 Right, good afternoon ladies and gentlemen, welcome to this month's non-farm payrolls webinar with me Michael Houston, Chief Market Analyst at CMC Markets and we're coming to the end of what's been pretty negative week for equity markets before I get started on the actual charting and the content. Obviously, I have to do the disclaimers, the risk warnings and what have you, but this payroll support is going to be a slightly tricky one I think in terms of being a directional indicator for what the markets are likely to do going forward simply because I think that even if we get a decent report, it's going to be very difficult for markets to rebound given what we've seen so far this week. We've seen the DAX fall for four days in a row. Potentially today could be the fifth. The FSC 100 has finished yesterday lower for the third straight session, although it was rather notable that we did close well off the loads of the days. The US markets also slipped back for the third day in succession yesterday while the dollar has gone very well bid and this has come against the backdrop of earnings, which by and large, they've been a pretty mixed bag, some good, some bad. Obviously, since the last payrolls number, we've seen central banks hike rates again and the major topic of debate I think really is whether or not we've seen the last rate hikes in this current rate hiking cycle. The main thrust appears to be, could we see a pause in September? I think that's a difficult question to answer. I think the Fed is definitely set up for a pause, the ECB as well. The Bank of England is slightly trickier given the 25 basis point rate hike that we saw yesterday, but I'm still of the opinion that even though markets are pricing in another 50 basis points from the Bank of England, I'm not so sure. There's two more inflation reports out of the UK to come between now and the next meeting. Similarly with the US, we've got US CPI next week. We've got a couple more payrolls reports between now and then, obviously, including the one that we've got today in 15 minutes. And for me, I think the heavy lifting has been done on rates and I don't think we're going to see any more. The Bank of England may do another 25, but really, again, I really can't see what benefit another rate hike would do. As for today's payrolls report, expectations are fairly limited on the headline number. Those of you who follow me and listen to me on a regular basis will know that from my morning reports, I think what we're looking for for today is still a fairly weak number, but relative to obviously previous numbers, 200,000 is not a weak number. But I think in terms of the overall direction of travel, when it comes to the US labor market, a slower weight of jobs growth, a slow rate of jobs growth easy for me to get me to get my words out, would be conducive with the Fed going for a pause in September. But even if we do get a even if we do get a number in excess of, say, 222, 230, 240, I really struggle with the idea that rates above five and a half percent is really going to make that much difference. I think there are significant lag effects. Taking place not only in the US, but also in the UK. An awful lot of US mortgages of fixed rates. So housing costs aren't going to be the issue that they were 20 or 30 years ago in the same way here in the UK. The biggest problem the UK's got is that an awful lot of fixed rate mortgages are rolling off and will be rolling off over the course of the next six months. So you've got a really delayed factor coming in to the credit cycle when it comes for these mortgages to roll over. If you fixed on a five year, you're still pretty OK when it comes to your mortgage costs. If you fixed on a two year in the middle of 2021, then you are in for a very painful shock over the course of the next three to six months when your fixed rate comes up for renegotiation and you have to roll over from a fixed rate, which was around about one or two percent or even lower than that and is now going to be between five and six percent and potentially even higher. And that that effect hasn't filtered through. So that is that is that is the big problem going forward. In terms of what the markets have done this week, let's have a look at the S&P 500. And obviously, we've had to absorb that Fitch credit rating downgrade to the US earlier this week, which people have kicked up a massive song and dance about, but for me, really doesn't matter that much. You know, Fitch cited a number of factors for the reason for the credit downgrade. But you know, what is Fitch telling us that we don't already know and which standard of pause told us over 10 years ago when they moved the US credit rating of triple A to double A plus. There was nothing compelling in Fitch's findings that told us anything we don't already know. You know, fiscal governance in the US, the debt ceiling, political instability. That's been going on for the last 10 years. Where's Fitch been, you know, hiding under a rock? You know, none of none of what Fitch said is really that surprising. And ultimately, if not the US, where else would you put your money if not in the dollar? The dollar actually has gone up this week, despite the fact that Fitch downgraded the US credit rating. So, you know, for me, the biggest concern now is not inflation. It's not higher rates, even though what we're seeing in the bond market does appear to suggest that that is what is spooking an awful lot of the risk of sentiment that we've seen this week. Let's, for example, look at this chart here. Now, this is a spread chart of the 10s, 2s spread. We've seen a massive