 Good afternoon ladies and gentlemen welcome to non-farm payrolls webinar on Friday the 8th of March before I get started it needs just to do a little bit of housekeeping a brief disclaimer just basically saying that I cannot and will not be giving you any sort of buying and selling advice with respect to levels and what have you but what I will be doing is hopefully giving you some ideas as to where the key key chart levels are key chart points are on the various FX markets indices as well as key commodity prices in the wake of in the wake of the payrolls announcement which is due out in around about 15 minutes time and I've got to say I think with respect to this payrolls announcement we do need to be aware of a significant revision to the January number which came in by and large much better than expected I'm hoping that you can all see and hear my screen okay you can hear me loud and clear and you can see the updating watch lists that you've got in front of me right now and that you can see the various panels and the chart that I'm just about to open in front of you for Euro dollar but I think first and foremost before we do get started I think we have to look at what is likely to happen in the wake of these payrolls numbers in the context of what's happened this week because what's happened this week I think is a significant sell-off in global equity markets and this is probably going to be the first significant sell-off of the year since we started rallying at the end of last year we've seen some we've seen some really decent decent gains from the lows that we saw back in December and if we look at the S&P 500 chart I talked about this a fair bit that 2800 level over the course of the past four or five weeks we finally managed to push up to it but look at this weekly decline that we're seeing thus far now it's very unlikely that it's very unlikely that we're going to finish this week higher given this particular candle here now that would suggest to me that ultimately over the course of the next few weeks and months and the fact that we're now below the 200 day moving average that the line of least resistance for the S&P 500 is likely to be lower which means that any resistance that we currently have on the S&P 500 is likely to come in around about 2750 2755 now I am assuming that you guys can hear me because I haven't heard anything to the contrary and I'm assuming that you can hear me loud and clear and see my screen so 2750 is going to be a very key level on any pullback on the S&P 500 and if we look at the four hour chart we can see that it's around about through these series of highs through here so any any positive read on the payrolls which is likely to prompt to rebound in the S&P could well find a little bit of resistance at 2750 2755 but I think it's important to also look at what we're expecting on the payrolls numbers because I think by and large it's not really going to be the headline number that's going to drive the direction of the dollar and I think in this context the direction of the dollar is going to be key in terms of how equity markets react because at the moment a stronger dollar is something that I think equity investors don't really want to see and in terms of that I think it's important that we have a good look at the dollar index because I think a decent wages number and this is the number that I'm going to be paying particular attention to a decent wages number could well push the dollar index through this 9770 area that's capped any dollar gains over the course of the last five to six months and we're back again we're back up there again on the back of obviously yesterday's very dovish ECB raid announcement the announcement of the TL TRO which is due to start in September and I think with with respect to that and the strength of this afternoon's numbers it's going to be key in terms of central bank policy US central bank policy going forward and I think it's through that prism that you really have to look at how the market reacts to the numbers that are due out in the course of the next 10 minutes because ultimately it's really about what US markets or US investors are pricing in in terms of US rate policy going forward if we also look at the US 10 year index we can also see that there's a really solid support on yields around about 261 which is the lows that we saw at the end of January so for me in terms of the direction of the dollar I'm going to be looking at the support that we've got on the US 10 year Treasury as well as the resistance that we currently have on the US dollar index and market perceptions of what US Fed policy will be relative to central bank policy elsewhere so it's really not about what the Fed might do this year it's really more about what the ECB is likely to do this year the Bank of Japan and the People's Bank of China and ultimately the dollar can still strengthen even if we have a payrolls number and a wages number that comes in pretty much as expected because ultimately it will mean that the Fed is probably not likely to ease interest rates anytime soon but it also means it's likely to continue to reduce the size of its balance sheet and that in essence will help drive the dollar higher so my primary focus today will be in what the US bond market does and at the moment it's trading towards the low end of its recent ranges so any spike up in yields is likely to be dollar positive but really it's a question of whether or not we can actually push through these highs that we saw yesterday around about 97.70 which more or less equates let me just move these over so that we can see