 Okay, hello, welcome to CMC Markets and this Non-Farm Payrolls webinar with myself, Michael Houston and Colin Svazinski who's based in our Toronto office in Canada. Once again, I'm sure this is going to be a roller coaster ride, certainly given what we've seen so far this week. The economic data continues to be rather mixed and obviously we've also had the intervention of the IMF which has muddied the water somewhat but before I get started on all the nuts and bolts I just have to do the obligatory risk warning which I'm obliged to do by my compliance department so if you could all digest that slowly but surely for both jurisdictions both Canada, UK and Ireland and then we can and we can crack on which I am now about to do. So we've got 15 minutes to go. My expectation I think with respect to these payroll numbers, I think they're starting to lose their effect because I think irrespective of what the payroll's numbers are I think markets are now probably more focused on the inflation picture and the prices picture and the wages picture. I don't know whether you have a different view on that Colin but when I look at these payrolls numbers and I look at the direction of travel with respect to the recent data it doesn't fill me with confidence. If we look at this spreadsheet that I've got here, I don't know whether you guys can see this but if you look at this column, in this column here we've got ADP and since November last year we've basically drifted lower, 284, 275, 222, 171, 165. Now we have seen a bit of a pickup in May of 2001 but certainly I don't think by enough to suggest that we're seeing a significant turnaround in terms of jobs growth in the U.S. economy. If we look at non-farm payrolls data we can see that again we had a very big numbers in November and December, 423, 329 then obviously the December number which was posted in January was 201 that's quite a big drop and then we've really fluctuated 264, 85, 223. If you look at the unemployment rate it's 5.4% but it's fallen at the same time as the participation rate. The participation rate has also fallen from 62.9 to 62.7 so for me even though the unemployment rate is lower it's on a much lower participation rate which makes me think that this recovery that we're seeing in the jobs market it's not as clear cut as I think a lot of economists was like it to be and certainly if you look at wage growth that continues to remain weak. The Fed's consumption indicator, the PCE indicator is also very weak and we saw that in the latest data that we saw out earlier this week. I think more importantly than that, for me this is all about the price action. You can look at the data and you can dissect it to your heart's content but I noticed a couple of very key things on the charts over the course of the past couple of months and regular viewers of my videos know I talked about this at the beginning of May just before the UK general election, potential reversals on Euro dollar and cable. If we look at the monthly chart here we can see right here a potentially bullish engulfing or a key reversal day on the daily candle chart for Euro dollar and to a lesser extent the pound against the dollar which suggests to me that we've seen the peaks in the dollar. We can also extrapolate that backwards in the context of the dollar index so if we look at the dollar index in this particular chart that I've got here again hopefully you guys can see all of this. This is a decline from the peaks that we saw at the beginning of April to the lows, the double bottom that we saw at the beginning of May. We retraced pretty much 61.8% of that. We've dropped lower and we have posted a little bit of a reversal down here and currently we're pushing up against this moving average here which suggests if we do push higher we could see Euro dollar go lower but ultimately I think the picture has changed somewhat and I think there's good chance and you can disagree with me if you like and love it if you would that we've probably bottomed in Euro dollar and I know that's slightly contrarian given what's happening in Greece at the moment and the potential for a Greek default but what we've seen in the past 24 hours is they've kicked it, they've kicked this so-called can and I hate to use that cliche because the can is probably in bits by now and at the time it's been kicked but it's been kicked another 20 odd days so we've certainly got potential for an awful lot more volatility in Euro dollar and potentially more upside. Now this bottom that we've got around here is around about 114.815 in Euro dollar so if we now basically drill this down into the actual Euro dollar short-term chart that I've got here I know it looks a bit of a mess it does make sense to me even if it doesn't make sense to anybody else let's actually get rid of that channel there because it's now surplus to requirements so we've got a I think we've got potential for a little bit of a pullback in Euro dollar as long as we stay below this series of peaks either side of that very strong peak that we saw yesterday if we look at that peak there it's around about 1285 113 so in the event of a poor number at 130 we could actually get a pullback to around about the 113 level I don't expect for us to see a breakout of the current range I certainly don't expect to see us break above 114 80 the May highs there is a good chance in the event that we get a very positive number we could take out yesterday's lows at around about 111 50 but I don't expect to take out this low around about 110 50 or this key level around about here the