 Good afternoon ladies and gentlemen think I'll make a start a little bit early, but I am recording it So I'm the first couple of minutes are disclaimers anyway, so you're not going to be missing anything, but Thank you and welcome to this non-farm payrolls US payrolls webinar on Friday the 6th of September and The August payrolls report and we're covering a fair bit of ground today This is obviously not just about the August payrolls report. There's an awful lot of event risk coming up in the put in the next few days We've also got a lot to talk about I think the events this week the rally and equity markets But while I can well, I'd like to obviously Cast your attention to the various disclaimers that are about to come up I'm not going to be giving any trade recommendations on This video even though I will be highlighting very key support and resistance levels with respect to a number of different markets Nonetheless got quite a bit to get through expectations around this US payrolls report expectations around The next Fed rate decision, which is due Just under two weeks from now just just a little over just a little under a week After next week's European Central Bank Rate meeting which is likely to be a market mover not least because I think market Expectations about what the ECB might do are probably slightly over optimistic. There has been in the past few days some Pushback from some governing council members about the possibility of further QE Which is likely to prompt. I think some dissent as to how far the ECB is like to ease monetary policy next week given concerns about The stability of the banking system and The ability of European banks to make profit, but I'm slightly going off topic here because we're here to talk about Non-farm payrolls. We're talking we're here to talk about what the prospect of a decent number is likely to do to US rate cut Expectations when the Fed meets later this month. So let's start first and foremost with What Fed rate cut expectations currently are now the screen that you've got in front of you right now is a Bloomberg rate screen if any of you do have a Bloomberg the code is WIRP And what it does it gives you the implied probabilities of how much the Fed is likely to cut rates When it meets later this month now currently at the moment the Fed funds rate is this number here between 2 and 2.25 percent now We've heard an awful lot this week about the prospect that the Fed May decide to cut by 50 basis points now certainly based on the manufacturing data You'd have to say yeah, there is there's certainly a case for that The only problem with that argument is that a manufacturing only makes up around about 11% of the US economy What the what it what makes up the largest part of the US economy is services and there We have also seen a little bit of a slowdown, but This week's ADP report was much better than expected which came out yesterday with 195,000 new jobs being added and while we have heard James Bullard of the St. Louis Fed Talk about the possibility of a 50 basis point rate cut later this month You also have to remember that there were two dissenters to the July rate cut in the form of Eric Rosengren of the Boston Fed And Esther George of the Kansas City Fed So they were opposed to the 25 basis point rate cut that we saw in July They've shown no indication thus far that they have shifted on that position And while it's all well and good for mr. Bullard to talk about the possibility of a 50 basis point cut He still needs a majority for that to happen and Jerome Powell chairman of the Federal Reserve In his speech in Jackson Hole at the end of August gave no indication whatsoever that he was minded to Cut interest rates by more than 25 basis points Certainly the implied probability here this this little box here 18th of September There's the market is assigning an 88.7% probability that the federal cut rates by 25 Basis points the Fed finance rates from 1.75 to 2% there only is signing an 11.3 probability of a 50 basis point cut So for a 50 basis point cut to happen you would need the data You would need for the data to to deteriorate quite substantially and thus far We haven't really seen much evidence of that yesterday's ISM Services on our manufacturing report on the headline number was fairly decent New orders jumped quite sharply in August as did prices paid The employment component was slightly weaker and obviously that is a concern, but New orders jumped so you could find that the employment component in August could rebound this month in September, so It's very very difficult I think To Sort of assign any particular indication as to whether or not the Fed is likely to go by 25 or 50 at the moment The smart money is on 25 so 25 basis points is the likely probable outcome of a Fed rate cut irrespective of How these numbers pan out so there is another thing also that's giving me a little bit of concern because What we've seen thus far this week is a decent rebound in equity markets, and there's been a number of reasons for that Obviously one of the reasons is the fact that Allegedly The US and China have decided to sit down and have a little chat in October Despite the fact that we were told it was going to happen in September, but you know Let's just put cementics