 Good afternoon ladies and gentlemen and welcome to CMC Markets non-farm payrolls webinar on Friday the 6th of March and I can't remember the last time I hosted one of these webinars Where the actual US employment report couldn't be of lesser importance than it is right now before I get started Go general risk warning But I think irrespective of how good or bad today's payrolls report is It's unlikely I think to really make that much difference To what markets do this afternoon or what markets do next week. It's really all about Coronavirus so Rather than calling this the non-farm payrolls report for the US and the Canadian employment report Let's just call it the coronavirus webinar because I have a feeling we'll probably be talking about that and not much else First and foremost, obviously there's this week's emergency Fed rate cut which to all intents and purposes was I think a little bit of an own goal on the part of Federal Reserve because I think if they wanted to send a message to the markets that They were a little bit concerned about the coronavirus and its impact on growth going forward they wouldn't have done an emergency rate cut and Would probably have only done 25 basis points when they meet in March Looking at the beige book earlier this week. There were 48 mentions of the coronavirus which suggested that there are rising concerns about it, but certainly not enough To really I think worry people Unduly and let's not you know, let's make no mistake about it. There will be effects from it But I think in reacting the way that they did I Think they miscalculated quite badly because what they did was they sent a message to markets that they were worried I am very very worried about what might happen over the course of the next few months and I think for me It was the equivalent of the central bank trying to throw a treble 20 in darts and getting 180 and instead of sort of that throwing triple one and getting nine instead It missed the mark by quite some distance because we are now lower than when the Fed cut rates Earlier this week and we're testing the lows of the recent range. So Let's talk about the payrolls We'll talk about the numbers But I'm going to move swiftly on because I think for me what you guys will want to see is chart points and Chart points specifically, you know, where are the next key levels for stocks in some cases like the Dax for example we've already fallen through the lows of Earlier this year and that suggests to me that we're probably going to see further declines there We're right on the lows of the FTSE 100 right now But talking about payrolls February payrolls expecting to see 175,000 new jobs added Down from the 225,000 that we saw in January. We did see an also a hefty revision in the ADP Payrolls report for January that was a revised down from 291 to 209 if memory serves me correctly I'm trying to remember that off the top of my head and I think it's 291 to 209 And the ADP number wasn't particularly bad either Unemployment expected to come in around about 3.6 percent again near a 50 year low and the Wages numbers are expected to remain in and around the 3% level, but let's start with the Dax the Germany 30 well I continue to talk about the data with respect to the US economy because so far what we've seen from the ISM reports is Manufacturing still looks fairly decent. Well, so it looks very decent. It's rebounded in the last couple of months But more importantly than that man non manufacturing ISM was actually very very good and all of the metrics Not just the headline number, but apart from prices paid, which is around about the 50 level employment New orders and what have you all in the mid 50s? So the US economy services sector Still shows is still showing to be remarkably resilient So really I think it's about it's not about it's not about today's payrolls report What it's about I think in terms of the US labor market It's what's coming down the pipe And I think the best benchmark for the health of the US labor market will be the weekly jobless claims numbers now They're currently coming in around about 2 15 to 20 and I think if we start to see stresses in the US labor market That's where we'll see them first We'll see them in Slowly rising jobless claims, but only if we move I think above 250,000 because we sort been trading between 200 and 240 over the course of the past few months in any case So, you know, and even when even when they had the GM strike Weekly jobless claims didn't really jump that much at the end of last year So this this coronavirus effect could take a while to filter down into the US economy But you know judging by the Fed's actions, you think they were About to price in a Significant slowdown in the US economy now that could happen that could happen markets are already pricing it in if we look at say for example the US 10 year yield. I mean, I've I've never seen a Move like that in the US 10 year yields We closed the end of last week on the US 10 year at one point one four eight six We are now just above 71 basis points so that is a hefty old move that is a real hefty old move for US yields and You know in and around 71 80 from all the way up here I mean that's pricing in a pretty drastic slowdown for the US economy So I think the question that we have to ask ourselves is the market pricing in too much The market's pricing in another 50 basis points from the Fed on the 18th of March. Is that realistic? Is that the message the Fed wants to send to what essentially is not only a Supply shock but a demand shock what can lower rates