 Good afternoon. Welcome to CMC Markets and this non-farm payrolls webinar for the June Payrolls Report with me, Michael Houston. Before we get started, just a couple of disclaimers, company policy and all that. Hopefully I will be able to give you some fairly decent indications as to what I look at when I look at a particular payrolls report the most important data items, whether or not this particular payrolls report is going to be market moving in any true sense of the word. In fact, as a matter, I don't think it will be. I think we're going to have more focus on next week's US CPR report. I think that has the potential to be more market moving than perhaps today's payrolls report. Now that's not to say that today's payrolls report isn't important. It is. It is if it misses. If it's not, it doesn't really change the calculus when it comes to US interest rate policy. Got a little bit of dollar weakening coming into the report. The pound is back above 120. The euro's back above 101 after a little bit of a dip below 101 earlier this morning. The main topic of debate on Bloomberg this morning has been parity watch, i.e. will the euro dollar hit parity over the course of the next few days. I think it will. I think it will probably go an awful lot lower than parity. But I don't think that's going to happen today because I think we'd have to see a very, either a very, very strong payrolls report. And even if we did, we've already come a long way this week, having broken below 103.40. I think we could well see parity after the US CPR report, always assuming of course that it comes in hot. But there's an awful lot of moving parts to this overall dollar story. It's been very much the story of dollar strength. And I don't expect today's payrolls report to be any different. So these are the key numbers. Non-farm payrolls, expecting a number in the region of 268,000. I've got these alerts set up on my platform. Generally tend to set them from the market calendar, which you can find here. You just set them up as a recurring alert. And then you set an alert timer for 30 minutes before the numbers are due out. You can actually adjust that. So it's 20 minutes, 10 minutes a day or an hour. I've got mine set up for 30 minutes beforehand. And we've also got a Canadian jobs report as well. And that's important in the context of a Bank of Canada rate decision that is due next week. And I think when it comes to central bank monetary policy decisions, none of today's data is going to change the prospect of a rate hike from the Bank of Canada next week. 50 basis points I'm expecting. The market is expecting that as well. And a 75 basis point rate hike in July from the Federal Reserve. We've already seen from the Fed minutes this week that the Fed is much more concerned about inflation than they are anything else. They're not concerned about recession. And to my mind, I think they should be. Certainly European markets are very concerned about recession. We've seen that in how the DAX has performed this week. German power prices are surging. The Nord Stream 1 pipeline is shutting down for maintenance. And it's concerned that it may actually never reopen. Already Germany is rationing energy use in the middle of the summer. We're not even in winter yet. And that's helping to drive electricity prices up. And that's going to be a very big drag on European economic growth over the course of the rest of this year. If Europe's biggest economy is already rationing energy use now, what's the situation going to be like in three to six months' time? That's going to act as an enormous drag on the European economy. It's also going to limit the ECB's ability to raise interest rates. It doesn't mean that it won't, but it's going to find it enormously difficult to raise rates to the same extent as the Federal Reserve in the teeth of an economic slowdown. At the moment, the Fed is laser focused on inflation to the exclusion of anything else. US GDP in the first quarter contracted 1.6%. The US could already be in a technical recession. The Federal Reserve doesn't appear to care about that. And given how low the unemployment rate is, they're probably right. But what does that have to do with today's payroll's report? Well, first and foremost, let's look at the overall story when it comes to Eurodollar. Now, those of you who are regular listeners of my videos and various payrolls report already know that I think Eurodollar is going a lot lower. One of the reasons for that is an article I wrote in April, earlier this year, arguing that we're probably going to see a targeted move because of the breakout of this sideways consolidation over the course of the past five years, which has broken to the downside. Now, 10340 was my initial target for support. We've hit that. We've rebounded, haven't been able to get back about and now we've broken below it. That now opens up a potential move to parity over the course of the next few weeks and months, but it doesn't stop there. If we zoom all the way out, that measured move target potentially has the capacity to head to 9620 over the course of the next six to 12 months and potentially even lower than that. So when I look at technicals, I look very much in the context of the wider pattern. And at the moment, I've seen no evidence that the Euro is set for a respite. So for me, I think