oscillator is starting to point a little bit lower but overall I think it's really a question of what happens if a number comes in as expected I think we can continue to get choppiness between 112 85 and 111 80 if we get a very positive dollar number we could see a strong move lower and a move down to these sorts of levels that we saw at the beginning of the week just below just above 110 110 50 110 70 if we get a bad number then again we'll probably retest the highs that we saw yesterday for me it's all about picking the range it's about picking your moment at the moment we're stuck in the middle of this range and it's really reacting to the number as it comes out so certainly in the context of euro dollar and more importantly I think the pound against the dollar it's a similar sort of story you've got a very strong trend line resistance coming in from the peaks that we saw in the middle of May that currently comes in just above 154 so again a poor dollar number we could see a rally in the pound up to around about 154 but it would take something substantial to really drive it above there so we really need to be aware of that going forward now I know Colin I've rambled along enough I know you want to talk about the Canada jobs numbers because they're out as well yes so I'll bring up the Canada shot thanks Michael so I've gone a little bit more bullish on the on my thinking on the employment numbers for the United States I I've been watching the jobless claims and after the last month's survey we saw a pretty significant drop to the lowest level we've seen in years and years pretty much almost a century for jobless claims even though they've since ticked back up a little bit so I'm thinking we might see a little bit of an improvement on last month's number which was 223 and I've gone with 240 for the US for Canada we had a substantial increase in full-time jobs last month that was overshadowed by a drop in part-time jobs that's why you ended up with a negative headline number this month the streets looking for 10,000 overall I think you'll see for Canada full-time jobs retrench a little bit say back to around 20 but I think you'll see the the part-time bounce back so the streets at 10,000 and I've been I put up my guess as 25,000 for Canada employment this month so with Canada we've seen it it been quite choppy lately we had the it was generally strengthening between March and the middle of May for the the Looney while the price of oil also recovered from 40 to 60 in the with oil is leveled off we've actually seen the Canadian dollar weaken quite a bit we've had the the Looney go here from this 119 120 lows back up to 125 where it's been bumping up against resistance again we can see it's gotten overbought on the on the Scocastics and started to roll back down again if it breaks that 80 would be a downward signal so it is looking a little bit toppy here for a $4 cat that it's probably weakened it certainly weakened more than you would have expected from the oil price there has been some soft Canadian data lately that which is what's that which is what has pushed the Looney lower but still unless things really go off the rail it doesn't look like the Bank of Canada is going to cut rates they didn't do it at their last meeting and didn't really indicate any plans to do it either so on Canada if we continue to see a positive a plus number on jobs particularly on full-time jobs then I think you'll probably see it continue to top out here in and around this falling falling trend line certainly looking at that candle there Colin the negative one there there that does seem to suggest that there's significant selling pressure there obviously we do have falling lows and we have had a strong rally off that trio of lows around about one nineteen and a half so yeah that negative tired now it is looking a little bit tired what we don't want to see I think is that is a is a break above that peak that we saw at the beginning of the month which is I think just around about 125 and a half we can quickly have a look at that it's 125 65 give or take the odd tip so it's only worth keeping on that if we blow that down give us a much better indication of the actual chart in question you actually got quite a nice little line going through there let's draw that in just attach it to those lows there that's actually quite nice that it's all be it's very very tight into the apex so we may not get a significant reaction if we do break below it but certainly I think there's good support around about one 2380 on the downside in the event that we get a good Canada number you wanted to look at the s&p didn't you yeah I wanted to talk a little bit about the the s&p and and where we're at in the perspective if you could blow that up to a daily chair michael that is over four hours okay it looks a little bit bottoming around the lows that we saw earlier there let's look at the daily there we go I just wanted to highlight here and where we're kind of adding the overall picture on this for us stocks is that we're at a typical point which was I call the mid-cycle correction which is you get a liquidity field rally up out of the bottom then you get into a stage where they start pulling back on liquidity and the market goes sideways and we saw this in 04 and 05 we saw it again in 1994 and 1995 where the market basically goes sideways for your because you lose the liquidity boost and that kind of puts a cap on the stock market but at the same time the market only goes down so far because then it's supported by a generally improving economy and