 Right, good afternoon ladies and gentlemen and welcome to this non-farm payrolls webinar on Friday the 8th of July with me, Michael Houston and my colleague, Colin Sizinski, who will be joining us, hopefully joining us shortly. Hopefully he's not going to allow me to free wheel it on my own. I haven't seen him log in yet, but hopefully he will be joining us shortly, but before we get started, let's have a quick risk warning. So anything that you hear here should not be construed as trading advice. What we'll hope, hoping to do is give you some important levels, get an idea of direction in terms of the strength or weakness of the number and also really I think what to expect over the course of the next half hour or so because ultimately I think markets are looking to price in a fairly decent number, I would suggest. Certainly the expectation after the poor number that we saw in May and the ADP number that we got yesterday of 172,000 is given us a slightly positive bias in terms of expectations for today. So just to sort of recap a little bit on what we're expecting in terms of the numbers, for the change in non-farm payrolls, markets are pricing in 180,000 new jobs to be added up from the 38,000 that we saw in May. I mean what was important about the main number was not so much the fact that it was very, very weak. It was very, very weak even when you actually factor out those 35,000 jobs, those Verizon jobs that would have basically taken the number down in any case. So if you add them back in, it was still a very weak number around about 73,000. So what we're looking for this number is for that number to get added back in. So we're looking for the headline number which includes those 35,000 Verizon jobs which will go back into the numbers. So really what we're looking for is a number in excess of 150,000 not including the Verizon numbers. The unemployment rate we're expecting that to rise ever so slightly to 4.8%. The ADP in relation to the non-farm payrolls is the private sector payrolls. So stands for automatic data processing. Usually there tends to be a correlation between the two or the markets like to think that there's a correlation between the two. You can sort of see that correlation here in this spreadsheet. The yellow numbers are the ADP numbers. So we've got 172,000 new jobs yesterday for June 168 in May, 149 in April. What was notable about yesterday was the fact that we saw a downward revision to April from 166 to 149. But if you look at the direction of travel of this red line here, this red line here is the direction of travel for non-farm payrolls, the Bureau for Labor Statistics. And that has shown a significant plunge since the February numbers that we saw of 233. We've come off quite significantly. And what we saw in May was also the fact that we saw a 59,000 downward revision to previous month. So I'll be looking for an upward revision to May which should be broadly dollar positive. But I think more importantly than that, what we really need to see is ultimately a very positive number of 200,000 plus for the dollar to go higher. Now the big question I think is more than anything else is what sort of number would cause us to revise our expectations of a U.S. rate rise. And to my mind that is very, very difficult to quantify because at the moment if you actually look at what markets are pricing in in terms of interest rate expectations for a rate rise this year, this screen here is very, very informative in that regard. It's WIRP on the Bloomberg. And at the moment the market is not pricing in any prospect of a rate hike this month or pretty much September, 5%. Now if we get a very strong number, if we get a very strong number of around about 200,000 plus, we could be expected to see the probability of these numbers to go higher. I still don't think we're going to get a rate rise this year irrespective of how positive the numbers are. But what we will get is probably an upward pop in the dollar. And if that happens that will in all probability push Euro dollar down. So I'm just going to bring these up here because these are basically what we've got with respect to the expectations for the various payroll numbers. And ultimately the most important one I think here with respect to the payrolls is this number down here. The unemployment rate I'm not so concerned about because ultimately that tends to get distorted a little bit by the labour participation rate. So if the labour participation rate drops along with the unemployment rate, the unemployment rate is based on an estimate of people who are claiming unemployment benefit within the next two years. After they've been unemployed for more than two years they drop out of the numbers and become economically inactive. So they're actually not counted as unemployed. So the unemployment rate is not generally an accurate gauge of a tied to labour market. So we need to bear that in mind. Let's have a quick look at the key chart points that we need to look at in the context of where we can go to next. And ultimately it's pretty uninspiring when it comes to the S&P because obviously we had the post Brexit sell-off and since then we've had a slow climb all the way back up towards these 21, 15, 20 areas here. Now we're slap bang in the middle of this area here. But what we do know is denoted by these very long shadows on these candlestick charts here are that there is very, very good demand to buy stocks at very, very low levels. You can see all these long shadows. The market is closing pretty much near the top end or well away from the lows of the day. That suggests to me the market generally is quite happy buying stocks on