steepening in the curve here, which would appear to suggest that there are concerns about the direction of long term rates. We can certainly see that based in the US 30 year been seen a big rise in the 30 year 10 year yield. We've also seen a big rise in the US 10 year yield as well. But not back to the levels that we saw in October last year, but we're getting pretty close and a large part of that, the reason for the set off in the longer end of the bond market is because we've got a bond auction coming up or some bond issuance coming up next week in the US, 103 billion dollars of new issuance, which is pushing prices down. And as a consequence of obviously the resolution of the debt ceiling and the fact the US Treasury needs to issue new debt. So what we're seeing at the moment is the issuing of this new debt, pushing the longer end of the yield curve down and driving yields higher. Does that mean that the fundamentals of the US economy are changing significantly? No, they're not. But as a result of this rise in yields, we're seeing down the pressure on equity markets more broadly. So that's essentially because if we actually look at what two year yields are doing, two year yields aren't really moving that much. US two year yields have pretty much done nothing this week. It's the long end of the curve that's moved higher. And as a result, that's put downward pressure on bond markets or stock markets. So what does it mean going forward? Well, you know, we look at the we look at the S&P. We're still in the uptrend. We're still in the uptrend that we've been in pretty much since those lows in October. So it's got the 50 day moving average. We've got the trend line support from the lows back in March. We've got a longer term trend line support here. So for all the concern about the sell off that we've seen thus far this week, we still remain in the broader uptrend that we've been in for US markets over the course of the past six to nine months. And we've seen a regular pullback over the course of that six to nine month period on a fairly regular basis. The one concern that I do have and it's born out here is we've obviously put in this peak back in July. We put in this lower peak on the Nasdaq at the end of July and the beginning of this month. And we've rolled over ever so slightly, but we are still above the 50 day moving average. So there is some evidence that momentum in US markets is starting to tail off. So that could be our first warning sign that we could start to see a little bit of a rollover in terms of what the markets might do next. So the 50 day moving average is the first level of support. We've also got this low back on the 10th of July around about 15,000. So we could see a drift back lower there. So for me at the moment, there is some evidence of waning momentum as we head into the summer months and heading into September. That's particularly prevalent, I think, in terms of how the FTSE 100 has been behaving pretty much since the start of this year. We've seen a lower highs and we've got fairly solid support, 7,200. When I talked to you last month around about the payrolls time, we did see a little bit of a sell-off back to the lows back in March. Those lows held. We've now rallied back towards this line here and rolled over again. What was particularly interesting yesterday was we closed pretty much off the lows of the day, which suggests there is still demand, I think, for buying equities on the dip. The biggest question is how far will this dip last? If we look at the DAX, again, we're looking a little bit soft. Look at this chart here. But overall, every time we've dipped anywhere near close to 15,400, we've found fairly decent buying interest and we are in a fairly decent uptrend from the lows that we've seen back in December last year, but also the lows down here. So at the moment, we remain pretty much range bound, albeit in a fairly decent upward trend. So there's nothing that we've seen over the course of the past few days that leads me to suggest that stock markets are going to start to roll over and sell off quite aggressively. Now, I've just been asked a question. What would a 150,000 number mean for the markets? I think that should be fairly positive for the markets because it will mean that the Fed's rate-hiking cycle is working. It should take some of the heat out of yields and I think really reinforce the idea of the September pause for the US. So it should also take some of the heat out of the dollar. A week number should be dollar negative and should be fairly constructive for risk. But we also have to bear in mind it's Friday. We've seen a big sell-off this week and I think people will be reluctant to take on aggressive new positioning ahead of the weekend. So in answer to your question of a week number, that should be fairly constructive for risk. My view on the FTSE 100 going forward, Richard, is I'm still constructive. It's cheap as chips. We've seen some fairly decent earnings numbers out of some fairly decent companies, Rolls-Royce, posted some really strong numbers this week. Obviously BP and Shell posted some weak numbers. But if we look at the direction of travel when it comes to oil and gas prices over the course of the past few weeks, that's been fairly positive. So I think as from an income basis, BP and Shell should be fairly positive. We have seen a little bit of weakness but my biggest concern I think about the FTSE 100 more than anything else is obviously the outlook for the UK economy over the course of the second half of the year. And we've got GDP, UK second quarter GDP coming out next week, which could be as