growing corporate earnings and we've moved into this now particularly since february but in some ways you could almost chase it back to november and you had one little higher leg we've basically been going sideways in the u.s. market and and a lot of people are getting confused by this where you get a lot of conflicting data where the market goes up for a couple of days and down for a couple of days and nobody can really get to get a handle on it and then I've seen twitter is full of reports of people saying oh it's all over watch it for the market crash that's coming and and so on and in reality the the u.s. economy is generally strengthening whether it's a little stronger than we think or a little softer but it's generally kind of muddling along reasonably well and that's where we're at with the market so usually these things last about nine to twelve months and if you say start in february and measure it for nine months you're about halfway through and if you start in last november and measure it for a year again you're about halfway through this so we could still see this kind of choppiness in the u.s. markets in this sideways trend trending for a through the summer and probably into the fall so when we're looking at that moves in the market it still lends itself to a more of a trading approach where you we're being opportunistic trading off news looking at how things happened relative to expectations is is the key for for u.s. markets or really for the next several months you carry on mate i'm just in the middle of trying to construct a chart on my bloomberg anything else you want me to look at no this is a this is good here we we still got about three minutes until the two and a half minutes until the payrolls come out so what we're looking at so of course what we've really what we're really focusing in on here and with the employment numbers is at this point in time people are focused more what does this mean for the fed what is the fed likely to do and michael talked a little bit earlier about inflation and and the other thing we're watching for and we've seen a crop up in particularly in euro trading lately and elsewhere is that there had been when we had the oil price crash that people were worried about deflation and and some of the headline numbers did go into the it did go into the negatives now we're seeing the headline numbers are starting to bounce back a little bit as crude oil has bounced back it's up it's at 60 instead of 40 and but we've been still getting really mixed readings on the core inflation some of core inflation has been ticking up but for example you talked about the u.s. and the the u.s. has a measure called core pce and that's the one that the fed uses and it's still been soft so something or if you keeping an eye on as we're looking at the data here will be the the average hourly earnings as well as the actual employment numbers because it's been holding above 2 percent for for the last several months even while the the jobs have been all over the place okay so what i've done this ties into my narrative of a stronger euro and a weaker dollar if we look at this chart here this is the spreaders this is the spread between the 10-year bond and the 10-year u.s. treasury and we can see that the spread is tightening in favor of the bond which implies a stronger euro we've broken below this support here if this continues to push lower then that should support euro dollar it's when basically the yields between the two come closer together we'll go into that a little bit more detail after the numbers come out but the numbers that i'm we're essentially looking for are the non-farm payrolls obviously looking at average hourly earnings actually i need to call that up so let me just bring that up market calendar and then we can average hourly earnings is right there so we'll just open that alert it's right there close the market calendar and then drop them in there so 10 seconds away let's bring up my bloomberg actually let's put it let's put the bloomberg up there then you can actually see the numbers as they come out to actually call that a good number wow lower euro dollar that's a big one let's let the average hourly earnings scream higher on that yeah it should scream high above 125 and dolly yen i would suggest so let's just pull that out of the way oh let's see what's happened the jobs have 58 k 30 000 full time so that's a huge number for Canada as well all right for the next level on dolly yen is 125 65 which is basically the highs that we saw in early 2012 and we look at this we're blasting towards that we've come back off that now let's look at euro dollar and let's quickly move that out of the way so that we they'll be screaming rate rate hike now for june there's nothing june is pushing it but there's maybe July or September june's out of the picture because for me they've got to they've got to upgrade their forecasts so yeah it looks like we're probably going to come back to here around about 110 50 on euro dollar on the back of that number let's just dissect the rest of it so we've got 280 on the non farms we got 5.5 on the unemployment rate so unemployment's actually gone back up that's interesting 62.9 on the participation rate that's aged back up as well and let's look at average early earnings and they've gone up 0.3 percent which is above expectations and the yearly rate has gone up 2.3 so it's definitely dollar bullish I think if you basically broaden it out across all of them even though the unemployment rate is increased you can explain that away on the back