even if we get a rebound in Eurodollar and about dollar weakness, we will need to get back above 10340, which is these twin lows here to stabilize and potentially target a move higher. For the time being, I think a move to parity might happen today. Do we get a move below parity? I would be surprised given the extent of the move that we've seen already this week. So I think this payrolls report will probably give us an opportunity in dollar terms to consolidate those dollar gains that we've seen so far this week. I don't think the strong dollar story is over quite yet, certainly not in the context of Eurodollar. So let's talk about what is likely to happen when it comes to US markets. NASDAQ 100, we've seen four days of gains this week. We're currently testing the 50-day moving average and we're also bumping up against these previous peaks back on Monday, the 27th of January. So bit of resistance at the 50-day moving average, there's also resistance at 12,230, which is these peaks back here. What would a good payrolls number do? When I say a good payrolls number, I mean the number in excess of 260, 270,000, it's not likely to be positive for stocks. Why do I say that? Simply put, it means that it's going to shift the focus to next week's CPR report. If we get a hot CPR report, it means the Fed isn't going to be slowing down its rate-hiking cycle. At the moment, 75 basis points is priced for July. It's unlikely that today's payroll report will deviate the Fed from that point of decision-making. What could weaken subsequent rate hikes is a fairly benign payroll report, weak wages. Wages is another pressure point for the Fed. It's already looking fairly subdued, wage growth is 5%. When you look at CPI, it's at 8.6%. The expectation for next week is for CPI to rise to 8.8% and another 40-year high. That rather flies in the face of PPI data, which has been trending lower since March. PCE data, which is the Fed's core inflation measure, that's also been trending lower since March. So the CPI expectation for next week is 8.8%. It flies in the face of PPI, which tends to be more forward-looking in terms of, this is what's coming down the pipe, the CPI, and that's been in decline. And PCE, which has also been in decline. So I'm struggling to square what the market is telling me in terms of CPI expectations next week with what the market is currently pricing. We are starting to see a little bit potential for base building here. We've got a lower low there. And the next target, I think the next potential target could be a break higher here. So this series of lows here is above those lows there, which suggests that maybe a base starting to build. But the key test will be if we get a move back to 12,900. If we're able to move above that, then you could argue that the bottom is in for US stocks. But at the moment, the trend is still down. And the same applies to the S&P 500. So, again here, the peaks that we saw back in June, late June, this is the next key resistance for the S&P 500. And the 50-day moving average is quite some distance away. So there's certainly potential for further upside in US stocks. And a payrolls report in line with expectations would potentially support a little bit of some further gains from the gains that we've already seen this week. But overall, I think the main focus is going to be on next week's CPI report and less on today's jobs report. One single middling jobs report is not going to change the calculus when it comes to the Fed. So what it might do is send stocks higher, weaken the dollar slightly so that Eurodollar goes back to 102, 102.5. But overall, I'm not really expecting anything too outlandish from today's US jobs report. Famous last words. Germany 40. Quickly, before we get to the numbers, we've got five minutes to go, the five-minute countdown. Does anyone want to ask any questions about what's happening with respect to any other markets that I haven't yet covered? We're getting a decent rebound this week on the DAX as well. It's held that lower support from the lows back in March. So there's a little bit of technical buying going on on the DAX. There hasn't been enough momentum to take it below the previous lows. I think that's also helping to some extent prompt the rally this week, a little bit of technical buying ahead of some key data announcements. And it's also important to remember that next week we get the beginning of US earnings season with US bank earnings, JP Morgan, Citigroup, Wells Fargo, Morgan Stanley, and then Goldman Sachs the week after. So US earnings, I can't overstate this enough. That's going to be very important in terms of forward expectations for US company profits. And I think that's another reason why we're getting a little bit of a rebound ahead of the start of US earnings season as well. So some big levels coming up for an awful lot of indicators, US and otherwise, as well as ahead of today's reports. So quickly, Dollar CAD. Dollar CAD is going to be important in the context of the report that we've got coming out today. Big, big top through here at around about 130, 131. Very decent jobs report out of Canada and wage growth in particular could see Canada test towards the top end of its recent range. There is an outside chance the Bank of Canada could do 75 basis points next week. So that's worth keeping an eye out for. But