 Hello and welcome to the CMC markets non-farm payrolls webinar with me David Madden today's date is Friday the 4th of January 2019 and the time has just gone 1315 GMT quarter past one here in the UK Before we actually get going with the Webinar what we're going to do as always is quickly run through the slot the risk warning slides, which I'll leave on screen They're very straightforward the essentially state anything that is covered in this webinar is not Trading advice or trading that's not in any way investment advice or trading advice is purely my own comments and observations and opinions And I shop and it should not be construed as Trading advice, so please have a quick read through those slides for those of you who tune into our videos and our webinars frequently You know this is all pretty common practice and as always with the webinar what I'm going to do for non-farm payrolls is run through Run through what's going on the news talk about the state of the US economy? What can we expect from non-farm payrolls? And then we're for the numbers of themselves gauge the market reaction And then I thought if there any questions you have drop the webinar feel free to ask and then towards the end of the webinar I really encourage questions in relation to what's going on in the financial markets of the reactions To the non-farm payrolls numbers once they're out in about 13 minutes time So what I quickly talk about is the kind of very volatile week we've seen here in European equity markets and actually global equity markets as a whole At the very beginning of the week what we saw is some quite negative so some quite downbeat news out of China The Kaohsiung Manufacturing Survey contracted so that was in a negative growth state It was the first contraction in 19 months Only a couple of days ago we heard from Apple who essentially downloaded or lowered their first quarter forecast in terms of revenue And also said that the gross margins would be lower due to weaker sales in China Now this wasn't entirely a shock because a number of months ago Apple came out and stated that what they're going to do is they're going to stop In their quarterly updates they're going to stop stating how many individual units they sell and they're going to just focus on the total revenue Now the new iPhone models that are coming out are going up in price so the average price is being dragged higher by the cost price of the new models So it seems to me that Apple were already going to send out a warning saying that you know what guys don't look at the individual sales Just look at the total revenue with total revenue is obviously units multiplied by the price Average price is going up so therefore they're trying to distract us and draw attention away from the fact that sales may not be rising that much Or even if they are rising, they're likely rising at a slower rate so I think this was an entire shock And it's a possibility that it isn't just, it did decide China, but it's a possibility that it isn't just China who are actually slowing down And in fact it could be a wider play, nonetheless this put a lot of pressure on global equity markets in recent years Earlier in the middle of this week, overnight we have heard some recently optimistic news Beijing and Washington DC are going to sit down next week and have some discussions at mid-level range Mid-level kind of government ranking levels in relation to trade Traders are a bit optimistic of this, now nothing has been confirmed It's just purely simple as saying we're going to have discussions and talks But given that the Chinese stock market has dropped a considerable value Given that President Trump's pride and joy that the Dow Jones and the S&P 500 have given up so much ground in the last number of months Both sides may be a bit more accommodated than they previously were A few months ago the US economy was clearly in a better shape than the Chinese economy Now we're seeing some signs of this economy slowing down We're also seeing concerns about the potential recession in the US economy That's more in relation to the movements in price action in the bond deals which have previously forewarned on recession So even the talk of recession and some of the economic indicators out of the US have been mixed or in some cases actually not great as a whole So because of that, traders are a bit fearful about the state of the US economy And so should President Trump, his hand isn't as strong as it once was And if traders, if people keep viewing the sell-offs in US stock markets as if we're warning to recessions That's going to look back at President Trump because in 2018 he was all about look at all the policies that are boosting the stock market Look at all the unemployment this morning, that's the one Obviously we'll have the unemployment number solved in about nine minutes time So the situation has changed and on top of that the Beijing authorities have also come out with some stimulus packages They've come out and basically assisted the Chinese economy by reducing the reserve requirements ratio Which essentially is kind of the cash ratio of banks in China are supposed to hold in relation to the loan books So by cutting that they're allowing Chinese banks to actually lend more which put more money