 Very good morning to you. It is Friday the 5th of June. Hope you're doing well first things first Don't forget to like and subscribe to Ampli trading YouTube channel And just as a reminder on the channel, you've got different playlists You've got the briefings that I deliver Monday through Friday ahead of the European market open Where I give you a global macro kind of overview across assets Then you've got Sam's weekly trading setup So as per usual, he'll be giving his full look ahead in terms of key technical levels and setups that he's looking at For the forthcoming week now be delivered on Sunday afternoon And you've got Eddie with his explainer series and this Saturday He's going to be doing a special video lots of questions this week I did address it a little bit, but he'll get into more details about I guess why is the stock market rallying? Common question I guess for the normal consumer as well as the trader So Eddie's going to deliver that and release that video on Saturday tomorrow morning So let's get straight into the briefing and let's talk about markets for this morning And really I want to want to share a stage with these two individuals who have really stepped it up this week and and created an extension of gains in the euro currency EUR a dollar actually climbing for a ninth day yesterday and it's moving higher again this morning That is in fact the longest streak since 2011 for the euro currency And why are these two particularly important? Well, Christine Lagarde You recognize from yesterday She over delivered on that pandemic emergency purchase program the PEPP by a hundred billion caught a few by surprise She also said that they extended those purchases at least to the end of the summer Basically June of 2021 some of the 12 months and all of this looking to offset a deflationary spiral of course given the dramatic impact of COVID-19 Similarly Angela Merkel the German Chancellor coming through this week and you know, we started the week with a Day of kind of impasse in in German politics of whether or not they could come together and get a deal over the line of a Secondary stimulus package, but she came in and and she over delivered You know the range was for 80 to a hundred billion euros and she managed to come together And put forward a plan for 130 billion euros. So the two forces combined have been a powerful Cocktail for the euro currency and I really wanted to kick things off and start with the euro First of all you can see here. This was some of the euro initial price activity around the ECB Rate decision then we broke higher going in towards the latter part of the afternoon But the main thing I wanted to look at here was on a was on a much longer time frame And we're going to look at this is the same chart that we were looking at on Monday's briefing if you remember so let me just remove my Camera feet so you can see everything a little bit more clearly. So there you go so You remember on Monday I had this chart up and I had this trend line in focus and that trend line coinciding with an important technical level around the 115th level, which was the resistance points that we had in March And also and around June of 2019. It had also been their resistance through 2015-16 and support through parts of 2018 And this was a level of which Deutsche Bank analysts were looking at if you remember they were saying that a combination of the general Interventions from fiscal and monetary forces helping support then the idea of the economic recovery in the eurozone Coupled with then the general unwinding of the risk premium built into the dollar during COVID-19 And generally what that's meant then is your dollar has been rising as I said consecutively for many sessions The red line here is the 200 DMA of which as you can see here on the I'm looking at weekly continuation Candlesticks at the moment. We are right at around that level right now and testing on that trend line. So Really quite important now where we're at at the moment. There still seemingly is still quite a lot of Greetings through some of the bank commentary even talking to some of our traders like Alex for example Who pretty much just focuses exclusively on the euro. He still remains pretty bullish and in fact I mean, he's got some pretty punchy targets looking for not just a break above This type of area or the 115 looking for a much bigger move to the upside Over the multi-month kind of view I guess a lot of that comes with some associated risk where developments on the the trade war the The ability or not to control The potential for a secondary wave and how significant or not that is do we see a return of some risk trade? Which then re strengthens the dollar They would be counter kind of risks to this overall trend, but at the moment all things being equal You'd have to be of a more bullish mindset And certainly if we can technically get above some of these levels Then if we do get hit through where we are where we are at at the moment I don't really see much in a way to then retest that at 115 handle in the near term so just a quick look at the ECB and and See as I said, you know, they over delivered. That's kind of the bottom line peripheral bond yields then falling after the ECB expansion as you would imagine the yields in the 10 year in Spain, Portugal and Italy declining That then resulting in the spread between the italian btp and the german bund tightening As you can see here by percentage points moving from around 1.95 down to 1.75 on the back of that announcement the reasoning then behind this chiefly has been because the ECB want to offset this potential for a kind of deflationary spiral and inflation as you can see here from the euro system staff macroeconomic projections So these are well were last delivered In march the update comes in june for their forward-looking kind of guidance on these two major Economic metrics and for inflation as you can see You know, they do see it Dipping considerably this year down to the point of 0.3 percent. So it's in actuality. It's going to remain So far away from target that it requires this type of more expansive effort to try and lift that as well as other ways and means of which Increases the PEPP will support the economy economic growth as well You can see remember when I was talking about the preview yesterday They had these kind of more soft moderate and then severe case