to one side. You can't lie about the price action. The price action has been Uniformly positive and what we've seen thus far would appear to suggest the potential For further gains in equity markets. Now, why do I say that? Well, obviously we've seen some very decent gains over the course of the past few days Obviously a lessening of tensions between US and China despite the fact that tariff levels are much higher now And they were a month ago Also, Italy's now managed to get itself a new government for how long we don't know but they've got a new government so new elections aren't imminent and In terms of the Hong Kong situation We got a decent rebound this week on the back of the fact that Carrie Lam the CEO suggested that she was going to pull The extradition bill now You know the protesters have said well, it's too little too late if you've done it in July, you know now We're cooking but unfortunately, I think too much bad blood has gone under the gone under the so-called bridge And it's going to be very very difficult. I think going forward as to see whether or not we'll get a dialing back attention But having said that there does appear to be some evidence of bending on the part of the Chinese and that in essence I think is why we've seen the rebound in the Hangsang and Asia markets more broadly So momentum is a powerful thing and what we've also seen over the past few days is a significant risk on Trade coming on there does appear to be Evidence of a significant reversal in risk off now the risk off trades are gold higher silver higher Bond yields lower Buying treasuries buying bonds. We've seen a significant rebound In bond yields in the past two to three days and that's flashing up a warning sign It's suggesting to them either market is priced in way too much easing Relative to what's coming and they're having to readjust their expectations So to give you a good example of this is what the US Treasury yield has done in the last couple of days We've seen a very strong rebound in US two-year treasuries. Now. This is a daily candle chart Okay, if we change that to a weekly candle chart That gives us a nice little rebound there So that looks as if it's starting to form a little bit of a base Not conclusive by any stretch of the image imagination, but certainly some evidence that there might be We might have seen the lows in the short term If we then look at the German Two-year yields that becomes much more striking if we look at this is a daily chart So it's not really telling us too much But what we have seen is there's some very strong rebounds from those record lows of minus 0.94 Okay, so my negative north 0.94 now the current deposit rate for the ECB is minus 0.4 so Essentially the markets pricing in 50 basis points of cuts by the ECB over the course of the next two years Is that likely given concerns about the damage negative rates is doing to bank balance sheet? More importantly, what happens if we change that to a weekly chart? Now that to me looks like a bearish Sorry a bullish reversal in terms of the weekly chart which might suggest that yields have the potential to rebound So if yields rebound That generally tends to be positive for risk That would then suggest that we might get a seed to see a rebound or further gains in equity markets as I say it's not by any means a Done deal, but certainly the the balance of probabilities are leading me to think that This bullet potential bullish weekly reversal in the two-year Which is also being matched in the prices would appear to suggest that we could see a little bit of risk on Now let's look at gold and silver. I got asked about gold and silver just before we came on air and if we look at silver again, we've seen a big correction in Silver prices over the course of the past couple of days on a daily chart a very significant reversal What happens when we change that to a weekly chart? again, that is potentially a Warning that we may have seen a short-term top on the weekly chart So change that back to the daily now. Let's look at gold prices very very quickly before I start to go over the numbers with respect to Canadian and US payrolls Now I've talked about this 1480 level on gold quite a lot. That's held as support It was also 38.2 percent Retracement of the entire down move from the all-time highs in gold to the lows of around about a thousand We've broken above it, but look what's happened over the course of the past couple of days We've seen a big big correction off those highs around about 1550. What does it look like on the weekly chart? Okay, we can see that here. It's potentially a little bit of a reversal taking place So we could see a little bit of a pullback in the risk off back to 1480 over the course of the next few days Again, it really will depend on on these payrolls numbers that we get later today But certainly if we break below $1,500 an ounce then we could see a little bit of a run to the downside Let's quickly look at dollar CAD because dollar CAD we've got the Canadian payrolls numbers So if there's anything you want to get out right now Then it's probably a good idea to Fire me a question over if I haven't covered it before the actual numbers come out But certainly I think in terms of the direction of travel for equity