do to offset the effects of a potential pandemic? I would argue there's not much they can do at all and really what needs to happen is something on the fiscal side But also In terms of the liquidity side now, you know liquidity and rates You know that don't have to work in lockstep with each other rates are already at historically very very low levels So you don't really need to lower rates to improve liquidity But that's essentially what the Federal Reserve is expecting one to do so Not only is it basically pushing yields lower and Placing enormous strain on bank balance sheets as we're seeing as we've seen today In the European banking sector where the European banks stock index is Back at levels that we last saw at the height of the eurozone debt crisis If we look at this Bloomberg chart here, that gives you an indication European banking stocks They've absolutely crated since the end since the week ending the 21st of February and Back at levels if I do a max chart on this you can see that the last time they were this low It was all the way back in 2012. This is a quarterly chart. So it's probably not a particularly decent Example, but if we let's say for example go over the last 15 years on a monthly chart They the only time they were they've been this low was back in the the depths of the eurozone debt crisis when Mario Draghi basically uttered those immortal words that you do whatever it takes to preserve the euro and believe me it will be enough Now we're pretty much back there where we were in July 2012 and The prognosis is not looking particularly positive and this presents an enormous problem for the European Central Bank huge problem for the ECB because the markets are pricing in ever lower rates and Ever lower rates is utterly utterly toxic for The European banking sector utterly toxic There's absolutely no upside if they want the banks to help out with smoothing out cash flow problems for companies in the euro area and that's essentially what Essentially what the economy needs there's going to be an awful lot of what I would call cash flow spikes if we get a significant slowdown In the global economy over the course of the next few weeks a month and what an awful lot of companies will need is forbearance or sympathy in terms of Getting over these cash flow Humps so if the ECB doesn't deliver something like that next week Then the situation in the euro area could get very bad very very quickly We're already seeing it born out in the DAX if we look at the DAX chart here We can see on this chart. I drew some Fibonacci retracement levels on this for you We rebounded off the sixty one point eight Fibonacci retracement level of the entire up move from the lows that we saw in December the end of the end of December January 18 beginning of 19 and The highs earlier this year and we rebounded off the sixty one point eight Fibonacci retracement level and We've now broken below that now. That is significant We need to close below that to signaled retest of these lows here in and around eleven thousand two hundred and That that suggests to me here that we've got a little bit of a flag This is a classic This is a classic thrust move down here a little bit of a flag and then another thrust move lower So on that basis the fact that we've broken lower here on a technical basis is a very very bad sign If we close back above eleven thousand seven hundred on the DAX Then we've had a false breakout. So if you're looking to trade this break lower Then any stop-loss needs to be back above this retracement line here I'm just being asked if There's an audio problem on the part of people who are hearing me someone saying that they can't hear any audio I Think that if there wasn't any audio I'd have more than one person Basically saying that they couldn't hear me so Anyone who has audio problems Check your speakers or headphones and hopefully the problem will go away So just give me a second in one of the audio problems Please check speakers Etc. I Just send that to everybody so Okay, so We've we've seen a break lower in the DAX now the big question now is Will we see a significantly similar move elsewhere? We're also at a very key level on the on the footsie one hundred and I'm just going to Align that for you. Yeah, here we go. Let's try that again 6460 on the footsie was the lows that we saw earlier this month and We're retesting that right now So on a technical basis in terms of the footsie Let's not forget the footsie is underperformed on the way up and it generally tends to underperform on the way down If we break below this low here, then there's a good chance we could go quite a bit lower personally You know, I think in terms of the footsie one hundred UK stocks and what have you sell off is slightly overdone The problem with the footsie is sort of gauging where the next support level will go if we break below 6450 which is basically this low here at the end of February 6455 I've got as a low. So what I'm going to do with this one ladies and gentlemen is basically extrapolate out To where the next support level is With respect to the weekly chart So we've got the weekly chart here We can see that there is a nice little low in and around there But we've also got this low here back here. We've also got a series of highs through here, so between 6400 and 6420 is A fairly decent area of support. So even if we break below 6450 I'm not overly convinced that we're probably going to move much below 6400 in any case Now I can't I can't buy into the case that if we if we if we break 6450 will come crashing off Given