scenarios for growth and certainly this Sat between the more moderate to severe end of the spectrum and minus 8.7 percent is a far Removed expectation now for this year from where we were just a few months ago And obviously, you know, you can't really I don't think that's too surprising Because at the end of the day when they issued these they had very lack of Visibility about the overall impact of of covid 19. It was still very early at that point So this isn't massively surprising but just goes to show The the shape of change that we've been through I think over the last Three months and as you can see here, they're looking for a real powerful recovery Going through then into 2021 before then stabilizing with inflation They're gradually picking up in step with that So that was the general ECB story And overall with markets this morning Let me just switch my Feedback on We still have relative risk on sentiment The DAX equally so Quite volatile initially The DAX popped higher and did run into a degree of resistance into the prior days high Um However, then it came all the way back down as when she started to the press conference It looked a little bit uncertain whether or not then this is it You know now that they've delivered this there's nothing more coming and equity to come under a little bit of pressure We bounced off that trend line that had been in play Over the short term the last 48 hours quite nicely And that coincided with those previous highs and as you can see that was kind of an area of resistance and support This goes back to really the beginning of the week mid-week And then that in combination with that trend line was quite a nice Technical point where the market responded in magnitude to move up and really the move here has come in the overnight age of pacific session And now importantly we've broken above these two that kind of double top On would have been Wednesday's price action and the ECB spike high initially and so the DAX pushing on now Up about 170 on the session general risk appetite overnight in the age of pacific session following through from what we had from from yesterday and Yeah, S&P futures positive Gold then down a fairly significant amount already down $14 and sub its pivot level T-notes down five ticks and in the FX markets The dollar continues to react in a kind of risk Sentiment type way and the Dixie's down about two tenths of both major currency pairs continue to move higher Euro an extension above the Kind of double top that we've had printed Or three tests that around that level. Yeah, you late yesterday afternoon and into the US session And you can see again Technically just using that as a bit of a springboard for then a support area this morning for then this next pushed up You can see that that low there that we've just printed as europe is coming to the marketplace sterling currency obviously Just Benefiting if anything just from the prevailing moves elsewhere in the currency markets if the euro really is powering ahead Obviously when you look think about the dollar basket the euro is the biggest proportion of that And so strength there is by default weakening the dollar with that risk unwind and and kind of sterling getting a bit of a kick on the back of that Interestingly when you talk about the pound, you know, I was just reading the headlines this morning And and obviously this is something eddy can go into tomorrow because I think if you're not If you're not operating within financial markets, it can be a little bit confusing You know, you look at cable and it's just rallying at the moment But if you read mainstream media, I'll give you a flavor of some of the headlines from this morning UK consumer confidence touches a new decade low as covid hits the economy according to gfk We've had this week the biggest fall in us or uk house prices in a decade uk labour market sharp slide continues into may according to rc the recruitment employment confederation And then uk retail sales dive nearly 20 in may as the lockdown bites according to the bdo. So, you know, it is Pretty depressing reading and I guess as a consumer Not really aware of what how markets operate No surprise then that consumer confidence is getting impacted significantly at the moment when you're getting exposed to this kind of This type of information but from a market's perspective, obviously this is all priced in this is all Absolutely as expected You know, what else was going to happen? I mean on the back of the severity of what an entire And stringent lockdown on the economy was going to be and that was predominantly what shook markets in march and now that we've had such immeasurable response from central banks and And governments and the uk being included in both the bank of england and the uk government That we're forward-looking and for now, you know, despite all of this economic doom and gloom this Disconnect between main street and wall street The the the gulf of between them is getting wide ever wider At this point, obviously eddie can touch upon well at some point does reality then start to kick in and um, you know, these asset prices are so inflated by these other mechanisms that It's kind of doomed to fail at some point the bubble bursts, but At the moment, I don't really see that happening anytime soon. So Yeah, hopefully that makes a bit more sense if you if you are new to markets in In terms of an explanation of of how markets react rather than the actual True economy and its figures and how it's performing at the moment Going back to the news then the other thing I wanted to talk about briefly here was OPEC lots of comments If you actually look at oil this morning oil is actually tracking a little bit higher So if you think about it from a fundamental point of view, this overall European story on narrative we've had this week from both the governments and The central bank don't forget the you know, the single market is a massive proportion of the global economy Because it's not talking about one particular country. We're talking about an entire area And so that's somewhat relief the fact that they have come together, you know, it comes also with that more coordinated European wide recovery fund that they did last week as well And that's going to help on the demand side to a certain degree when it comes to the overall balance of views for the global economy So that certainly helps and