markets These payrolls numbers are unlikely I think to alter the dial too much with respect to the rebound that we've seen in equity markets Even if the footsie at the moment is struggling below the 50-day moving average Whether or not we see further gains in coming into the weekend is another matter because obviously we are a Friday It's also been a short week for the US And I think as such that could well limit the upside on any payrolls number But certainly in terms of the risk trade and what we've seen so far this week Momentum does appear to be on equity markets side So even if we don't see new one-month highs this week We could see further gains next week judging from what we've seen in the S&P 500 thus far We hit one month highs yesterday. We broke above 2960 which was a very very key level and also the 50-day moving average here Yesterday that for me is a significant technical break and as such does open up the prospect of another retest of 3000 on the S&P 500 but also if we look at the DAX it's a similar sort of story We've also broken above the 50-day moving average on the DAX and as such have the potential to move up to the 12300 level, but again, I've got a caution you we've seen some very good momentum thus far and as such We could see a little bit of profit-taking as we head into the weekend. So Expectations on the numbers. Let's first and foremost Bring up the market calendar So we can see the numbers in question as they come out and here they are so we're looking for Canadian payrolls of full-time employment to rise by 15,000 and we saw big drops last month in Canadian payrolls Which was a little bit of a surprise Unfortunately Canadian jobs data tends to be what I would call a little bit volatile So it's always difficult to extrapolate from one month to the next but certainly in the context of the US Payrolls numbers if we get anything over and above 158,000 that's going to be generally positive, but even if it comes in 140 130 I'm not overly concerned by the headline number on the non-farm payrolls number Certainly, we'll be keeping an interest in look on the private payrolls number More importantly, it's the wages number price is paid We have started to see some inflation start to trickle through in some of the underlying inflationary numbers inflation numbers on some of the ISM readings which would suggest that even with a higher dollar These tariffs are starting to put upward pressure on prices within the US economy now at the moment That's not constraining consumer spending That still remains fairly strong That was 0.6% at the last term at the last count and we've got US retail sales next week on the back of a consumer Confidence number in August which was fairly positive It was only slightly lower than the July number despite the fact that President Trump at the beginning of August Stated that he was going to put term 15% tariffs on the remaining 300 billion dollars of Chinese goods Now he has deferred some of them to the 15th of December But nonetheless he did that about two or three weeks after the fact that he announced them. So There could have been some spillover effect there, but overall I don't I don't expect, you know, these numbers to be particularly Dollar negative or dollar positive But what I would say is that a strong wages number could put upward pressure on the dollar push the euro dollar back below 110 let's have a quick look at euro dollar just before we get to the numbers because that for me I think is very very key. We have seen a little bit of a short squeeze here And we've seen a very long shallow candle there which would suggest that we might see a dip In euro dollar back to around 10980, but for me the market feels a little bit short on euro dollar And as a result we could squeeze back up ahead of next week's ECB back to 11080 and 111 Given the fact that you could argue that that is a potential hammer On the euro dollar if we look at cable Here again, we've seen a similar sort of snapback in cable on the cable chart To to around about 123 But again for me the big big resistance level on cable Is this level here 12380 We've seen some very decent gains over the course of the past two or three days after making a significantly new low So let me just close that down and actually bring this back up again So that we can change that to the weekly chart very very quickly to get an idea Of potentially what we might be looking at on the numbers are coming out now. They're breaking And we've got 3.2 average hourly earnings Payrolls 130 so that's disappointing Very decent number on the canada payrolls So that's probably going to push dollar CAD down quite sharply unemployment rate 3.7 percent the revision So headline number a little bit disappointing 130 private payrolls 96 So a little bit of a slowdown in the overall headline number but fairly decent wage growth number and interestingly enough 3.3 percent revision To the previous month on earnings as well. So actually wage growth is much firmer even if the headline is a little bit weaker So that might suggest to me that the labor market is a little bit tight Um and could put and does appear to be actually putting upward pressure not only on wages, but also On prices. Certainly. I think the market doesn't really know what to to