that we can analyze what the important numbers are I'm going to remove the unemployment rate number for the US the US data if we look at the euro dollar the 97.70 area equates to this 111.7080 level that actually is a nice little support on the move lower yesterday now why is this level important well if I scroll all the way back here to the entire up move from those lows all the way back in 2017 at 103.40 and the peaks here at 125 61.8 percent retracement of that was 111.86 111.80 there are their abouts which ties in quite nicely with the lows that we saw yesterday around about 111.76 so even if we get a fairly decent positive dollar number I think in the short to medium term we're probably going to see a bit of a rebound on a test lower in euro dollar but what we do need to do is we need to get back above 112.7080 simply because that's actually a significant area of support over the course of the last few weeks so if we look at the key levels that I'm looking for in terms of any market reaction on the payrolls numbers if we get a little bit of dollar weakness there's certainly potential for us to come all the way back to this series of lows through here which is around about 111.7080 my bad and I'll draw a horizontal line through that but overall I would expect the euro dollar to continue to weaken over the course of the next two to three months the problem is that waiting for it to weaken is tantamount to watching paint dry sometimes and that's certainly what it's looked like over the course of the past few months but the direction of travel is quite clear as can be seen from this train line I had drawn from the peaks that we saw in early September middle of September every single rebound we can see the range here it's quite clear we've got significant resistance significant support and we can see that this 60 70 level on 112 as it has been a fairly decent was was a fairly decent support area for pretty much most of this year until we broke below it yesterday and I think that's I think that's really significant in the short to medium term so the boundaries I think for any move today I likely to be dictated by the lows that we saw yesterday and obviously that area through here this congestion area through here around about between 112 60 and 112 70 if we also look at we look at dollar yen a decent dollar number here will obviously put upward pressure on dollar yen and certainly I think the Britain the mover back above the 200 day moving average was fairly positive but we're now back below it again which would appear to suggest that the bias has shifted a little bit towards a slight dollar correction as we head into the end of the week and I think that's important in the context of where we are currently we've seen a really big up move in the dollar this week is it likely that we're going to see fresh highs as we head into the weekend and experience experience has taught me that on the balance of probabilities it's probably unlikely let's not say that it can't happen but certainly in terms of managing the risk I think it will take a really significantly big number in terms of wages of around about 3.4 3.5 to push the dollar significantly higher against the euro push it significantly higher against the yen certainly if we look at it in the context of this chart here we can see that there is a decent area of resistance just above 112 but there's probably more potential to drift a little bit lower certainly I don't expect to see a significant move one way or the other on the dollar yen however if we look at the dollar CAD because obviously it's Canadian payrolls as well and I think that's important the line of least resistance for dollar CAD is for a move higher we going to talk about that a little bit here we've broken out of this triangular consolidation here that we've been trading sideways since the end of January we've broken higher we've broken up through this series of peaks through here and that would suggest over the course of the next month or so that dollar CAD could see a move towards 135 initially and then 136 and I think it was significant earlier this week that we saw the Bank of Canada take further rate hikes off the table now that is likely to undermine dollar CAD even further particularly if oil prices remain weak so the Canadian payrolls report we saw a bumper number in January 66.8 we saw a bumper US payrolls number in January as a well of 304 what was significant about the January payrolls number and the December payrolls number was December was quite strong initially came in at 312 and was revised downwards to 223 so there is a risk that we could see the US payrolls number for January revised lower and we could see actually a decent number for February generally when you look back when I look back over the course of the past five years February payrolls numbers have been fairly strong but they've usually come off the back of a week January number obviously we've had a very strong January number so I think the correlation there could actually be slightly different so I think in terms of the February number even if we see if we see a decent number there we could actually see a significant downward revision to January in the same way that we did to December so certainly keep it on the employment change for the revisions for the January numbers certainly in terms of the Canadian economy we've seen a very flat growth over the course of the last two or three months so I'd be very surprised to see a decent number for the Canadian economy given the weak GDP numbers that we've seen there and I think they would potentially lend a