at the moment, Dollar CAD looks a little bit toppy anywhere near the recent highs that we saw seen over the past few weeks. The downside to that is that potentially if we do break higher, we could see a significant move because if you've got a stop loss in Dollar CAD, if you've got a short position in Dollar CAD, where are you going to put your stop? You're going to put it above this series of peaks through here at around about 131 there or thereabouts. So at a big, big level and Dollar CAD, Aussie Dollar very, very quickly covering that one. Oops, didn't want to do that. I know the clock's ticking. I've got two minutes, so I should be okay. Aussie Dollar, big, big level around 67.58, which also happens to be a 50% retracement of this entire move from the 2020 lows to the peaks in 2020 and the peaks earlier this year. So we're on a big level in Aussie Dollar. Can we hold above that? If we can hold above that 67.58 level, then we should head back towards the 70 level here. That also ties in. That's purely a risk play as well. If you're bullish US stocks, it's quite significant that the rebound that we've seen in US stocks has also coincided with a little bit of a rebound and support in Aussie Dollar as well. So there's that. My take on gold is that we're probably going to see further weakness while US yields remain resilient. There's resistance at 1760. Decent support through there. If we get a rallying gold back towards that 1760 level, we could well see a little bit of selling kick in. As for Brent Crude, that looks fairly well bid anywhere near around the lows that we've seen over the course of the past few months around these sorts of levels here. And that does look a little bit like a bullish reversal on the daily candle on the continuation pattern. So I'm sorry that was very brief, but I'm a little bit strapped for time here. Also WTI, similar sort of story, decent area of support all the way through these lows through here. Let me just quickly draw that line in for you while I can. And it's interesting that it's fairly similar to the line that I drew in for Brent Crude. So decent support just below $100 a barrel for both crude contracts. So expectations, $268. Anything below $100 is not going to be good for the US dollar. It'll probably be positive for stocks because it could well prompt a slight shift in stance from the Federal Reserve. But anything above $150 is mid-link. You might see a little bit of dollar weakness on anything below $200, but it's not going to be sustained. Anything below $100 could cause a little bit of pause for breath. Forecast, 5% for wages. Anything above that, again, dollar positive. Participation rate is also likely to be a key component as well, and I'll be keeping an eye on that. And then they'll be quiet and just wait for the numbers to hit. Canada jobless has dropped to 4.9% US unemployment at 3.6% unchanged. Payroll's report fairly decent number there, 372. All fairly positive there. So that's dollar positive, euro dollar pressing lower. Let's just look at the dollar reaction in the euro dollar. We do a five-minute chart and we can see that on that chart there. Let's look at the S&P. It's likely to be a slightly negative reaction on the stock market. And that's exactly what we've seen. That's exactly the way it's played out. So solid jobs report. Fed's going to remain in fairly aggressive tightening mode on that basis, but obviously that will now shift the attention towards the CPR report, which is due next week, as well as the PPR report, which is due the following day. But overall, we should see a retest of the lows on euro dollar on the back of that report. I'm not sure that we will see a move to parity, but who knows? In these rather skittish markets, but certainly in terms of the overall scheme of things, euro dollar remains sell the rally. And US stocks are likely to probably retest the pre-market lows that we saw earlier today around about 3880. The way we go from there is another matter entirely. Have a quick look at the yields on the bond market and to see what they're doing on my Bloomberg. Let's just bring that over, just checking them now. We already know that the bond market is pricing a recession for US stocks and there it is. So we've seen a big spike there in US yields. Let's look at the one day. Yep, there it goes. So we've gone to 306 on the 10-year market prices in. And on the two-year, we're inverted already. So the two-year is above the 10-year, which means that markets are pricing in the prospect of US recession. Let's look at that there. So 311, 306, so two-year borrowing costs are above 10-year borrowing costs. So markets are certainly starting to price in a recession, a US recession, according to one side, the fact that technically the US could already be there because of first quarter with minus 1.6 and second quarter potentially coming in negative as well. But certainly stock markets don't like those payrolls numbers. They feed into the Fed's tightening cycle, aggressive 75 in July, 75 potentially in September. And I think the only way that we could see the Fed deviate from that course is if the CPI print next week comes in weaker than expected. And that's important because the markets are pricing in an 8.8 percent CPI number, which really doesn't sit right. But for the time being, the markets are moving on today's