of the fact that the participation rate has also gone higher as well so that that certainly introduces an extra element of volatility in it and I certainly think that means that potentially we've probably seen the high in the euro for the short term and we could have a little another little trip towards the downside so we've looked at we've looked at euro dollar as we can see that the area of support I'm targeting there which is just below 111 dolly yen pretty much topped out where I thought it might 125 65 125 70 that was the that was the big big level if we can blow that out all the way back to 2002 we can actually see the number in question if I can actually get it out out of the way that far I can I can show you how I arrived at that number if I can actually find it and there it is it's right so it's not that one it's those peaks there and that's where we've peaked out so it was around about between the end of october and november 2002 so that's basically why I picked that particular level on dollar yen when the dollar shot higher so we'll take that back in again there and we can now moved to the let's look at the others guys if there's anything you want me to if there's anything else you want me to look at please feel free to chip in look at not surprisingly we've seen obviously u.s. equity markets drift lower on the back of that and brings a tight it brings a tightening a little bit closer certainly makes you wonder I think what the IMF were thinking when they were talking about potentially delaying a rate hike yesterday was it yesterday yeah yesterday was that it was yesterday I think that pretty much I had done a presentation last night and told everybody I think that that speech pretty much sealed the deal on a on an interest rate hike this year at least in December because the the Americans certainly don't like anybody telling them what to do and with the track record I don't think anybody wants to listen to them that's fair and exactly who does right I mean nobody wants to see the IMF going around telling them what to do she probably should have just stayed quiet on that well either that'll add a little chatting Janet shell like on the quiet in area exactly I've just been asked about euro card I covered that in my video this week I'll cover that in a minute I'm just going to write that down and we'll cover that in just a moment what I would say is that these are an unambiguously good set of numbers but to my mind they don't change the timeline of a prospective us rate hike and for me it's about sequencing sequencing here is basically for June if the U.S. want to raise rates in September they need to adjust their growth forecasts up in June I think we both talked about that didn't we Colin they young growth their growth they downgraded their growth forecast in March we because of concerns about the slow down in Q1 so if they're going to telegraph a rate hike which I think they probably will or lay the groundwork for one then they'll need to upgrade their growth forecast in June to act in September given the weakness of the data that we've seen thus far I think they're still unlikely to move their forecasts in June and the next time I can do that is September correct me if I'm wrong that's correct they do it every other meaning okay or every quarter so basically then it's unlikely they'll raise in September they'll probably raise their forecast in September and that will be telegraphing that potentially we could see one in October or December because there isn't one there is someone in November that's correct it's it's pretty much right on Halloween and then and then mid December those I think are the two most likely so the two most likely meetings for increases this year and then the other one is are they going what kind of the path that they want to take are they've still kind of been talking very cautiously so it's possible they may go every other meeting this for rate hikes instead of every meeting as they have in the past so we'll be keeping an eye on that as well. I mean people are talking about rate hikes do you think it's credible that they would hike rates before hiking their forecasts? At a minimum I don't see them doing it off of a cut I when they when they cut in March it pretty much rules today because you can't cut your forecasts and then start raising rates maybe you might sneak one in in September at the same time as an increase if they if they stay the same in June if they raise in June they're telegraphing a hike if they if they stay the same it's it's iffy but I would say probably noted July maybe the September if they decide to do it at the same time. Now I think call me when September ends I mean I think the IMF intervention and that's the colors in August back in August yeah I think the IMF intervention speaks to a wider concern they have about hiking rates right let's go into EuroCAD because we talked about that earlier this week in my weekly video and that's a that's a nice little move down there EuroCAD off off the highs and off those peaks the inverse head and shoulders that I talked about the break higher what we don't want to do here is fall back below the neckline of this potential head and shoulders we can see from here and here and here and here how significant 13780 the 13780 level is in the context of this overall move if we if we ratchet out all the way to the 2014 highs let's take that out there we can see how significant also the 50 week moving average is we've broken about the 200 week moving average so what we don't want to do I think with respect to