dips. And it's not really surprising when you consider where interest rates are going at the moment. Certainly Fed funds rate is 0.25 to 0.5. The UK base rate is 0.5. There's a prospect that it could actually get cut to 0.25% next week. I'm a little bit doubtful about whether or not that will happen. But that's for another day. So the key levels I think for me on the S&P, we're right in the middle of it unfortunately. So it doesn't really give us too much in way of latitude. I think currency markets give us a better indication as to where the key levels are. But certainly on the upside, the highs in July around about 21, 12, 21, 15. On the US 30, similar sort of story. We've got a decent resistance level coming in from the highs in April. Decent resistance around there. But ultimately again, we're range trading and US markets are pretty much back near to their highest levels, their peaks. Whereas European markets are not. So we've got a significant what I would call divergence in terms of what European markets are doing, what US markets are doing. And more importantly, what the 1,100 and the 1,250 are doing. But we're getting a decent rebound in European markets today. That's not to say that that will continue. But I certainly think that a decent payrolls number is probably likely to give a little bit of an upward tick to stock markets. Some pretty much across the globe. So you're looking at a rally of around about maybe 9,600 on the top side. Certainly 9,700, a little bit higher up. Similar sort of story I think in terms of the currency markets. Euro dollar is like watching paint dry at the moment. Unfortunately, there's not really too much in terms of excitement that we can do with respect to Euro dollar. But certainly there's decent resistance just above 111. We've managed to find a decent resistance level around about those sorts of areas there. So 111,20 on the top side. But what I'm going to be particularly interested in in terms of a very poor number is this level in dolly yen. Now, those of you who've listened into my webinars on previous months will know that I've been watching dolly yen and it's a great barometer in terms of the strength or otherwise of any payrolls number or any US economic indicator. A poor payrolls number will put downward pressure on the dollar. At the moment we're just above the 100 level. We can see how important 100 level is. It's the 2014 lows. We're around about where it is now. We have been below there but we closed well off there. So there's certainly decent support down here around about 100.2. This is the weekly chart that we're looking at and we can see that here. So we can zoom that in. The downward pressure is certainly the predominant play at the moment and what I would say despite the rebound that we're seeing in stock markets at the moment, the yen is still very, very strong. So one of these charts I think is lying to us a little bit. Risk aversion is very, very high. There is an expectation that ultimately the dolly yen is probably the weakest side is the downside and we're probably going to get a move over the course of the next few days and weeks towards this lower level of 95. So that for me is the weaker side. A decent payrolls number of say for example 200 plus is probably going to get a decent dollar rally back towards these sorts of highs around about and I would suggest probably around about 101. But certainly you can see here we've got a decent area of trend line resistance coming in through here. So what we really want to see is a move through 101.20 to push higher. So a positive number for payrolls could see a move back to 101.20 but I would expect that to hold. A weak number is likely to have a see the market have a go at that 100 level on the lows that we saw earlier earlier in the month around about 100.15. Keep an eye on that. Sterling dollar, big, big level on cable at the moment is 130.50 and that was yesterday's high but more importantly than that we've also got decent resistance at 131.20. So certainly keep an eye on that but this certainly does appear to suggest that we're probably going to get further sterling declines over the course of the next week or so but in the short term I think that the pound is vulnerable to a decent rebound back towards the 130 level, 130.5 or maybe even that 131.20 level. Who knows, we have come a long way in the past two weeks. Ultimately is the market short enough for sterling or will they start to take profit as we head in to the weekend and I think that's the big unknown at the moment. Gold has started to come off a little bit ahead of these payrolls numbers so again a decent payrolls number will have a negative effect on gold. If we look at this weekly chart here we can see this trend line resistance coming in from the all-time highs. We are struggling to get through that right now. This is the weekly chart. We now move that to the daily chart. We can see that in even more starker detail here. So need to keep an eye on that but I would suggest a positive number we'll get a positive payrolls number of 175.182.00. We'll probably get a moving gold back to 13.40. So keep an eye on that. Resistance at 13.79, 13.80 which was the highs that we saw earlier in the month but I certainly think again the bias is probably going to be for a week a dollar. It really depends on how we play it out from here. Brent is also very interesting in the context of the breakout that we've seen below the June lows. So 46.70 on the upside is resistance there looking at the support on the downside around about 45 dollars a barrel and we're going to finish up with dollar CAD for all the Canadian dollar clients