good as it gets for the UK economy going forward. But ultimately, if you're a long-term investor on the FTSE 100, I struggled to see that much in the way of downside while we're above this series of loads through here around about 7,200. So, you know, it's cheap and there's an awful lot of negativity around the UK, quite rightly, I think, given the political leadership at the moment, but in terms of valuation, you know, the UK stocks are very, very cheap relative to their peers. So I'm still constructive on the FTSE, I continue to remain constructive and it has been my trade for, you know, has been my opinion for most of this year, despite the fact that we've come on from the highs that we saw back in February when we were above 8,000. So I've seen no reason to change that even though we're 500 points below that as I speak right now. Okay, so before I wrap up and stop talking because we've got the numbers coming out in around about less than a minute to recap, we're expecting 200,000 on the headline number. So if we get 250, that's likely to be fairly, it's probably likely to see a little bit of weakness when US markets open in just over an hour. But overall, I don't think it's gonna change and it'll probably keep the pressure towards the downside. But overall, it's likely to, keep the pressure on the euro, the pound and don't push the dollar higher. Let's just change this to a five-minute chart and then we can see the market reaction for the numbers come out. So let's go right now. We've got 10 seconds to go. We've also got the Canada jobs report. So keep an eye on dollar CAD. We're expecting around about 20,000 there. Numbers breaking now. Okay, here we go. So payrolls, 187, slightly less than expected, but broadly in line. Let's have another look at the other numbers. Canada's lost 6,500 jobs and the unemployment rate. Let's get that here. There we go. So these are the numbers. I'm just gonna bring them over. 187,000 on the headline number. 172,000 change private payrolls. Let's see if there are any adjustments to that number. The participation rate has remained constant at 62.6. So I would suggest it's fairly neutral report. The unemployment rate has fallen again to 3.5% from 3.6 and average hourly earnings 4.4. So again, it's a mixed report. We've got a slightly weaker than expected headline number. Wage growth has remained steady at 4.4%. So that's dollar positive, but in the unemployment rate, 3.5%. So pulling those numbers out of the way, dollar's slightly weaker on the back of that number. It sort of buys into the narrative for me that we're on a pause in September. The policy restricted policy for the Federal Reserve is working, jobs growth is slowing and the unemployment rate, the US labor market still remains fairly resilient and we are finding support on Euro dollar at around about this 50 day moving average here. If we look at this 50 day moving average for the last two to three days, we've managed to find fairly decent support in and around 109, figure 20. The dollar should soften a little bit on the back of these numbers and we could we'll see a move back towards 110 on Euro dollar. Similarly on cable, finding a little bit of an uptick there. We have broken below the 50 day moving average on cable. We're struggling to break back above it, but if we look at this candle here, that looks like a little bit of a hammer on the downside would suggest we've probably hit a little bit of a base on cable and could well retest the 127, 50, 128 level over the course of the next few sessions. I'll be surprised if we see a bit of a big sell off on the dollar today, but we have seen a strong move higher. So that would suggest that maybe positioning is probably stretched, but getting a little bit of a rebound on equity and risk more broadly, the S&P's edging higher on the back of those numbers. Bit of a Goldilocks report, going back to the five minute chart. There we go there. So still struggling to make sense of it, but ultimately what I've seen from the numbers today, nothing to worry about normal service being resumed. We may see a little bit of softening when it comes to yields. Let's have a quick look at that on my Bloomberg chart. So we've come off the highs on the 10 year on yields, softened a little bit, pulling off. There we go. A little bit of a spike lower on yields on those initial numbers. Bit of a spike lower and now retesting higher again. Looking at the two year, quickly switch that over so you can see that. So two year doing, wanna bring that over. Slightly firmer, but not really doing that much. Let me look at those slightly lower on the two year from the peaks that we saw just prior to the price of the numbers. So a pretty Goldilocks report on the back of those numbers. I think we're probably gonna drift into the weekend. We're probably not gonna pair back much of the losses that we've seen so far this week. And the focus will now shift to next week's CPI report out of the US for July, which is due on the 10th. We've also got China trade numbers next week and China inflation numbers next week as well. And I think of the two CPI reports, I'll be paying more attention to the China one because China is probably gonna slip into deflation next week. Getting asked, oh, getting two questions on Aussie dollar. So yeah, let's answer that because I think that'll be an interesting question, particularly in light of the China numbers that we've got coming out next week. China trade, but China CPI. Let's look at the Aussie dollar. That's an interesting chart. So I mean, that chart really speaks for itself. Decent support coming in from these lows back in