into the economy And there's also talk of some tax cuts in the pipeline as well So with that, we have seen a boost in global economic markets Strong session in China overnight, strong session Europe today, we're looking higher for the US market So it seems that it's going to continue to be a volatile week But keeping in mind the news that we see in recent weeks and months We have had the cases where the Chinese authorities have come out and brought in new Stimuluses or quasi-stimuluses or alterations to how they regulate the business in relation to actually trying to prop up the stock markets And also to how to turn around the economy and it hasn't worked So I'm a bit skeptical if these moves will work again Because it's a funny game whereby while a country or a government keeps intervening in the market Some intervention will assist the market and will help to turn the market around If you keep intervening in the market, which is kind of going against you or the economy is going against you You might say not the wrong message, you might say not the right message You know what, we actually keep need to intervening because it comes into bad shape And then all of a sudden if people kind of look beyond that They could become fearful that they can't slow down or they can't halt the decline rate of the Chinese economy So I'm still a bit skeptical of the state of global growth Which also brings me on to the state of the US jobs market And the US jobs market is actually in quite decent shape For those of you who are familiar with the trading platform, which is right here in front of you Let's take a look at the market calendar Here it is It's the fourth option down Scrolling down to the market calendar We're not going to be looking at what we could expect out of the US today In terms of the employment figures So scrolling down along here Non-farm payrolls, we're expecting 177,000 Keep in mind that the November figure was 155,000 The unemployment rate is tipped to whole steady at 3.7% On a year-in-year basis We're expecting the average earnings to be 3% It would be a slight cooling from the November reading of 3.1% And on a monthly basis We're expecting the average earnings to actually increase by 0.3% About the improvement on the previous reading of 0.2% Now for me The most important detail of this report Is going to be the earnings component The unemployment rate is at 3.7% It's at multi-decade lows And when you get to that point where you're essentially at full employment It's actually quite difficult to kind of keep grinding down And actually adding new jobs Because it kind of gets to the point where by anybody who wants to be in a job Is sort of in a job Or even if you do have incrementally higher increase in unemployment In the grand scheme of things It really going to shake things up too much For me it's all about the earnings When American workers earn more money They're likely to go out and spend more money And that's what was driving the economy And we've seen a cooling of house prices We've seen a cooling in manufacturing activity Recently only on yesterday What we've also seen is a bit of hesitance About consumers spending atop of that Major sell-offs in the stock market Make the 6 o'clock news A chatter of a session from time to time Also makes investors, sorry Consumers a bit apprehensive So for me I want to see a good earnings component I want to see both the yearly And also the monthly numbers to be quite decent Before we can actually become more confident That the US economy is going to Is in very decent shape Now traders will be viewing these figures Through the eyes of the Fed Reserve Last month the Fed Reserve Hiked interest rates by 0.25% It was a fourth rate hike of 2018 But also they gave a bit of a mixed update They were slightly dovish in their outlook For the state of the US economy But they were a bit hawkish In what they planned to do in 2019 They talked about how they perceived Slightly slower growth And how they perceived slightly weaker inflation But at the same time they also said They're talking about having a hiking rate Twice in 2019 And as it seems out to me That they are talking about A slowing down in the economy Yet further tightening of the margin policy Both in terms of balance sheet And also in terms of higher interest rates And that is one of the reasons Why we did see a bit of a Very sizable model In US indices And also global indices Because the fear is If you're hiking while the economy is slowing That could bring on a recession And there's already talk of recession Doing the rounds to begin with So that's one of the issues to be concerned about So traders are also very concerned About the slowdown in China The slowdown in Europe We had disappointing service figures Out of Europe today We had disappointing service figures And CPI figures were weak So it suggests demand is falling there So you might look at this report And go, you know what, David If we have a bad number today That will actually slow down the Fed That will really put the rates to the Fed And make the Fed reserve think about Not hiking rates for a number of months Or maybe if they do hike Only hiking the back end Also in 2019 I think if we see a soft number today In terms of the overall report We can actually add