EuroCAD is actually close back below the 200 week moving average we've broken above it we haven't as yet broken the downtrend line from the 2014 highs what we really want to do is see a significant close above it but in the short to medium term if we do drift lower what I wouldn't want to see is for us to close the week below the 200 week moving average and I would be surprised if we did do that even even accounting for today's significant pullback that we're currently seeing in EuroCanada or a good Canada jobs number and also obviously a very good US jobs number so you got got a little bit of a double whammy there so that's what I think of EuroCAD as long as we stay above 13780 then I still think that this breakout is as valid as it could be and we all know that when you measure a breakout of an inverse head and shoulders you measure the distance from the peak to the neckline and you project it higher well there's around about 650 points between there and there so as long as we can sustain this move higher then we've got potential to go from 13780 all the way to 143 or 144 which is the February the February peaks that we saw earlier this year let's have a quick look at OPEC and Brent crude I think that's strong dollar is obviously I think going to push crude prices back down we're pushing against the significant uptrend line and a couple of significant support areas on this daily Brent chart here and we can see that borne out by these lows here around about $61 a barrel so that's a that's a significant support area so certainly worth keeping an eye on that if we decide that we're going to drift lower over the course of the next few hours there we go nice little intersection on support there we've got significant resistance coming in through the peaks from the May highs the gravestone doji that identified I think last month is still holding true we've managed to stay below that and as such I think this this downtrend if we break below this level here we could start to see further traction in that similar sort of story on WTI please jump in Colin if you if you want to add anything again WTI is slightly different I think in that it's trading in a bit of a range we had a similar a gravestone doji what we didn't get though is a slow breakout what we've got here is a sideways consolidation so if we take this channel here and then do that that I think is the the strength of WTI again we've had a bit a bit of a reversal there but I think again we're probably going to drift down to the lower end of this reach this recent range yeah I think you're right on that and even possibly back I mean over time over the summer you could even maybe see it come back that I believe the low end right now is around 55 and just below that you've got that resistance support line what is that around 53 I can't read that very well the time you got just $53 on the channel yeah you can see that retest again we've you've got I think you'll I think you're going to have a hard time seeing WTI get much farther from above where it is because you've had this you've had Saudi Arabia in particular walking around clucking basically saying we getting thumbing their nose at the Americans and saying we're winning the the supply war and then we pushed you out and we're going to keep production going on full tilt because we're winning and and I think if you saw the the prices get too much higher you'd see the response from the Americans and bringing their production back on so even though you're seeing the the U.S. inventory starting to come back off the this supply with a war among suppliers and a lot of it's politically driven not just not just economically driven I think and and that you're going to see this go on for quite a while so I suspect that what we'll see is the WTI go into some somewhat of a wide-a-training range whether it's 50 to 60 or 55 to 65 or something like that so probably not I also at the same time with the U.S. economy strengthening I have a hard time seeing it going back to 40 in the near term but you'll probably see it level off now and kind of it you know certainly nowhere near where it was a year ago but but well up off the bottoms as well yeah I've just been asked to have a quick look at cable quite happy to do that key support there is around about 150 170 that's the lows this week I think what's also important about that is if we take it around to the dailies we've got great conversions of the 50 and 100 day moving average so that basically makes this level doubly important in the context of where we go next so what I won't what I don't want to see I think in on cable on this daily chart is for us to fall below 150 160 otherwise we're probably going to head back to this sort of area around about 150 in the short to medium term certainly think the market is going to want to have a crack at the downside certainly on the basis of those figures I think an awful lot of people were caught the wrong way around that's certainly borne out by our client sentiment here where most of our top clients are actually positioned valued 70 percent long of cable that's up 2 percent today so that gives you an indication of how sentiment has changed over the course of the last few days I can remember about four or five three or four weeks ago when that was 93 percent short and only about seven percent long so you can see the cash position as opposed to the number of clients who are long or short the actual amount of cash sitting along a cable is 76 percent and that's our top clients and the top clients are basically the clients who've made