularly um noteworthy number that unemployment has just jumped back from 3.8 to 4 percent you can't really sell that on the ask things oh yes unemployment rates gone back to 4 percent make America great again yada yada yada doesn't really doesn't really um swing well so we've got US markets heading back towards the top of their recent ranges not surprisingly because there will be a perception that maybe that will make the Fed slightly more er towards the dovish side because inflation isn't so much of a concern but again i'm watching this 2746 area and i think it's going to be very difficult for US markets to really push significantly beyond that yes momentum is starting to turn positive yes we've seen a fairly positive week but in a holiday shortened week for US investors are they going to be wanting to go home long over the weekend and my hunch would be that they probably won't so we've seen some good gains this week i'm i would i would suggest that the likelihood of further aggressive buying is probably likely to be limited in terms of further upside particularly when we've got this resistance level through here at 20 2746 if we look at the Dow we've got a similar sort of area of resistance coming in on this particular chart here as you can see we've been quite volatile on the Dow you can see that from the very long shadows on the daily candles you can see that we've tried the top side we tried the downside and the volatility has been there the direction hasn't so again it's difficult to really say with any degree of certainty where the Dow is going but certainly i think if we if we take it down and make it slightly shorter term you can probably draw a nice little line through these highs there and a nice little line through these lows there to draw what is what looks like quite a nice little triangle there we go right there and there we go right there and yeah that's quite a nice little that's quite a nice little pattern unfolding there so i might might keep an eye on that this afternoon to see whether or not we get a breakout of it over the course of the next few hours not forgetting that obviously the official us session opens in 55 minutes time if any of you have any other questions or any questions at all on what i've been talking about or whether you want me to talk about a particular um a particular product that i haven't quite touched upon yet please feel free to direct a question over i'm watching your questions as they come in um and i'm happy to answer whatever questions you might have with respect to um with respect to any of the markets that we cover dolly yen it's pretty much a snoozeville dolly yen at the moment we're looking at a fairly tight range on that i think the fact that we've had a fairly weak wages number will limit the upside to around about 110 75 and we'll probably look to test to around about 110 20 over the course of the afternoon session sadly i think the volatility this afternoon is likely to be fairly limited given it's us hope it was the fourth of july holiday i think a lot of us traders will probably have taken extended um some extended time off okay i'm being asked euro cad so let's have a quick look at that in light of the canadian jobs report um quite surprised to see um euro cad actually uh push higher so let's have a quick look at the oscillator on that because you would expect canada not to weaken but to strengthen on the back of those of that canadian jobs report let me just well the line of leader resistance on euro cad sir is higher we've got a nice trend line coming in from the lows here which i can draw in right there and we have if i now drill it down into the four hour chart to try and figure out where the next resistance level is and the next resistance level is through these peaks here around about 154 60 so in the short term i think the upside in euro cad is likely to be capped around 154 60 but given the longer term direction of this particular pair i would expect to see um a move up towards these previous highs that we saw at the end of june which currently comes in at around about 155 90 so in a definite uptrend on euro cad certainly look to buy dips maybe sell a little bit into the rally here but that would be very countertrend and would be something that i'd be a little bit reluctant to do certainly um certainly ahead of the weekend in any case because the risks of you being wrong are much more much higher than they are if you than if you buy the dip where you have support on the trend line and also where you have the 50 and 200 day moving average so that is euro cad very much in a decent uptrend but the dollar does appear to be showing further signs of weakness and it looks to me as if we're probably going to head towards 118 in euro dollar and head up towards 133 20 in um in cable and head down towards 110 25 so a weaker dollar should be generally positive for us equities um that should underpin it but overall i would expect a fairly modest trading session over the course of the rest of the next three or four hours let's have a quick look at the ozzie dollar because that's taken a bit of a battering in recent times and that again is also pushing up towards um the top end of this week's range with the potential that we could actually be carving out a little bit of a bottom down here there's a nice little resistance coming in currently where we are at the moment but it's in the context of an overall downtrend so i think any dollar weakness in the ozzie is likely to be confined to the top of this trend line this this trend line that i've drawn in from the january highs here so we'd expect to see any short squeeze in the ozzie head back towards around about 75 20 75 30 let's look at gold gold has got to be one of those currents or those commodities that's really really um had me scratching my head because ultimately given all the concerns that we've heard about trade and everything else you would expect gold to be an awful lot higher and it's not it's actually come down but there does appear to be some signs that maybe we're on the cusp of a little bit of a rebound let's look at this here now those of you who listen to my webinars on a fairly regular basis will know that i like this particular pattern it's a bullish engulfing pattern on the daily candle and that generally means that um we could we'll see a reversal of the prior trend well we have a prior trend this is it from the april peaks we've come down quite a bit from 1350 to 1250 we've carved out a little bit of a bottom down here and we're finding a little bit of support on this dotted line around about 1252 1253 i think while we hold above the 1250 area on gold i think there's a good chance we could head back to 1275 over the course of the next few days so as i say recap as long as we hold above 1250 then i think there's a