how bigger support and resistance area this this region has been since 2015 2016 2017 so Certainly keep an eye on this level But I'm minded to think that in the short term we could see a little bit of a base on the footsie 100 between 6420 and 60 and the and these sorts of levels that that we've got here If we look at the S&P 500 Or we're not we're almost there with respect to the numbers. So as I say, I'm not expecting a significant reaction We're well short at the moment on the S&P of the 50% retracement of the entire up move here Which is at 2858 so again? I think any downside on equity markets while these series of support level holds could well be limited Now that's not to say that we can't go lower But I think ahead of the weekend It's unlikely that people will want to take on Significant amounts of new risk heading into the weekend and take out the lows that we saw earlier this year Global comfort global coronavirus cases confirmed surpass 100,000. Yeah, that's cases reported and that's a lot but You know for for me That that number is only likely to go higher and really it's just a question of the economic disruption It's likely to cause but if we look at this 2855 level on the foot on the S&P It's a big level because it also corresponds with the October 2019 low So that's huge. It's a huge level huge support level And if we get down there, then I think it stands to reason we could see a decent rebound now Let's look at the dollar and Euro dollar in particular. I still think there's I think there's potential further upside in Eurodollar, why do I think that because I don't think the S&P saw the S&P the ECB Can do that much and we'll be able to do that much next year on the rates front Whereas the Federal Reserve has certainly got more scope to ease further Which means that the upside of Euro dollar is likely to give us a retest of these highs here at 114.12 114.20 in the highs of the year in the middle part of next year So I'm thinking that we're potentially going to get further dollar weakness over the course of the next few days and weeks That's not to say that we're going to get there today In terms of gold prices very very quickly. I think we can go to 1800 by year-end Fairly easily if this coronavirus stuff Continues the way that it has been looking at dollar yen dollar yen looks very very weak And the likelihood is we're probably going to retest the lows that we saw a Few a few weeks ago a few months ago in August of 104.45 104.50 we're only about 50 50 60 points away from that It's unlikely that will break below that in the short to medium term So let's get ready for the Canadian payrolls and the US payrolls Report and the numbers are out and 273. That's a fairly decent number for February payrolls very dollar-positive number So that should give us a bit of a knee-jerk reaction when it comes to the dollar a little bit of a rebound there But overall it really doesn't change the picture that much Canadian payrolls report again a fairly decent number there on the Canadian payrolls wage grow 3% US and the unemployment rates fall into 3.5. So it's a 50 year low so all told all told ladies and gentlemen a fairly decent set of Numbers none of which matters but having said that it will still give us I think a fairly decent opportunity To rally for stock markets And I think it's sort of a little bit of a little bit of a silver lining and a week which has been absolutely horrible for risk so So in terms of the overall direction of the dollar, we're probably not going to see an awful lot in terms of the declines thus far But nonetheless, it should cap It should limit cap should limit the downside in the short to medium term We've seen some big moves this week in US treasuries We've seen some big moves this week in equities and we've seen some big moves this week in the US dollar So I think you know, we should get a decent we should get a fairly We should get some sort of rebound on the back of these numbers And we're already starting to see that now the footsie 100 is at 64 80. It was around about 64 67 64 68 The the s and p is in and around 1933 And he's starting to tick back up as well so Again, you know a fairly decent set of numbers, but overall Doesn't change the overall long-term picture for For dollar weakness, but I think it will limit the downside For today now does anyone have any questions? Um before I start to move on and look ahead To what's coming up next week because there's three things I'm paying particular interest to over the course of the next few days China trade ECB and the UK budget and I think for me when we're looking When we're looking at markets through those multiple prisms And you're looking at the pound in particular I think there's a good case to make that I think there's potentially further upside for sterling Then there is for the euro now. Why do I say that? Well, basically we've got a budget next week And the UK government has much more fiscal flexibility To take steps to mitigate the effects of coronavirus than any other country in the european union Why because it controls its own budget and it controls its own currency So if it wants to go on a fiscal splurge it can And in essence that could well actually help underpin the pound going forward. So I think for me particularly in the context of the ECB meeting next week and The UK budget next week euro sterling is a fairly decent Euro sterling is a fairly decent cross to have a view on Earlier this week Euro sterling, please feel free To fire any questions my way if you want me to cover anything in particular