downward pressure On the U.S. stock market And global stock markets Because there's already kind of fear About we're kind of almost Past the fear of the Fed reserve Hiking rates while the economy We're kind of at the stage Where traders are concerned That we could have a global slowdown And some of the economic indicators Out of the U.S. have been mixed recently We saw an increase in jobs as claims yesterday That was offset by a very, very strong ADP employment number ISM manufacturing was Of an activity and that Housing figures out of the U.S. Haven't been particularly impressive recently So I think we need kind of a goal With a lot of support on this one We kind of need to adjust right If it's too strong That could scare the market And thinking you know what We're going to have a few more rates In 2019, if it's too weak That could be a sign You know what the U.S. Is catching the cold That the rest of the world has In the U.S. economy Like I was saying, for me It's going to be largely about The earnings component And this report, the job as claims figure Apologies, the non-farm payroll figure Really needs to be looked at As an entire report So we have a headline figure We've got a potential revision To last month's number We've got unemployment And we've got the two earnings So we're really going to do One, seven, seven Expectation But in my report We need to kind of digest the report And down the years I've seen too many times Where the market moves one way They look at whether the headline figure Beats or doesn't beat the Whether it beats or not And then from there We can actually kind of place All the trades around that Then what happens They look at the report They look at the numbers And they realize We've actually had fairly deep The remainder of the report Was the opposite of the report So sometimes you see a miss in the headline But everything else was good Or vice versa Sometimes you see a very strong headline About other components a week And the market kind of does a turnover So we'll just kind of Hang on here One second I think we're going to probably see About a kind of 160, 165 region In terms of as your headline figure I think it'll be a bit softer than expected What do you guys think? Feel free to stick in your estimates Into the chat section As long as the US economy Is producing on average about 200,000 jobs Oh, wow That is a colossal number Just one second there please 312,000 jobs Non-farm payrolls jumps By 312,000 jobs in December The unemployment rate also rose To 3.9% Up from 3.7% The previous month Average hourly earnings They increased as well Up 11 cents to 2740 This appears to be an exceptionally Strong report 312,000 jobs are added in December Smashed the expectation Of 177,000 You're also looking at To 176,000 Up from 155,000 In November So as a double win Smashed the headline expectations And the positive revision Unemployment though Also ticked up from 0.0 point Sorry, ticked up To 3.9% From 3.7% Which isn't great But guess what Average earnings on a year on year basis Ticked up to 3.2% The previous Average earnings on a monthly basis Came in at 0.4% Topping the 0.3% expected And saw the improvement On the 0.2% rise That we saw in November All around All around An A- The only kind of marks Have been docked Because the unemployment rate Also ticked up But guess what A very strong number And I think traders Could be a bit spooked Thinking we could have We could see the Federal Reserve Continue to hold A hawkish action plan For 2019 What's going on here Are there any kind of comments Or questions Bring the markets down Take a quick look At the initial reaction My guess is that traders Are in equities That's my reaction On the market thought There we go A bit of a bit of a speed The initial reaction was quite negative It appeared to be not too far away It appeared to be pushing higher Yet again So we'll see how it goes On other markets That's the title of Jones I'll take a look at the S&P 500 See what's going on there Actually I'll leave a little miniature On this one Which way around is it For their position I think it's a great number Very good number But I think traders are going to wonder What's that going to mean In terms of Fed I think it would justify the Fed To keep down their path Of hiking rates To be honest I don't think they necessarily should I think they should be going to play it By ear and see how the global economy Has declined its feet We're probably not going to have A really good view of this In terms of equities for a few minutes anyways So I'll take a quick look now To look at the US dollar index This should be dollar positive There's a very decent report all around As you can see here I'll take a quick look now On the one minute charge Just take a look here So a fairly sizable increase there On the US dollar There we go Well ahead Very positive indeed Very much dollar positive For the In terms of the story today Given that There has been a decline in the greenback Since about the middle of December You can see it's going to steadily decline This could be the move Which I should look at I should bring this higher again Because I think traders should be looking at this report Thinking you know what The US economy is in decent shape I'll take a look now I can see a