probably more of an upward bias to the dollar CAD and a move back towards 13460 as long as we can hold above 13421 for the 3430 and overall I would suggest that the bias is probably more to the upside than the downside in the dollar CAD but that you know I've improved that could that could be that could be wishful thinking on my part Aussie dollar is also a very very key level very very key support level keep an eye on 70 and 6980 obviously that was the little flash crash that we saw in January on the back of the Apple the Apple announcement the Apple profits warning that saw a little bit of risk off right in there but certainly we are very close to some key support on the Aussie dollar and again I would be very surprised to see significant dollar strength and a significant move lower on the Aussie so close to the weekend so I think for me the bias would be for a little bit of dollar strength but I wouldn't expect us to see it I wouldn't expect us to see us take out the highs on the dollar for this week it really depends on obviously how well the numbers come out but certainly in terms of how the markets are looking if we have a quick look at the DAX we can see again here we've come off some very significant resistance levels and I think the potential is for further weakness in equity markets over the course of the next few days and weeks irrespective of how the number comes out so as we head up to the number I think it's probably incumbent upon me to now keep quiet wait for the numbers to come out and try and digest where we go to next I think what I will do though is I'll put a five minute dolly end chart up to give an indication of to the initial market reaction of any dollar strength or weakness as the numbers break goodness gracious me that is an awful number is a dreadful number 20,000 55,000 jump in Canada so obviously that blows my Canada dollar cadder and my dollar cad position completely out of the range but the unemployment rate has dropped to 3.8 percent average hourly earnings have risen to 3.4 so that I mean this average hourly earnings is a fairly decent that's a fairly decent number but certainly in terms of the dollar reaction it's profoundly negative so I think it's unlikely that we'll take out the highs in the dollar index this week but we may see a little bit of a rebound once the dollar has tested the lows simply because of the positioning that we're currently seeing in the market with respect to the dollar and you're now starting to see a little bit of a rebound in dollar yen there's a decent support area of support coming in around about 110 70 on dolly end if we look at the daily chart I should have mentioned that earlier we can see that here while I try and zoom that in it coincides with this series of highs through here so certainly I think we could see a degree of support coming on dolly end around about 110 70 but certainly in terms of equity markets it's going to be somewhat of a mixed bag but I certainly think we'll see euro dollars start to head towards the highs of the day head towards 112 70 1280 I said a quick look at dollar CAD if you do have any questions guys please feel free to zip them across but certainly in terms of what we've seen thus far the weak dollar number is obviously going to help push gold back up again but I'm fairly bullish on gold anyway I think the downside to gold is likely to be fairly limited and with solid support around about what 1275 1280 around about there I am hoping that you guys can hear me because I'm not really getting any feedback on any of the on any of the on any of the numbers but we certainly are seeing a significant pullback in the dollar index we can see it here here we go that's not surprising when you can when you when you consider how bad the numbers are but it is slightly counter-intuitive let's have a quick look at the FTSE 100 get rid of that so I would expect to see a retest here of the lows that we saw last week round about 70 50 fairly decent support there let's draw that in yeah the gold rally I would absolutely I would absolutely concur with that just being asked about the gold rally I would certainly expect to see a little better resistance coming around about the 50 day initially I don't certainly think that we'll see I don't certainly don't think we'll see this 1305 level quite yet because obviously you have to take into account this series of your series of lows here which could well act as a little bit of resistance in the short to medium term but overall I don't see an awful lot of downside in gold and the reason for that is ultimately even if the Federal Reserve wanted to hike rates I think they're going to be constrained by the fact that no one else globally is going to be able to and they won't want a higher dollar so for me it's really about buying the dips on gold and only really reconsidering that position if you move below the support around about 20 1275 which was the lows that we saw in the early part of January 2019 here overall I don't really see a case for aggressively being short of gold at these at these at these sorts of levels so let's have a quick look at the S&P the key level for me on the S&P was took the break of 2750 earlier this week on a technical basis that is a little bit worrying in terms of overall gains what we what we're also going to see here is a negative or bearish engulfing week now generally that tends to be very negative now that doesn't necessarily mean that we can't see a pullback to 2750 or 2760 but overall it's broadly negative and likely to see us drift back to 2700 over the course of the next few trading sessions