payrolls report. And at the moment, they're pricing in stronger dollar and potential recession, which is bad for stock markets. And with the earnings season starting next Friday, with JP Morgan's results, that's not particularly great for risk assets. So we remain very much selling into rallies on stock markets. We're still in this downtrend line from the S&P here. And if we do see any late day strength in the S&P 500 when US markets open in just under an hour, we're likely to run into a wall at around about the 50 day moving average. And these peaks are around about 3,900 on this particular chart here. So that's this peak from the 28th of June. Right. Does anyone have any questions on anything that we've just talked about? Getting a little bit of a pullback now on Eurodollar, that little nice little squeeze back after a test lower. As I said, I think parity is unlikely today. I think we've already come a long way this week. And I think what we'll do now is probably chop around for the rest of the day as we head into the weekend. So questions. Let's have another quick look at dollar CAD and not altogether surprising that we've seen a fairly non-committal reaction on the five-minute chart on dollar CAD, spike higher, come straight back down again. As I said, we've got the Bank of Canada next week. Let's get rid of these now. Interesting to see that wage growth in the US has been revised up ever so slightly. And I think that's even more important in the context of the overall discussion about the non-farm payrolls numbers as well. So that's likely to keep the Fed much more hawkish. And certainly the comments from Waller yesterday and Bullard yesterday feed into that narrative. The Federal Reserve is quite prepared to push the jobs rate higher if it gets the inflation rate lower. And they've certainly got an awful lot of regal room to play with. Let's face it, the unemployment rates are 3.6%. Their target for US unemployment is around about 4.1, 4.2% in terms of their expectations for next year. So there's certainly quite a bit of room for US unemployment to go higher, not with standing the vacancy rates, which are 11.2 million. They came down from 11.6 million. So there's still quite a few vacancies in the US economy, which means that the Federal Reserve is unlikely, very unlikely, to soften its tone when it comes to rate hikes. And we could well see the Fed funds rate double by September. So we could see another 150 basis points from where we are currently now. Okay. Copper. Yeah, copper. I mean, this is one of the things that's really been making me think that the market is pricing a recession. I mean, when we look at copper, Thomas, this is, I mean, it's an absolute freefall here. We've come quite significantly lower since the beginning of June. But I do think that potentially we could be near a little bit of a base in copper. And there's one reason why I think that and I could be completely wrong. Demand for copper for once is not going to go anywhere anytime soon. The transition to renewables is going to need an awful lot more copper. There's also this. This has the potential to be a little bit of a daily reversal. Why do I say that? Because of this very long shadow on this candle here, that typically you can call it a hammer. You can call it a doji. But it's the two candles either side of it. It's the candles either side of it. We've got, we've seen a very strong impulsive move. We've seen a push to new lows all the way back to, you know, 2020, 2021. But we haven't been able to sustain that push lower. Following day we've rebounded strongly higher. There's all this talk of a China stimulus plan and we do have China data next week as well. Not that that's likely to paint a pretty picture of the Chinese economy in the second quarter. It's likely to be diabolical. We could well see a quarterly contraction of Chinese GDP, not on an annualized basis, but certainly on a quarterly basis. I'm expecting a contraction of 2.3% on a quarterly basis, which should bring the annualized figure down to around about 1%. Let's not forget that they have a target of 5.5% for this year. So I think they don't think they're going to meet that. That doesn't change the overall narrative when it comes to copper. If we can get a break above 360 on copper, then we could well see a short squeeze all the way back to $400 or $4 a tonne. So this could be early signs of a little bit of a reversal on copper. But we need to see confirmation of that on a break above this area here, which is 360. So I'm keeping an eye on that. If we do see a break above 360, we could get a wider move higher on the copper price. So that's something that I'm paying particular attention to on copper. And it's one thing I do have my eye on. Would a lower euro act as some measure of support for European equities? Yes and no. It depends on the European company. A company, a European company that basically isn't as exposed to the European economy, which has a global footprint, then yes. But if it's a company that's very exposed to the European economic cycle, then no. So it depends on the company you're investing in terms of the DAX. For me, the key level remains these twin lows in and around $12,400. If we break below that, then there is potential for us to fall all the way back to the lows back in October 2020. At the moment, that level