If you want me to focus much more on the payrolls because I know this is a non-farm payrolls webinar But I don't really think there's anything else much left to say on that Looking at this euro sterling chart We've got the 200 day moving average Which has capped the advance of the euro over the course of the past few days at 87 45 87 50 so Playing Are you playing the euro sterling? I would certainly look To start to think about playing this from the short side If we get close to or near to this week's highs Um, I certainly think there's a case at the pet There's potential for the pound to go higher And the euro to come lower and I know we can talk about the trade talks and everything else between the EU and the UK But so much of that is political So much of that is political and it's political noise And it doesn't really Tell us where we're going to be at the end of this year It only tells us where we are now And the transition period ends at the end of this year So it's not really going to drive the dynamics in terms of euro sterling Between now and then so for me I always trade things from technical points technical standpoints and in markets like this Which are moving 34% in a day It's never been more important That you pick your levels when you're trading So if you're looking to go long you're looking to go short. Don't just dive in Look at the chart identify your key levels as to where to go long or short And then set your stop loss accordingly The worst thing you can do in a market like this It's just dive straight in because you can get stopped out on a whip very very easily And when you're seeing thousand point moves in the Dow And you're seeing 70 or 80 point moves in the s&p 500 It's very very easy to get sucked in Very very easy to get sucked in so first rule of trading As far as i'm concerned Is trade the levels pick the levels that you're comfortable getting in it And then trade around that so In terms of this euro sterling trade You want to try and make the distance between your entry level and your stop loss level As small as possible without obviously putting it too close So If you've got a stop loss above 87 50 That's probably a little bit too close But if you've got a stop loss at 87 70 on euro sterling For a short position that's probably just about right And any pullback is likely to find support in and around this 86 level here Which basically coincides with this series of highs there There And there I work on the basis that when resistance breaks it becomes support And when support breaks it becomes resistance The the trick is when you're trading is to keep your losses small And run your profits So you want to make the losses that you take as small as possible So in terms of playing euro sterling from the short side You can clearly define where your stop loss is because it's above the 200 day moving average And it's also Above the highs of the last five days So you clearly defined your risk parameters straight away And then from that you can then extrapolate how much money you're looking to make on the on the app side So if you're risking 50 points on the downside, you can look to try and make 100 on the upside That's that's that's the rule of thumb generally Do I use average true range? No, I don't You can usually tell whether a market is trending or ranging just by looking at it. You don't need an ATR to tell you that But it's you know, that's just my own personal preference. I'm not rubbishing it. It works for some people It doesn't work for others So I've just been I've just been asked about crude oil So let's look at crude oil Because that's gone for a little bit of a slide today As those of you who follow me on twitter will know Went for a little bit of a little bit of a crash Because russia has decided That it does not want to take part in any production cuts before june And that's caused a little bit of a sell-off because of fears of a slowdown in demand We'll bring about a bit of a supply surplus. So we've seen a little bit of a sell-off down here We've broken below The lows that we saw earlier this month So at the moment, we've really got to determine where we go from here And this is the hardest thing with crude oil and this is why I really don't like getting involved with it Because For me it's something that I always end up getting stopped out on because I don't really know enough about trading it First and foremost, I've always been a currency trader. I traded FX on a on a on an australian bank spot desk In the 1990s and that is basically what i'm familiar with. That's my comfort zone If you like it's where I feel most comfortable trading spot for an exchange Having said that using technical analysis and charts um The rules generally tend to apply pretty much across asset class. So As long as you maintain your discipline and you wait for the market to come to you Then generally you can mitigate any downside risk and you will you will take losses. Everybody does I do the trick is to basically keep your losses to A minimum, you know, and I think that's really the key thing when it comes to trying to figure out You know where your entry and exit points are likely to be if we if we look along here We can see that It's very very difficult to determine where the next key support is on Brent crude apart from these lows back in 2017 when we were around about 45 dollars a barrel and I'll be very surprised if OPEC allows Prices to fall that low Without cutting production further and I think the reason russia is resistant to Cutting output is because they're actually doing