then with OPEC plus then They've got a tentative deal basically although It's never over until the fat lady sings when it comes to OPEC For the moment, they've got a tentative deal with iraq on compliance with their quotas This was one of the things yesterday that they were talking about It's kind of russia and saudis seem to be seeing eye to eye, but the saudis in particular Due to the nature of which they are always picking up the slack for uncompliant nations and particularly ones like iraq and Definitely more problematic when you're picking up iraq's tab Because they are significantly larger producers in other countries like libya, nigeria angola Kazakhstan these types of people for example And so what they're saying is we want them to fall into line Better first and then we'll look to take some more meaningful action And what they're talking about here russian press has been talking that the alliance will hold a ministerial meeting Actually tomorrow, so it could be over the weekend I'll write my normal macro menu if there is updates to be aware of and it is a new story you'll need to track Over the weekend. I'll I'll cover it on sunday ahead of the market open You'll be able to access that on my my twitter account if you follow me The other three nations that I just mentioned angola, kazakhstan, nigeria They all produced above their opec plus quota, so they were also uncompliant in the month of may The three though have said and agreed to bring their production in line with the agreement, but again Yet to be seen opec plus they are going to be holding a technical Committee this is what they call the jmmc In terms of some of the market jargon that you hear that basically just means it's the technical committee and the joint ministerial monitoring committee And they're set to meet in the middle of the month june 17th 18th This is basically when they come around do the spot checks make sure the compliance levels are indeed Being met One of the things though, I would say there's quite significant risk here in my mind about Where this is at the moment, obviously markets are reacting in a somewhat positive fashion They have progressed. They've got a tentative deal But the deal is as I said Contingent on iraq compliance and therein lies the problem in my mind and bloomberg had a couple of good graphics So here you've got several of opec countries failed to implement full The output cuts they agreed to take in may so here are some of the corporates if you like of that And as you can see here what you're looking at is the black bar would be the target what they had agreed upon that Historic meeting that we had just around a month ago or so With this coordinated opec plus and g20 all producing nations to comply In order to get away from this increasingly low price of all that we had seen And so the black bar is the target the pink is the actual And as you can see iraq is massively off what their target was which was Basically a million they needed to cut and they cut they they cut about 300 000 The other country is also a way off that nigeria has always been highly uncompliant because generally before in initial phases of the opec deal They had been given a pass Alongside libya chiefly down to the civil disruption that they've been seeing their countries So lo and behold what do those countries do? They try to pump as much as possible And seemingly nigeria is still not moving too far away from that at the moment But if you look at iraq in a bit more detail This is looking at even if the cuts begin to taper in august iraq would have to cut output by more than 1.3 million brows a day from its april Level is what this is looking at and so The cut made towards meeting the target These are the cuts not made and now they've got to compensate with an additional deeper cut Basically what the Saudis are saying is look you were uncompliant before you've got to cut even more Now so not only were they uncompliant in the first place now you're asking them to cut even further than they couldn't even achieve in the first place in my mind That is a disaster in waiting I do not see iraq being compliant to what Saudis are requesting at this moment now Is that is that the silver bullet then that means the whole deal? Collapses I don't actually think so at the end of the day if you think about it strategically from Saudi's point of view They just want countries to be a little bit more compliant the little bit more compliant that they are a little bit less Than the Saudi need to go to over deliver because every point of which they over deliver They're selling less oil and making less money. So at this point, it's just it's just kind of being a little bit more strict if you liked But I do think then that My main kind of final summary to this Explanation is that look It ain't over till it's over with opec and I think this week's been a good one for some of our new traders About just getting used to the type of volatility The miscommunication the misdirection that you get from opec It is about as far and removed from central banking Communication tactics and strategies you're going to get so Yeah, expect the unexpected plan accordingly And then, you know, when you're trading oil, you've got to trade what you see Not too much what you think because it's very hard to trust what these officials are saying with any true In that sense. All right, let's move on the final thing I've got to talk about is the calendar and of course non-farm payrolls for today So let's just skip straight to that because there's nothing really happening this morning from a data perspective. So non-farm payrolls What is the deal? It is expected the headline figure at minus 8 million The unemployment rate is expected to be at 19.8 percent And the average hourly earnings going to be at one and 8.5 percent month to month in new and year expected So in short then we are looking for further Significant deterioration in the jobs market in america But if you look at the prior month when we were in the fall midst of the lockdown in america Which was in april we had a job loss, of course of 20 million. So what did that look like? Well, this is what we had This is what we had in the last two readings and if you remember The march reading court the very the very tail end of when the the pandemic was really kicking off and the lockdown was just commencing So this figure was minus 