big sell-off in gold Obviously recently there's been In recent months There's been a very strong inverse relationship Between what goes on in gold And what goes on in the US dollar We could take a look here When the numbers came out Five and a half one Gold early on in the session Reached fresh Six month highs In the early hours Very good Market fashions sold off quite heavily Well actually not heavily Unexpected move to the downside In the gold market So we could see further pressure To the downside in gold in the near term Gold is very sensitive to perceptions About what the Federal Reserve Are going to do And now I think Like I said to reiterate I think this would If they do want to keep hiking rates I think today's numbers would justify It's a good report And it's a bad move for gold But take a look at the gold market here Gold had a colossal sell-off Between April and August And then August the third stage You come back in mid-August Move to the upside Higher high, higher low Higher high, higher low And I started to grind a bit higher here In mid-February Sorry Apologies December rather than December Getting ahead of myself I started to push higher in December When When equity markets started to fear You know what, this talk of recession Picking up, this talk of recession Joe Wynn is the Federal Reserve From late December said Maybe the Fed should reassess its situation Its outlook And actually suggest that the Fed Maybe they want to take the foot off the gas In terms of their hiking policy So what we saw is we saw gold Just pushing higher From late December to early January Gold has been creeping higher If we do see further decline in gold We could see support coming to play In around the 1275 region Or perhaps in around the 1265 region But we've been in a fairly decent upward trend Since August So it's a fairly obvious trend If we continue to push in higher We could be taking off the 1300 level on gold Are there any other markets You'd like me to take a look At the Euro versus the US dollar Like I said this morning We're disappointing Eurozone's CPI numbers And also service figures From France and South from Germany And France So basically the Euro dollar Has been basically in a downward trend Since April Had a bit of a rebound in August But since September The markets have been pushing lower yet again And we've kind of been in a bit of a holding pattern A bit of a range for the last number of weeks For me the 115-115-10 region Has been an area to keep an eye on While we were in south of that region Here I think it's likely we could see further downward pressure In the Euro versus the US dollar If the market does continue to push in North Lear We could be looking at retesting The early November lows Of one spot 12-16 And if you go below that We could be looking at it back down towards One spot 11-10 Move to the upside If you break north of 115-115-10 Please keep an eye on for the 30 moving average here Of this red line 16-55 area I'll take a look now at the pound dollar as well If there are any markets You want me to take a look at Now is the time to shout Dollar card Yes, I will call out the dollar card in one second Because we also had Canadian numbers out today Which we did actually get a chance To look at To call out what's going on In the American situation So the pound has been Very decent decline Since September In my opinion The British economy is in fairly decent shape On appointments Multi-decade lows Earnings are solid But the Brexit uncertainty is the real issue And I think we could see Limited moves to the upside of the pound While someone concerned in relation to Brexit Is hanging over If you can remain below This area here One spot 28-15 I think we could see further ground Looking at taking off this area here again And one spot 24-76 We did trade it Through it last night Whenever there's the flash crash In the currency markets And we saw major moves In dollar yen But I think if you continue to push And lower from there I think that is the kind of The general trajectory for the pound Versus the US dollar One gentleman was calling out For the Canadian numbers In terms of the headline on employment Good said numbers on a Canada The unemployment rate held steady At 5.6% So better expected on that front It came in at 5 They were expecting 5.7 to take off The employment change increased By hardly expected Over 9,300 jobs Were added If you take a look at that The full-time jobs Are declined So That isn't as good as It's a good number But it's not as good as the headline would suggest I would like to see it all the way around I would see full-time jobs being created And part-time jobs are kind of a secondary Although obviously jobs are jobs But nonetheless It's a bit worrying that Full-time employment dropped by 19,000 Whereas part-time jobs increased By over 20,000 But I would say overall It's a fairly decent report And I suppose net-net Some additional jobs is positive Take a look now At the US dollar versus the Canadian dollar With the dollar CAD If you're new to the markets You want me to have a look at Please feel free to just shout it out Because if you're looking in the chat box In a few minutes We're going to look to wind things up In a few minutes time So what we can see here Is the kind of