very nicely. Thank you because of the strength of the ruble and the weakness of the dollar So when they convert their dollars back into rubles, they're actually not taking such a big hit As say for example, the middle eastern countries are And that's why they're trying that's why they're playing hardball when it comes to Cutting production further. It's not in their interests to sort of do their Middle eastern neighbors too much of a favor. So they want to try and extract as many concessions as possible out of them assuming of course both sides Conform to their quotas and generally with OPEC production cuts There's usually a little bit of swerving going on when it comes to Compliance shall we say anyway? So we're at the bottom end of the range I think on WTI and Brent at the moment And if we look at WTI and WTI in particular We actually haven't made new lows, which makes me a little bit suspicious about whether or not there's any further downside In crude oil in the short to medium term if we look at this candle here this big strong candle here on WTI There's a decent low there of around about $43 a barrel So I would be very very reluctant to be short at these sorts of levels at this point in time and particularly ahead of the weekend And particularly when OPEC Um and OPEC plus are still meeting. It's um very dangerous thing to do to run a position like that over the weekend It's not something that I'm a particular fan of particularly in these markets because just so many different things Can happen over weekends now that usually it's just a license to sort of lose money or get stopped out so In terms of crude oil, I think we're probably potentially Near the lows in the short term obviously if we break the lows then I'll have to reassess That point of view Um any other questions ladies and gents? before I move on Looking at the dollar cad After that decent canadian payrolls report Sort of gives the light of the 50 basis point rate cut from the bank of canada doesn't it really? Um again, you know, I think central banks have overreacted. I think they fired a blank They've acted unnecessarily and they're using the wrong tools But what I would say is the federal reserve have got the flexibility um to Step in as of the bank of england funding for lending or a special lending program special liquidity scheme Um, they've done that before we could see that in the budget next week And I think that could be fairly supportive Of sterling going forward. Um, let's have a let's have a quick look at the cable actually because I think um That's at a very very key level at this point in time And it's something that I tend to update on a fairly regular basis And if we look at cable here We've broken the downtrend line From the borris bounce highs in december 135 We're now looking to move above the 50 day moving average We found decent support in and around the 200 day moving average of 127 and a half And I certainly think there's there's there's definitely potential for us over the course of the next week or so to move back to here 132 And potentially edge a little bit higher over the course of The next few days and weeks um Simply because I think the flexibility of the bank of england is likely to Mean that euro sterling is likely to drift lower Assuming of course euro sterling stays below its 200 day moving average If however euro sterling moves above its 200 day moving average you have to revise all of your assumptions about sterling weakness and sterling strength because I derive an awful lot of my assumptions about sterling On the basis of what euro sterling is doing relative To euro dollar so at the moment euro sterling has just gone slightly better bid And that's pushing the pound back down from the 50 day moving average So, you know as a spot trader you do have to be aware of the cross currents of the crosses And how they affect the pound against the dollar Just been asked about euro swiss Obviously, there's definitely a safe haven play going on there We've just gone below 106 um If stock markets start to rally you'll probably start to see euro swiss start to Edge back up again But certainly I think in terms of the direction of travel here we're in very much sell the rally mode The trend is definitely down I would I would certainly be looking For euro swiss to sell any strength back to 108 Again, not a big fan of selling at the lows I'm very much a momentum trader, but I don't like selling at the bottom And I certainly don't like buying at the top But I like selling into strength in a downtrend and buying into weakness in an uptrend But I'm not a big fan of jumping on the back of a move because so many times when I was trading spot I tried to do that And I usually ended up wearing them for the next three or four hours And while I was able to probably get out of them It was an uncomfortable three or four hours before I was able to so it's very much about Trading on the levels and trying to Remove as much of the emotion from it as possible You can save the emotions for when you take your profit Or obviously when you take your stop losses, then you can let the emotion out But other than that you need to be You need to be fairly dispassionate when it comes to trading because it is a very emotive pastime Um, I've got enough gray hairs to prove it Anything else ladies and gents Let's quickly look at gold because I know I talked about it, but we didn't look at it So let's look at it So here's gold again. We've tried to move above the highs that we saw in February We haven't really been able to follow through on them