is holding. And while it continues to hold, you sort of really play the range. And that's essentially the best strategy. Until that level comprehensively gives way, you really do play the range on the DAX. And it's really a question of playing support and resistance levels on individual European companies. Right, I'm being asked about natural gas. Is that US natural gas, Thomas? Or UK natural gas? Because we do have a new contract. We have UK natural gas for August 2022. So do you want me to do US natural gas? Or do you want me to do UK natural gas? US natural gas is there. And we just open that up for you so you can see it on the daily chart. As I say, it's something that we've been asked by our clients to start trading. And that's what we've done. So we now have UK natural gas futures. Looking at ordinary natural gas. Let me just get rid of that. And it should be down here somewhere in my watch list. There it is. This is an interesting pattern. Let's look at this on a weekly chart. Yeah, I mean, that potentially looks like a tweezer bottom on this weekly chart. Let's look at the daily. We've got the 200 day moving average. It's having a little bit of a flirtation with it. Let's get rid of this because it's skewing my analysis somewhat. Right, there is a bit of a trend line there. Let's see if we can extend that back to the left. We are in a bit of a no man's land here, but I think the fact that we've been able to hold above this 530 level on three separate occasions should give us some confidence perhaps that we've seen a short term base. So it looks like we've got a bit of a short term base in US natural gas for the time being. I think what I'd like to see more than anything is a move back above the highs that we saw yesterday at 640 and a potential move back through 7 to have some confidence that the short term low is in. So US natural gas possibility of a short term low. Let's go back because you just mentioned UK natural gas. We've also got a carbon emissions contract for any of you who are particularly interested in carbon emissions. We've only just started carrying that, but we only carry the front month for that. But if we go to UK natural gas, we don't have a continuation contract for UK natural gas. So you'll have to make do with just the traded contract. That's slightly, there we go. So that's the hourly chart for UK natural gas. As you can see, it's a little bit choppy. So you've got to have, this is the hourly chart. See if we can define any discernible trend on what is going to be. What I would suggest is chart that has the ability to be a bit of a widowmaker if you don't know what you're doing. Certainly, there is a decent trend there, but there's also a decent top in around 330 on UK natural gas as well. So something to play around with. But as with any of these, please be careful because they move in a very volatile fashion. So they're not for the faint hearted. And that's, yeah, absolutely. Alan, that is, yeah, I mean, obviously the US is going to be exporting its natural gas to Europe. So, you know, that sort of reinforces the narrative that while we may see sell-offs in natural gas and commodity and energy prices more broadly, at some point, you're going to see a little bit of a rebound because the demand is there. It's just really a question of when that demand starts to kick back in after you see the sell-off. So the US is already, as Thomas has just said, the US is already exporting gas to the Baltics. And that is likely to continue particularly as we head towards the winter because Russian gas will become much less reliable. So any dips are likely to be well sought after, even if Europe falls into recession because you still need to heat your homes, businesses still need to keep running and Germany is already introducing gas rationing as I speak. So, you know, the demand is there. It's really a question of supply, which is really why I've been rather surprised at the big sell-off that we've seen in crude oil. But it's also why I don't think that we're going to see, I think we're going to see a steady stream of buyers anywhere below $100 a barrel. I mean, even if you're talking about recession risk, demand out of China is still going to be a constant, even if they are already buyer of Russian crude oil and gas. So for me, it would be very surprising indeed if we saw a significant move much below $95 a barrel of crude oil. And if we do see that, then you can probably surmise that the global economy is not in a good place. Okay. So anything, any other questions? Ladies and gents, any other questions? Otherwise, we can, we can, we can wind this up and I'd like to wish to thank you all for your company today. Hopefully you found it. Hopefully you found the presentation useful. You will be getting a feedback email in the next 24 to 48 hours. You may get it actually on Monday. Please feel free to fill it in, send me your feedback, good or bad. I want to hear it either way. Otherwise, I can't make these, I can't improve these webinars or I can't tailor them to the clients. So I think that's it for, I think that's it for this week in the, this month I should say, in the absence of any other comments, go out there, enjoy the sunshine. It's a beautiful day out there. I hope you all have a great weekend and I'll speak to you all same time, same place next, next month.