decent probability we could head back towards 1275 um oil prices are our favorite president trump loves tweeting about him amongst other things he likes tweeting about a lot of things what oil prices is one of his um it's one of his bug bears with his war on pretty much everyone except um except his wife i think even then that's under debate we look as if we could well have seen a little bit of a top here um we are starting to roll over on brent crude we didn't take out the highs that we saw in may even though us crude prices actually did take out the highs that we saw earlier this year nonetheless it does appear to be a little bit of weakness starting to creep in the oscillators started to roll over we're finding a little bit of support on the 50 day moving average but if we break below the 50 day moving average and looking at this here we've already broken below the lows that we saw on the 3rd of july at 76 85 and we're now at 76 55 we could well come back and retest this trend line here but make no mistakes even if we do see a little bit of oil weakness um we've still got the potential to come all the way back to around about 73 or 74 dollars a barrel and we're still in the overall uptrend that we've been in since the beginning of the year mr trump wants higher or lower oil prices but he's determined to turn the screw on opec to make sure they keep the taps wide open despite the fact that he's decided to implement sanctions on iran now this is interesting we've broken below this key 72 65 area on us wti now that suggests to me that we could well be heading for a nice correction on wti so i think with respect to this um we now that we've broken below this key support level as long as we stay below this peak here 73 40 then we could we'll see a move back towards 70 dollars a barrel over the course of the next few days but again you know taking positions ahead of the weekend is always a dangerous thing because ultimately you don't know what could happen over the weekend something could happen in the straits of hormones and the oil price could spike higher so an iran have already threatened to try and block the straits of hormones and if they try and do that you can be rest assured the united states navy will have something to say about it and that could actually push oil prices quite aggressively higher i've just been asked what i'm not clear about with oil is that trump is going for the juggler so to speak with iran but if they stop supplying to the market surely price is going to go up yeah that's absolutely right that is exactly what has happened but that's also why president trump has asked opec or Saudi arabia in particular to open the taps to try and compensate for the loss of iran's exports or iran's production unfortunately for president trump i don't think math is a strong point because iran pumps out 3.8 million barrels a day the Saudi spare capacity is only around about two million barrels a day so there's still a 1.8 million barrel shortfall that being said too much oil or not enough oil is not a problem that the us shale producers have the biggest problem the us shale producers have is getting the oil out to market and turning it into gasoline and other distillates because at the moment refining capacity is pretty much at its limit and it's getting it around the country to where it's needed however he wants to keep prices low because he doesn't want us gasoline prices to move anywhere near towards four dollars a gallon ahead of the midterms which are in november so his embargo on iranian oil will drive prices up and it has driven prices up but the big question is where is the ceiling on crude prices now for wt i it's probably around about 75 dollars a barrel for brent it's 80 dollars a barrel but what that doesn't price in is the risk premium if iran carries out a threat to blockade the straits of four moves because if they do that then oil prices could go even higher now there is a danger to them doing that if they send hot oil prices through the roof they could trigger a global recession which will then kill demand at source and then they won't be able to sell any oil or certainly they won't be able to sell anywhere near as much as or much oil as they would like to so we're in interesting times so in terms of crude prices we do appear to have broken down in us crude and we could well head back towards 70 dollars a barrel and brent crude prices look as if they're about to roll over but i wouldn't expect the down i would expect the downside to be fairly limited so i'm hoping that answers your question on oil prices if it doesn't please feel free to ask a follow-up one other thing that has been a little bit concerning is despite the fact that we've seen significant improvements in economic data over the past few weeks copper prices platinum prices commodity prices have been falling and that does suggest that does appear to suggest that maybe the recovery that we're seeing in equity markets is fragile because generally if the economic recovery is doing well globally demand for this sort of product copper platinum palladium should be fairly positive and it's not so there are concerns there they could be to do with trade they could be to do with the fact that people aren't ordering platinum and palladium for catalytic converters and for cars because they're worried about tariffs on cars so there could be a trade element to that but it is concerning when demand for basic resource materials starts to decline another thing i'm keeping an eye out for is this break in the hong kong china rate shares index which is broken it's 200 day moving average which would appear to suggest that we could be in line for further decline since hong kong china rate shares over the course of the next few weeks we can also see that despite the fact that we've had an awful lot of headlines about massive declines in chinese markets we're still above the lows that we saw at the beginning of 2017 so we've still got some way to go before we can start talking about a significant route if we fall below 10 000 i'd start get a little bit worried we're well we're well north of that at the moment but certainly that is something to keep an eye out for in terms of chinese markets over the course of the next few days and the next few weeks okay so it's 1348 ladies and gentlemen that's non-farm payrolls for this month unless anyone has any questions i'm going to wrap this up now i will obviously record i am recording this so i will post this online afterwards if you want to listen to it back but otherwise i'd like to once again thank you for tuning in and wish you all a very nice weekend and the rest of the trading week and look forward to speaking to you next month when the july a payrolls report comes out thanks very much for listening guys and have a good weekend