But overall the trend is very clear there We're still looking for a move higher. I just don't think we're going to get it yet Certainly not by the end of this week I think there's scope for gold prices to drift back But I'm still of the opinion That we'll see $1800 an ounce by the end of this year Um, simply on the basis that if this um If this coronavirus thing is not over by any stretch of the imagination, it's not going to just blow over It's going to Take center stage For quite some time And you're going to get an awful lot of companies Start to blame coronavirus For their woes and an awful lot of those companies will have You know We'll have decent reason to do so But it's also likely to become the new brexit in terms of companies making excuses for not hitting their revenue targets Or not hitting their profit targets And to all intents and purposes a lot of a lot of that for say example like airlines hotels Some retailers That will be justified But for other businesses not directly connected it probably won't be You know the collapse of fly b Earlier this week Wasn't directly related to coronavirus. It was part and parcel of it, but the company was in pretty ropey shape even before that So the coronavirus was basically the straw that broke the camel's back But if you're looking At other Airlines, then you have to look at the ones with the strongest balance sheet and at the moment everyone's getting Absolutely battered outside But you know a weaker weaker airline would be somewhere in light norwegian for example That's taken an absolute housing In the past few weeks hotels have taken an absolute housing in the past few weeks. So Again, you know, it's very much a case of When everything comes crashing off everything gets sold off even the good ones Just been asked to look at euro dollar Again, I think the upside is fairly limited on that We could go to 114 I think it's But I think that's probably the upper limit on euro dollar if we look at this chart here Let me just blow it out. So it's a weekly chart and then you can see see slightly more detail on it To give you a better idea of where we are So we come down from 126 in 2018 And for the best part of the last 12 months, it's been like watching paint dry But in the past two weeks we've gone from 108 And look to be heading back to 114 I think it's going to be very very difficult for euro dollar to trade much above Where we are now So we've got this series of highs through here But we've also got the 200 a week moving average. So 114 is likely to be a bit of a barrier on euro dollar And um, I think it's I think it's going to be very very difficult For euro dollar to get back above 114 20 very difficult indeed. It might do it eventually But overall The ECB does not want euro dollar up at 114. It's deflationary It will not cause them to hit their inflation target And will make things that much more difficult to hit their inflation target. So Um in terms in terms of 119, I just cannot see it not at this point in time If we break 114 20 conclusively then yeah, absolutely But you know once once we break key chart points Um and the direction changes You know, we look at the lows we look at the highs. It's definitely in a downtrend Until we break this downtrend Euro dollars not going to 119 Not any not anytime soon Not unless the bottom falls out of the u.s economy And even if the bottom does fall out of the u.s economy It's still going to be in better shape than the european economy Particularly in the european banking sector. So european banking sector is the real flash point for me in terms of Where the weaknesses lie And that's where I think we may need to pay particular attention to With respect to the european central bank meeting on thursday. So I do think I do think gold will push up but gold is very much by the dips don't buy it here But if we get a pullback to $1,600 an ounce or 16 20 Then i'm on then i'm on buyer of gold if we drop below 15 15 50 Then all bets are off, but I think gold will push up. Yes. Definitely think we'll go gold. I think gold will be $1,800 by the end of the year. I got asked will we get negative interest rates in the u.s No, I don't think we will Um, I don't think the way for u.s financial markets work um Mean that that will ever happen. So no, I do not think that we will get negative interest rates in the u.s Let me see any other questions that I may have missed out I think that's it Okay Okay, so Ladies and gentlemen, I think that's pretty much it for this week. Can I check silver? Yes, of course I can check silver Um, you're brave if you're trading silver because that's an industrial metal as well as a precious metal So it's going to get pulled in either direction if there's a if there's an economic slowdown It'll get hit, but if you've got a weaker dollar, it should find some area of support At the moment it's lagging significantly behind gold And it's very much in a range. So if I look at this silver chart I can see that it's pretty much a buy anywhere near 16 and a half dollars And it's a sell anywhere near 19 And essentially that's the way I would play that particular trade Based on the price action of the past six months. It's very much a range trade in terms of Trading silver and those of you who want to follow me on twitter My twitter handle is at m hueson m h e w s o n underscore c m c Otherwise, I'd like to thank you all for turning up to this webinar. I hope you found it instructive Please leave some positive feedback if you could and I hope you all have a great weekend and thank you very much for listening