870 000 at minus 870 000 is actually Over and above the one singular biggest job loss during the global financial crisis in terms of a one time month Reading when it comes to non-farm payrolls. So this in itself is historic And then bang you get a minus 20 and a half million. That is unprecedented if I put it onto a Max looking back through history going into the 90s. You can see the financial crisis You can barely even recognize the dip in this line Um, because as I said, it didn't even get to one million in terms of a single month And we were talking about nearly 21 million last month. So this month round. What are we looking at? Well, one of the things you need to be aware of is adp Uh adp is private payrolls, but it is often looked at as the kind of precursor for non-farm payrolls And this figure came in at minus 2.76 million. Now that is important Why? Because the forecast for adp this week was for a drop of 9 million. So the number came in at a much less um Number of job losses than the markets were expecting Significantly less in fact. And so after that dramatic drop that we had in april Yes, this is still economically Uh, a terrible situation of course seeing almost three million people getting laid off in one month. However, it's far less Actually than what we were thinking. So again underlying some of the general, you know idea about You know, the precarious nature of the economic recovery. Well, actually this would fit the narrative for the balls who were thinking well, look Yeah, with everything and the kitchen sink has been thrown at this from the federal reserve and and from the fiscal packages from from the white house, then well, look The the data would show that we're recovering at this point And given the fact that adp has had this pattern, that definitely is I would say from today's reading Which is expected as I said on the calendar on the headline at minus eight million There is a risk of an upside surprise So minus eight million would be about here, but given what happened with adp I would say probably then there's going to be a leaning bias towards a number smaller than that hard to say there's no exact science behind this but Anything around minus five minus four million. I don't think now is going to be too surprising Just given what adp has a bit of a litmus test then for for how this might perform In terms of a range then the bottom end of the range, which is the most pessimistic, which is the most optimistic Excuse me, which would be only a loss of 1.6 million jobs The worst case would be a loss of 17 million jobs, but I think if that did occur that would be a big surprise for markets looking at then The overall kind of pattern that traders do to try and ascertain them How non-farm perils might perform is they go through the various different job indicators that we get ahead of the actual BLS number And so challenge job cuts barely neutral not really too much to read into that initial jobless claims have been continuing to decelerate if you like ISM non-manufacturing PMI and the manufacturing PMI employment sub components were kind of bouncing Particularly in the latter off their lowest levels ever, but still heavily depressed So it would be indicative of still a fairly negative job situation University of Michigan confidence the conference boards consumer confidence index both fairly neutral Not really too much shifting around from their their current readings adp. Obviously was a big positive job job openings Perhaps a negative But only slightly so all in all I don't really think any of this is that important to be honest non-farm perils today I don't really see it having too much of an impact. That doesn't mean that you know Traders might not come out of the market. You'll see then a lack of liquidity You'll get that new usual flurry of price movement and activity But all in all I really don't see non-farm perils moving the needle that much And what I mean is the needle for the Fed for people's thinking about Any further additional policy stimulus and whatever shape or form that might come these types of things Which generally are underlying market movement at this time. So non-farm perils. It will have the usual kind of fanfare and And bluster and it will cause a bit of movement But overall, I don't think it's going to be a dramatic game changer and actually It might come and once it comes and you know what employment does get near to 20% That's going to be splashed all over the papers But the markets can digest that without much reaction or fear because it's priced in and at that point then Once the number is done it's parked aside and do we just recommence then the trade and we finish off the week As we've been trading so far, which is pushing again up into the upside. So Um, otherwise any other tail risks in the form of trade war as I've been saying throughout the Throughout the week trade war as you'll recognize has really taken a bit of a back seat in some respects because of the The george floyd process we've been seeing across the united states. So Yeah, when this type of thing happens then, you know, tactically trump needs to focus elsewhere and and then The trade war just gets parked to a certain respect. I did actually see some comments from I think it was let me just bring it up I think it was the light hyzer and he was talking and I'll finish on this because again This is quite a good explanation of just generally how markets operate um light hyzer here Who's the trade secretary in the us? So obviously very critical to the ongoing us china trade talks said he feels very good About the phase one us china trade deal and the report that china was not honoring the soybean purchases was false Remember that was the report that moved the market earlier in the week Actually, the empirical data that came out in china did say that actually were still buying Um, and then light hyzer being quite upbeat about phase one of the trade deal Which we were fearing towards the end of last week seven days ago that this was on escalation mode now quite far from it Trade war cycle, of course All right, that is it. I'll let you guys get on with your day Enjoy your weekend. Remember those videos are coming out. So put your alerts on on your phone By putting notification bell on the youtube channel and you'll be able to catch those all As and when all right guys take care. I'll speak to you monday