make of that It's a little bit negative in terms of the headline But a little bit positive in terms of the earnings So let's quickly look at dolly yen Because I think dolly yen more than anything will give you a good indication of what this number is going to to dollar wise And in terms of dollar wise, I think it's going to be very very difficult to really Break significantly above the 50 day moving average on this one here 50 day moving average is currently acting as resistance around about 107 25 30 And I think as such it's going to be very very I think with dolly yen It's very much a case of sell the rally until such times to break the 50 day moving average And it's probably going to trade 106 107 25 It does seem to be a little bit of a barrier at 107 20 107 25, which is obviously the highs that we saw yesterday Um, does that does that does anyone have any questions on anything thus far? Um, I've tried to cover gold. I've tried to cover silver. Um, had a quick look at the s and p 500 Not really seeing anything significantly Exciting with respect to that apart from the fact that we're probably likely to see A by-the-dip mentality on equity markets obviously in the absence of any president trump twitter activity Which does have the um disadvantage of knocking markets down like it did in In early august After he came out and rented or sorry the end of august when he came out and rented About the fed and what have you But um looking at gold. We've seen a nice little rebound on the back of those numbers not really sure why because actually in terms of the dollar In terms of the dollar effect. It's fairly neutral if we look at the implied probability of Fed funds what we've seen here is pretty much no move at all in the implied probability of A move on US rates and in terms of the two-year yield on the US treasury very little move in terms of The bond market either so a pretty pretty uninspiring set of numbers from the us If we look at the dollar cad though, I think we could well see a very decent reaction on that But what I would say about this dollar cad move lower Is that we are now approaching a very key support area? I inked it in there And we can see it here So if we look at These these levels here So the 50 day moving average the low from the 13th of august and the low from The 6th of august And the low from the 5th of august. There's some really decent support All the way through this level here on dollar cap so decent canadian jobs report makes it very unlikely that The bank of canada will be cutting rates anytime soon Which suggests that There's a decent possibility that this 70 80 level on the cad may well hold in the short term But could well trickle down towards the lows that we saw At the end of at the beginning at the beginning of july beginning of august around about 131 So I'll keep an eye on that 131 75 80 level on dollar cad because if we break below that We could see a few stops triggered below the 70 Looking just being asked a question here. Why the dip in the footsie 100? Let's just have a quick look at that Let's look at five minutes And let's see if we saw it and all the others Let's look at the s&p as well Because usually there's a correlation if you get a dip in one You'll probably get a dip in the other and yet basically all of them All of them dipped a little on the back of On the back of the headline number But they've come back a little bit I mean at the end of the day if we look at this footsie chart here And look at the range over the course Of the last four hours We're trading 76 56. So we're trading in a 20 point range Which is really really tight. So Sometimes you'll get these little dips here and there But at the moment We haven't really broken out of the range that we've been in since early this morning Decent support around about 50 55 Decent resistance about 75 80 I don't really expect that to change And would expect the market to probably drift back down over the course of the next Over the next few hours particularly if cable continues to push higher There tends to be at the moment a little bit of a A negative footsie effect If cable Starts to head higher at the moment it's around about 123 10 if we head back up towards 123 and a half 123 160 You could see the footsie start to Find upside a little bit limited, but if cable then drops back below 123 You'll probably see it go back again Now the reason for that Is that there's an awful lot of dollar earners in the footsie 100 Which is why when the DAX rallied yesterday for whatever reason You didn't get A similar rebound in the footsie 100 because cable was rallying very very strongly from the lows that we saw earlier this week um So i'm hoping That helps to a certain extent, but but generally There is always an awful lot of volatility around numbers Markets look for the weak side try and find out where the buy and sell orders are And as such that could just be the market trying to test out Trying to test out where the weakest points are with respect to the buy orders and the sell orders And the fact that we've seen it in both the footsie and the s&p Suggest that's the market just trying to find out Where the weakest side is so there may be no reason for it whatsoever It's just the market trying to test out the boundaries Of