fundamental point Of view It's good But they weren't amazing On a plumber-teller steady Jobs were created But they were largely in the part-time sector So we can see here That the dollar CAD Is a terrific run Between the lows of October And the kind of inter-on-the-conquisite period So solid upward trends So look at The trend is clearly to the upside Granted, we have seen a fairly sizeful pullback In the last couple of sessions To continue on the spider trend If you do move further through the downside In the dollar CAD We might see some support coming to play In around this area here In around the kind of 133.85 region This area here Perhaps even as low down As this blue line here The fifthly moving average At once by 33.10 We could see the market pullback to there Because you know a better profit taken Wouldn't be a surprise But given that in my view The re-continuation of the wider upward trend Which could take us back up towards This area here In at one spot 36.60 In around that area And if you do print that level We then be looking We then be at prices not seen Since May 2017 And if you go beyond that We could be looking up heading up towards The high 137 137.90 region here In terms of the dollar CAD outlook I'll take a look now We actually as after they settle down It always takes a few minutes For the numbers to be digested Like I was saying The webinar will be coming to an end Fortunately in about two or three minutes So if there are any markets You want me to cover please feel free So what we can see now is Kind of back to my original guess A bit of the downside So they should sell off Market bounce back A lot of us Uncertainly going on We're not too far below But the Dow were definitely below The levels we were at before the numbers came out So in terms of you know Wider view what to expect The way I see it is this Is that the Dow Jones Back in late December Back to the levels not seen In quite some time Back to the levels not seen Since basically The summer of 2017 And we've been in a class example Of lower trends Lower lows and lower highs This could be the market turning over That's yet again And it's later do become fearful That the Fed are going to continue Down their hiking path Recruits the market back down towards 23,000 And a break below that Could put us down towards 21,500 And if you go below that We could really carry that down towards 20,000 Apologies Down to 21,000 Looking to the strength Yes I do in the near term I do think I'll stick with the Dollar Index As I said With the Euro Dollar and Pound Dollar I think we're going to see declines of both Take a quick look now Again at the US Dollar Index Dollar Index here Has been in decline Well the wider picture has been pretty positive But The other Dollar Index Basically since mid Since mid December That's the biggest number Especially in light of what's going on In the UK the Eurozone in China We could see a flight equality And also the biggest number And the jobs front are good So I think in the Dollar Index We could be looking at heading back up towards The We could be heading back up towards The 96.5 area And if you take off that If you get back up towards 96.5 97 the dollar index. I think this is a good set of numbers from the U.S. and we can see for the gains for the U.S. dollar. I take a look now at dollar yen. Dollar yen, unfortunately, will have to be the last market I looked at because it's quarter to one. So obviously we had a flash crash, but a major, fairly severe decline in dollar yen yesterday. This could look to actually pull some ground around just on the back of the strength of the numbers. But it's also we're pointing out we did have a very decent run between March and also October. So a bit of a pullback in this regard here isn't the entire surprise. I am very concerned though that the market remains below the 200-day moving average, this red line here which comes to play a 111 spot 07. While we remain south of it, I think we could see further ground to be lost on the dollar yen. But given we've had a few, you know, one, two, three, four, five negative days in a row on the dollar yen. And the good numbers today are out of the U.S. in terms of jobs. I don't think we could see a bit of a bounce back in the dollar yen in the near term. We could be looking any back up towards the 110 mark. And then if you do manage to retake the 20-day moving average, we could then see any back up towards the 112-113 spot 70 region. But I would be hesitant while we are south of the 200-day moving average. If the market does look to turn over itself yet again, we could be heading back down towards the 105 region. Right, I'm going to wrap things up there. This video is going to be online, it's going to be both on our YouTube channel. I'll tweet it out. It's also going to be our insights. An insights can be found under this squiggly tab here. The second option down is insights. I'll be posting a recording on this video to insights within the next hour. I do appreciate all your time for tuning in and for listening. One last thing before I go, if you have any comments to make on this video or any of the other videos we make here at CMC Markets, please feel free to leave a review on Google reviews. And that's all for me this week. Thank you very much.