because on a technical basis I think it's very hard to argue the case for significant further gains given what we've seen over the course of the last few days markets are largely looking a little bit negative in terms of any potential trade agreement I think an awful lot of that is already priced in which really begs the question what's going to drive the markets higher and I'm struggling to see what the catalysts would be apart from obviously much looser central bank policy but you're looking at it in the context of an RBA that's looking dovish a Bank of Canada that's looking dovish an ECB that's absolutely terrified that we're going to slow down even further and that is decided that it's going to do another LTRO before six months in advance which suggests to me they're not expecting to see any signs of a pickup any time soon so the central banks are basically running at the extremes of accommodative monetary policy so for me it's really a question of what's going to drive equity markets higher and at the moment given the earnings outlook given the shrinking that we're seeing in earnings potential what is the price action telling me and the price action is telling me that we could well struggle in the short to medium term does anyone else have any questions on any markets they want me to have a look at from a technical basis because certainly in terms of those payrolls numbers it is a worry that we've seen a significant slowdown in US jobs growth but it does tell me that the US labor market is probably starting to tighten up a little bit we've seen minimum jobs growth 20,000 a significant jump in wages that could in essence signal one or two things a very tight US labor market or it could signal that the US economy is starting to reach the limits of actually adding new jobs and certainly the unemployment rate dropping to 3.8% would appear to suggest that we are starting to get some significant tightening in that market I'm just going to check the participation rate just to check to make sure that it wasn't a drop in the participation rate that's actually prompted the unemployment rate to fall and the participation rate was flat 63.2 I'm being asked if right okay so US 30 right okay I've been asked about the US 30 so I'm going to look at that now and then I'm going to look at oil prices so US 30 that would generally follow the S&P so if I think the S&P is going to go lower then as a general rule I would expect the the Dow to do exactly the same thing and certainly in terms of the rollover I think we're probably there is potential for us to retest the 200 day moving average I would be I would be surprised to see us break much below this series of lows through here so let me just let me just expand that out even further let me just close these down now and I appear to have lost my Dow chart there we go let's expand that here we go so can you see that nicely there so I'd expect us to retest the 200 day moving average so that currently is oops just lost that for a minute give me a second we're going to have to close that down again let's try and bring that back I've opened the wrong one my mistake so that currently comes in around about 25,100 so certainly potential for us to move at least another hundred points lower on the Dow but you also have to put in the context of how far we've come lower this week already and we've come down quite a bit so I'd be a little bit reluctant to be aggressively bearish on the Dow these this at this particular point but ultimately what we're seeing here is certainly I think a significant unwinding of where we were this time last week we've wiped out pretty much all of the gains of the last two weeks oil prices Brent crude or WTI are you not really concerned one way or the other on Brent we're at a very key support level on Brent if we look at this series of lows over the course of the past few weeks we can see there's a nice area of support around about 64 dollars and 20 so at the moment we're in a little bit of a range between 67 and 64 if we break below 64 then there's certainly potential for us to move a little bit lower but I'd be very reluctant to sell into a move towards the lows of the last couple of months because generally crude oil prices tend to rebound off areas of support resistance you can see it pretty much through here here and here so I think if we do head back towards around about 6420 6410 then we're right for a little bit of a rebound in the overall range on Brent if we look at WTI it's a similar sort of story if we look at around about 54 and a half on WTI potential for a rebound off these lows here you can see where I've drawn these horizontal lines where the areas of support and resistance generally tend to repeat themselves and this is generally something that I look at quite a lot support and resistance for me are very very key areas of consolidation so what generally doesn't tend to happen is that the market doesn't tend to blast straight through them you usually get a reaction around them and you usually tend to get a little bit of a rebound one way or the other yeah I mean Brent tends to be a little bit safer and slower moving you're absolutely right also tends to be slightly more depth to Brent than there is WTI and that probably means that it that probably explains why it generally tends to move in a slightly slower fashion right just being asked about the DAX and we looked at that a little bit earlier let's just maximize let's maximize that be careful around about 11,400 you've got a nice little low through there but you've also got a nice area resistance through here so if we