where the weakest positions are to try and flush them out that happens an awful lot In the wake of any Any macroeconomic data announcement the market tries to find the weakest level Right next one euro yen and dolly yen Okay, let me just work my way through these gents because i've got quite a few so if i haven't got to you yet Please bear with me. I will get to you Right, okay euro yen Now we're talking about risk on and risk off basically when equities do well The yen tends to weaken and when Equities do badly the yen tends to strengthen now in the past couple of days We've seen a fairly decent rebounding euro yen Now if we look at The weekly candle on this We do have the potential for a little bit of a rebounding euro yen Now that can happen in one or two ways. We can get a strong rebound in euro dollar Or a strong rebound in dollar yen Certainly given the the extent of the rebound that we've seen in the past couple of days There is scope for a bit of a short squeeze in euro yen So if you're short of it Maybe you need to think twice about that because I think Effectivity markets continue to push higher over the course of the next week or so which I suspect they will Could be wrong then euro yen will probably follow it higher as well And let's not forget the ECB rate decision will prompt a little bit of position adjustment ahead of that decision Which is due of thursday next week Certainly in the context of this move here That's a fairly decent bullish reversal Which would appear to suggest that In the event of any dips back down here. You may find some ready buyers To push us back into the resistance level Up here also the fact that the chinese Are looking to ease monetary policy in september october and november That's likely to add to the positive positive risk sentiment That we've had coming out over the course of the last few days Monetary easing always generally tends to be good for risky assets And chinese rates are much higher Than your other central bank averages. It's pretty much the same in ozzy yen If we look at ozzy yen Certainly the candlesticks here are telling me that the market's a little bit short We've seen a little bit of a breakout here and again And there is certainly potential for ozzy yen to go back to around about 75 So weaker yen generally equates to higher equity markets So as long as the yen continues to weaken any downside in equity markets Is likely to be fairly Fairly difficult. It's fairly well supported Where do I see the resistance in the german DAX? 12,300 is the short answer to that question And that's that basically that's that level there if I could just point it out I had a look at that earlier. We've broken the 50 day There is a very There's a candle here around on the 25th of july The lows on that day around about 12,300 I think if the DAX continues to move higher while it's above the 50 day moving average Then there's potential for us to go to 12,300 So hopefully that answers your question And to feed in to the risk trade we have to go include the chinese rim nimbi Or the offshore chinese rim nimbi Because I've just been asked that oh, yeah, I've just been asked that That is also Looking to roll over and it has room to roll over it has room to roll down all the way to seven at the moment This was the previous peak. This was the level that the chinese were defending 698 7 we've broken above it. We've come back. We've retested it. We haven't broken below it Now it's currently testing the 710 level We may find a little bit of support there But if equity markets continue to rally Then the risk off trades Generally or the risky trades generally tend to come back down so If equity markets continue to go up gold will continue to come off Silver will come off the yen Will weaken and the rim nimbi will strengthen it will head back to this seven level here Um, I still think the rim nimbi is going to go to 7 27 30 over the course of the next quarter But that's not to say that we can't get it come back down here Look to buy it around these levels and then look for it to move higher It's all about the timing of when you buy Because the last thing you want to be doing is buying at the top of a rally Or selling at the bottom of a trough. That's just not the thing you want to do timing is everything so We still have a whole host of tariff increases Set to come in over the course of the next few Weeks and months and I think once it starts to become apparent that they Will start to impact consumer spending Then I think it's quite likely that gold will start to head higher But I think at the moment there's an awful lot of trades out there That people are thinking are one way bets And there is no such thing It's ebb and flow ebb and flow ebb and flow And the risk I think for me at the moment is that we retest Some very some key support levels. So we could come all the way back here wouldn't alter This seven level wouldn't alter my overall view that the chinese renminbi will continue to weaken But it could take some time to get back to 720 and 730 and go to 730 But the trend is definitely up you can see that we're going here sideways up back up back And potentially higher So it's all about the levels technical analysis and charting getting at the right level And you sleep easier at night