because this chart here is very interesting. So the Canadian jobs report we could see a retest of this 131 area. We're in a bit of a range at the moment but certainly above 131 there's a good area of resistance up there which could see some decent selling pressure in the event of either a poor Canadian jobs report or a decent US jobs report. So there's certainly a significant amount of what I would call push pull on the Canadian jobs report. At the moment we're stuck around 130. We've got that support on the Canadian dollar at around about 128.75 but look at the long shadow on that candle so we can see there's decent demand down there for US dollars and short Canadian dollars. So again the bias here is probably for a slightly, slightly stronger number but don't forget we need to keep an eye on first and foremost the headline number and on farms but also the revision. The revision is just as important if we get a downward revision it could be one of those positive post-negative type things. So I always take a view when I'm looking at these numbers is to basically wait until the market settles down and finds its level because ultimately if you don't do that it can end up, you can get end up getting whipsawed quite horribly. Now the markets is looking to price in a little bit of a sell-off and doll again at the moment and the numbers are out. So here we go 14 it's on my word look at that 287. That is a really good number on the headline number 287 much better than expected so that's very positive for the dollar not a surprise they're straight up like a rocket. Obviously we factor in the 35,000 horizon number so 250 that is a huge number. 4.9 percent the unemployment rate's gone up that's probably as a result of the participation rate increasing slightly and yes it is the labour participation rate has jumped from 62.6 to 62.7. Does it make a fair rate rise more likely in July or September? Again I doubt it very much given the concerns about Brexit but look at the average earnings numbers they're at 0.1 so average earnings are slightly disappointing and given the fact that the Fed is concerned about wages pressure that's going to take a little bit of a gloss off the headline number even though the annualised number for average earnings has gone up to 2.6. So to quickly summarise that headline number good knock off 35,252 average earnings probably a little bit disappointing and also if we look at the revision to the headline number the headline revision is 11,000 we haven't seen that at the moment but the main number was revised down from 38,000 to 11,000 so the main number was even worse than expected and ultimately I would expect this June number to be subject to revision when we come out on the July payrolls report at the beginning of August so if you take those two months and divide them by two you've basically got 150,000 over the course of the last two months so ultimately we've got a slightly skewed picture on the payrolls report on the face of it it looks very very positive and it is and it's likely to give the dollar a little bit of a tap and prompt a little bit of short covering and we can see that here and now I'm going to be keeping a very close eye on the highs that we saw yesterday at 101.40 and 101.75 to see whether or not we can take those numbers out there on the downside obviously very bad for cable it's going to push us back down towards the lows of the week but I would be very very surprised if we take out the lows that we saw on Wednesday on the basis of that number I think the momentum while it still favors sterling I don't think markets are going to be going to want to get any more short sterling than they already are that's the euro dollar I think that's going to continue to slip lower we've taken out of the lows of the previous two days and as a result I think ultimately we will continue to drift a little bit lower but overall in the range that we've been in for about the last two or three months gold not surprisingly has sold off quite hard that's not really too much of a surprise we can see that here this is the key support level that I'm now looking at on the short term chart these two these series of lows through here we can also see that borne out by drilling down into these levels here 1335 and through here so see how we react around these levels here as a key support area let's quickly close that dollar CAD has obviously probably gone for a nice little run on the top side because that jobs number was a really really poor number on the back of the Canadian jobs report so let's look at that thing is a good chance that we could probably head back towards the 131 level on the basis of that particular number so again a stronger dollar number we can add there and last but not least Brent Crude pretty much unmoved on the back of that crude oil it's not really moved at all before I move on sort of is there anything else that anyone would like to ask me with respect to what I haven't covered already covered euro dollar dolly end cable the s and p have a quick look at that I can't imagine that's going to be too significant but I would imagine that we'll probably retest the highs these peaks up here that does appear to be what we are currently doing 21 20 looks favorite for that one I've just been asked how I get the boxes with the with the data in it that's a very good question and it's fairly easy to if you go to market pulse and you go to the market calendar you can see a whole host of data items here and what I generally do is I take the boxes so in other words if I'm expecting a number to come out so let's say for example I want to be alerted when this particular