change that to say for example a four-hour chart on the 11,400 you can see that through here and through here we have a decent area of support so I think if the DAX does test lower then we're likely to see a little bit of a rebound a retest of 11,500 but I still think in the longer term we will retest this line the big question is is whether we retest it by trading sideways towards it or whether we drift down towards it but certainly in terms of the DAX probably limited downside in the short term but over the course of the next few trading sessions we can certainly drift lower on the DAX looking at the cable I think with respect to the cable you're going to have to be very very careful in the context of events next week because obviously we have another yet another potential meaningful vote on the Brexit deal but certainly I think in terms of the line of least resistance and in terms of a stronger dollar I think there's potential for further sterling weakness towards this trend line support from the lows that we saw at the end of last year and I think if you've got and if you're looking at weaker equity markets I think it's interesting the way the cable has has sort of reacted towards the increase in risk and the way that the equity markets have started to react over the last few days it has more or less tracked the topping out an equity market so if we get further weakness in equity markets then we could actually see further declines in the cable the big level I think for me on the pound against the dollar at the moment below the current lows are around about 130 50 it's obviously the 200 day moving average which is around about just below 130 but also the trend line support from the lows that we've got here so I can see further downside in the cable towards around about 130 120 980 but we're still in an uptrend so I don't want to get too bearish on it quite yet but certainly in terms of further downside we've certainly got the legs of further downside as long as we stay below 130 120 so we could get a rebound towards 130 120 for a move back towards 130 but of course all of that is dependent on events coming up in the next week or so but I think what has been interesting over the course of the last few days has been the breakout that we've seen in euro sterling and we've seen a significant break lower on euro sterling below 86 2030 and that for me I think is actually fairly significant because if we look at what's held euro sterling up over the course of the past couple of years it's been this 86 2030 level so the break below it for me suggests that the potential for further losses in euro against sterling is quite high and I would only revise that opinion if we move back through 86 30 so I think while we're below 86 30 there is potential for us to actually go lower on euro sterling towards 85 40 and 85 so that's an interesting one because that would have that would imply further sterling strength which I find surprising when you consider the default position on the current brexit negotiations is that the UK leaves the European Union on the 29th of March that is the current default position and for that to change MPs would have to either vote for Theresa May's brexit deal and pass it through the House of Commons next week or in the coming or in the coming weeks or they would have to vote to extend article 50 and at the moment I can't see that the MPs are going to get the required 320 odd votes to pass new legislation on the statute books to reverse the UK leaving the European Union on the 29th of March that is the default position that is what MPs voted for in February 2017 and in the absence of passing further legislation that is what will happen in the event of the the MPs continue to disagree on the current default position so that is that is euros sterling so that's an interesting one because that suggests to me we could we'll see further sterling weakness while we're below 86 euro weakness while we're below 86 30 okay so that's some let's have a quick another quick look at dollar CAD because obviously that's good that slipped back quite sharply in the wake of those disappointing US payrolls are much better than expected Canadian payroll numbers so let's have a look at where the next key support level is on dollar CAD and that for me is currently around about 133.80 we can see that from this series of highs through here overall while it's a disappointing number for me the most important number of all of those was the wages numbers so for me that still suggests to me that the Federal Reserve at the very least is likely to remain on hold and is likely to continue to reduce its balance sheet but nonetheless this bearish candle here would appear to suggest that we've probably seen the highs in the short term in the dollar CAD this is also a potential tweezer top at 134.70 and it's going to take something significant for us to move back towards 135 which would suggest we may see a drift back down to 133.40 133.50 over the course of the next few days in dollar CAD okay so I'm going to wrap this up now ladies and gents unless anyone else has any follow-up questions I'd like to thank you for turning up today if you could leave a Google review that would be great hopefully you found the session informative I will be posting this on YouTube at a later date later this afternoon if any of you want to listen to it back and follow up on anything that I've already talked through or discussed in the course of the last half hour otherwise I'd like to thank you all for turning up thank you all for tuning in and wish you all a very nice and pleasant weekend