getting at the wrong level And you have to be reaching for the sleeping pills. So At the moment the dollar is looking a little bit weaker You've got the DAX continuing to push up footsies looking fairly well supported near its recent highs To be quite honest, you know, I think that's the way of it at the moment We will see equity markets continue to be buy on dips until such times as president trump opens his mouth or Something unexpected happens to temper expectations when we head into next week WTI very very quickly. Just just notice someone asked about that That's still very much in a downtrend We can see that here We just look at this daily chart So at the moment while we're below this trend line that I've drawn from the highs in april Very much sell the rally if we look at the long wicks on these candles here We can see there's plenty of selling interest anywhere near 57 and a half dollars Between 57 and a half and 58 dollars a barrel Also important to look at Brent crude in the round when you're looking at oil prices because they do correlate quite nicely So if we look at Brent crude, it'll it's going to tell you a fairly similar story So I think As long as Brent crude prices stay below this downtrend line here then wti are fairly It's going to be fairly difficult for wti prices to rally and again You see you've got a very long upper shadow on this candle Which suggests there's plenty of selling interest Above the 50 day moving average on Brent crude. So at the moment I'm on the opinion Brent crude sell the rally Which is likely to be fairly positive for consumers because they'll have more money in their pocket because they're going to have to Fill up at the pumps It won't cost them anywhere near as much And that's likely to keep services Services sector Fairly resilient because one of the things we I have noticed and I'm sure you you guys have as well While manufacturing has been weak Services still remains fairly strong here in the uk it makes up 70 80 percent of the economy in the us 70 80 percent of the Economy so even if the economy flat lines or is just slightly expansionary With wage growth fairly decent and we've got uk wages next week um I think the economy can do okay as long as services Remains robust unemployment remains low and wages remain at their current levels Have I missed anything off? Ladies and gents, is there anything else that anyone would like to talk to me about or ask me about with respect to particular markets because if not um Just like to remind you that of some key events coming up key market events Obviously, we've talked about the european central bank on thursday So the big question is What rates are they what what what rates are they going to cut are they going to cut all three or just one? What sort of lending program will they announce? We've got china trade for august We've got uk wages and unemployment data out on the 10th got us retail sales on the 13th Obviously, we've got brexit less said about that the better We've also got apple now apple that should be interesting because We've got the iphone 11 launch on the 11th of september and I've been i've been looking at that apples uh I've been looking at apple share price and it is quite near record highs You know these are the record highs here, but it's struggling to get back above 215 Now this iphone launch You know I'm not a big fan of iPhones. I've got to say especially these new ones I think spending over a thousand pound for an iphone Is a little bit excessive especially when you bring out a new model every year and the big thing about this iphone It doesn't have 5g And when you've got samsung bringing out folio with a folding screen For around about one and a half thousand pounds and it does have 5g Why would you pay over a grand for a phone that doesn't have 5g? They're bringing that out next year so I'm not overly convinced that the launch on the 11th is really going to flow anyone's boat, but hey, hope We remain to be seen but certainly I think that could introduce a little bit of volatility in the apple share price over the course of the next few days so um With respect to gold do I think gold will continue to rally this year? Yeah, I've answered that question I think we will find That we could slip back as long as we hold above 1480 then I can still see gold heading to 1575 1580 but at the moment we could see a little bit of short-term weakness But overall I expect gold to head back to The highs over the course of the rest of the year um And test this level Here which is I just draw my weekly chart in 1587 is the next target for me on gold and that is The 61.8 Fibonacci retracement level of the entire down move from the record highs in 2011 To the lows that we saw back in 2015 So overall that is my target for gold By year end how we get there Is anybody's guess, but we need to hold above 1480 for that to um to play out So hopefully that answers your question on gold Any other questions ladies and gentlemen? Okay. All right. Well, thanks very much. I hope you all have a great weekend um and um I'd like to say thank you for attending and I'll see you all in the same time same place a month from now for The September payrolls report in the meantime. Thanks very much for tuning in and have a wonderful weekend