the most money over the last three months I find that's an incredibly useful indicator in terms of where the market could well head to next and the pound has actually been fairly resilient over the course of the last few months simply on the basis of that some of the most of the economic data has been fairly positive we have seen a little bit of a sell-off since we peaked around about 158 in the end of May middle of end of May but overall we're getting we're getting some positive signs on the moving averages we did briefly break above a 200-day moving average that's still pointing down so that suggests to me that with the 50 and the 100 coming up to meet the 200 we're probably going to have to get used to a little bit of sideways consolidation probably between 150 and 158 so we get a bit of a flattening effect on the 200. Euro sterling needs to have a quick look at that that's in a range I mean that's really that's pretty dull at the moment as we can see from this chart here we can see that there's significant support around about the low 70s and the significant areas of resistance between 7380 and 74 you can see those two peaks the end of March beginning of April we've seen it again yesterday we've had a bit of a pullback looking for it to find support around about 7210 there or there about 7220 certainly around those lows that we saw at the beginning of the week sometimes when I look at a four-hour chart you can see where the areas of congestion support and resistance are just by drawing straightforward horizontal lines try not to over complicate it too much we can see that through there with these peaks and the troughs how they reverse their roles all the way through there and there that actually works even better if I extend it backwards to the left it probably hasn't worked as well in April but in May the 72 72 figure 7220 area has actually worked quite well as support and resistance and equal measure we can see that there's a series of support levels around about 7250 so certainly be keeping an eye on that over the course of the next few trading sessions so we've looked at Brent we've looked at let's have a quick look at the DAX because I think the DAX is actually quite interesting this is another this is another area that I was looking at the other week we've got again lower highs lower lows we're on a key support area around about 11 11166 but what was also particularly interesting when I did a video a few months ago was the fact that we got a significant sell-off here in the Germany 30 and all the DAX and it also mirrored and this is why I'm a little bit I'm a little bit bullish on the euro not overly because it's going to take you're going to need deep pockets to actually stay in if we look at the bund had a nice little breakout on the flag there you can see how volatile it's been but if you look at the monthly chart let's bring that all the way out and look at that I mean that is a significant bearish monthly reversal now we have seen an awful lot of volatility so yields could come all the way back to 0.5% that's when we ticked and hit 1% yesterday on the bund but certainly in terms of spread differentials we can certainly see that that bund rally that we saw that saw yields at 0.05% earlier this year was well overextended these lows that we saw in 2014 are quite to a yield of around about just over 2% so at the beginning of 2014 German 10 year was yielding 2% it's now obviously a lot lower than that it's below 1% but for me I think the direction of travel is quite clear we've held above this 50% level and I think we're going to chop between 38.2% and 50% certainly Mr Draghi says we're going to have to get used to yield volatility and bund volatility well I think we probably are going to see quite a lot of it and that's going to pull euro dollar around an awful lot over the course of the next few days and months and I think that's really why you're going to have it's very important that you pick your moment when you try and get into a euro-dollar trade dollars very very bullish at the moment you wouldn't want to stand in the way of it but I certainly think that that 110 50 110 80 level is still a very very key level in the context of this line that I've drawn in through these levels here so I think if we drop below 110 50 then we could see further losses back to the lows at 108 80 which we saw well 108 50 which we saw in May does anyone else have any questions on any of what Colin and I have just covered if not you can and if you missed any of it you can listen to it back because we'll post it on youtube as we normally do in the next 24 hours otherwise ladies and gentlemen Colin and I would like to thank you for your attendance this month and we'll see you same time same place next month for the same non-farm payrolls also we have a monthly webinar in the middle of May the details are in the education section of our website where we'll basically talk over the events of the last two to three weeks and also generally kick about any chart particular chart patterns that are that we find of interest sounds fantastic thanks everyone for joining us today it's been the it's been quite an active market on the on the numbers and and we expect to see if continued markets continue to be active throughout the day so it looks like another big day for trading cool all right thanks ladies and gents until next month or in a couple of weeks time when we do the monthly monthly Q&A on Thursday I think it's the is it the 15th no it's not 11th 18th I think it's the 18th all right thanks guys thanks see you then