data point is due out I select the box and what it will then do five minutes before the number is due out it will pop up onto the screen and it will always remember those settings so that when it comes up a month later you will then get that come up again so for example if I want to remind myself next week that we've got the bank of england rate meeting which is likely to be a very very big data item what I can do is I can scroll all the way down until we get to the 14th and I'll select that and the market calendar will remember that and then 15 minutes before the announcement is due to come out it will flag up this little box and it will stay there in the window until such times as the announcement is made so very very simple very very easy to do go to market pulse select market calendar and then select the item that you want to be alerted to and it is a very useful function because what it does it saves you an awful lot of market angst if you select that it'll suddenly warn you 15 minutes before if you've got a position it'll give you obviously then gives you the option of either covering the position putting a stop loss in if you haven't already got one in which you should have but sometimes if you're sitting at the desk you've got a stop loss in mind but ultimately you want to basically sit there without actually programming it in so that's how you do that market pulse is very very useful for other little tip bits like chart forums or insights or even Reuters news so you can see Reuters news you can pull that up and it'll basically tell you the headline numbers so you can see there those are the main headlines 287 against 175 may revise down to 11 from 38 unemployment average earnings up but by less than expected so ultimately given all the concerns about Brexit given all the concerns about China as well because this is another factor that I think we all need to bear in mind when people are talking about the Fed and hiking rates at a beginning of this year the market freaked out when the Chinese devalued their currency from levels around about 655 all the way up to 670 and there was concerns about deflationary shock rippling out over the course of the global economy now the Chinese authorities then came back to no no no we're not going to be looking to devalue the currency you know we what we're doing is we're just adjusting it lower ever so gradually and markets calmed down this came back down again until it's rebound and now look we're back here and while everyone else has been distracted by what's been going on with respect to all the Brexit anxiety if you like we're now back at the levels that we saw at the beginning of the year more importantly Chinese growth GDP is not showing signs of picking up to a greater you know to a significant degree and that's a worry and I think the concern is that this will continue to edge higher and the last thing that the the the Fed wants is more deflationary pressure and we also can't underestimate the effect the effect that a deflationary shock from the sharp set off in the pound that we've seen over the course of the last few weeks the last thing the Fed wants is a very strong pound also pushing out a little bit of a deflationary shock into the global economy as well so we can see from these numbers that wage pressures are increasing they're ever so slightly increasing there's certainly not increasing in any way the level that we thought they would be and we've also got concerns about stronger stronger Chinese a weaker Chinese currency in a weaker pound potentially depressing depressing inflation over the course of the next few weeks as well and the last of the last thing the Fed wants is a strong dollar and certainly if we look at where the dollar index at the moment is it is now starting to edge back up to the highest levels that we saw in the wake of the set off post post 23rd of June back towards these levels here so Fed's not going to be too happy about that because ultimately it's going to make us exports that much more difficult to offload right finally ladies and gents keep an eye keep an eye out on US treasuries trading at record highs yields at record lows we've seen that come off quite considerably so if these if these prices these prices still showing significant signs of weakness there but we've rebounded quite strongly there so rising prices falling yields those prices didn't stay low for very very long so again here the market's not really buying in the narrative into the narrative of a significant higher dollar and we've seen that dolly yen is now lower after peaking just below the highs that we saw yesterday 101 40 the high was around 101 29 so again anyone who bought into that dolly n rally is probably sitting a little bit uncomfortably right now the momentum still favors a lower dollar before I sign off ladies and gents are there any more questions on any of the functionality or our expectations for next week or anything like that more than happy to take them now that we've got the payrolls data out of the way we do we also do have a weekly webcast on Mondays at 12 15 which you can sign up for on the learn and analysis part of the CMC markets website again you know free to join no obligations and what have you just have to leave an email address a valid email address um otherwise in the absence of any further questions um I will uh I will sign off and wish you all a profitable afternoon trading okie dokie all right ladies and gents thanks for your company today and hopefully see you same time next month for the august pay or the july payrolls report which obviously will be the first friday in august thanks very much cheers