May, that's 64.50. We've seen a little bit of a move down to around 65. Earlier this month, but for me, I think it's very significant that we've broken below the series of lows through here at 66. I think for Aussie to rally meaningfully, we need to rally back through 66 to signal a return back to this series of peaks through here. I think for Aussie to rally, you've got to see a significant improvement in China data around the moment. Next week's China data is likely to point to an increased deflation re-outlook. PPI has been negative since October last year, November last year. Year on year, it's likely to see a decline of 6% PPI. On the headline CPI number, we're expecting a decline into negative territory of 0.5%. So deflation is a clear and present risk for the global economy. That will potentially be negative for the Australian dollar. US CPI, which is due out on the 10th, could also be significant for the strength of the dollar going forward. So I think for the Aussie, you've got to be aware, you've got to be very, very careful about being overly bullish on it. We could see a move back to 66, 66.20, but if we're unable to get back above that, we could see a broader sell-off on the Aussie dollar back towards these lows down here in May. At the moment, we've seen a bit of a rally off those lows there. We've run into resistance at around about 66, and this is a four-hour chart, if you're asking me. So we need to see a push back above 66.20 to signal that our base is in for the Aussie, and signal a return to 67. But unless we get a bit, unless we get evidence of a recovery in Chinese economic activity, then the risk for Australian dollar is likely to be a revisit of those lows back in May this year. So when you say a long-term basis, I mean defined long-term, are we talking two weeks, two months, or two years? Because I think that's the big problem that you have when you're two years. I'm not gonna predict Australian dollar out to two years. You can't even predict the GDP out that far. So two years is way too long. By definition, my background is FX. I'm a spot trader on FX. It's very, very difficult to predict anything that far out. You might as well flip a coin. So two years, not gonna do that. If you look at it on this particular chart here, you can see over the last two years, we've gone from peaks of 81 to lows of 55. We're right in the middle of that. It's pretty much impossible to predict that far out. What we can do is we can take these fib levels here. So this is the move from the February 21 highs to the lows that we saw in October 2022 and we've rebounded almost 50% of that particular move. So if you're gonna ask me what I can do with fib levels here, I can take these lows here, I can take these highs here, calculate the fibs on that and we retraced a fairly good proportion of that down move there. And then we can then drill down into this move here. But the fact that we've been unable to break above the 68, 90 level, what appear to suggest that we're probably gonna retest at some point the lows that we've seen back in May. But over two years, I might as well flip a coin. Because who knows where the world global economy is going to be in two years time. Who knows whether or not the Fed is gonna start cutting rates towards the end of 2024 and the beginning of 2025. So predicting that far out is a very, very difficult thing to do. And it's not something I'm prepared to do. Now, if you're asking me the next two months, there's a slightly higher degree of certainty in that for two years now, sorry, Mustafa, but I can't give you an answer to that particular question. Does anyone have any other questions? I'm gonna quickly look at dollar CAD on the basis of that Canada jobs report. And it was a fairly weak jobs report. If we can just look back at it, just need to dig out the calendar numbers again. So the net change in employment was negative. That was disappointing. We're expecting a 25,000-derm gain in Canada. Canada jobs report, we saw a 6,400 decline in those numbers. Full-time employment change saw a gain of 1.7, 1,700. But we've also seen a 49,000 negative decline. And we saw an adjustment lower on the June number of 24,000. So jobs growth is slowing when it comes to U.S. jobs. Let's just get rid of that line. It's no longer relevant. So we're looking for, we're seeing a bit of a retest of the highs in dollar CAD earlier this month. So 1.34 is gonna be a fairly decent level on that. We could we'll see a break higher if we break through 1.34 on dollar CAD. Any other questions on anything that I haven't already covered on this month's payrolls report? As I say, it's a bit of a nothing report. The FTSE 100 appears to be stabilizing around 7,500. We've seen a little bit of choppiness in terms of currencies, a bit of dollar weakness there. But overall, for me, it keeps alive the idea of a Fed pause in September. Obviously we've got upcoming events, our US CPI report next week. We've got Jackson Hole Symposium at the end of the month. That could give some clues as to what the Fed is gonna do in September. But ultimately for me, the narrative for this report is the Fed pause is still alive. US rates are probably peaked. UK rates, we'll have to wait and see on that. But I think there's a good chance they could have peaked as well. Getting asked about Canada Yen. It's an interesting one. Let's have a look at that. Okay, that's interesting. I think we could have peaked on Canada Yen as well. Let's have a look at the key support level on that. This level stands out, 104.38. We're starting to see lower highs on that. I think much will depend on what happens with Dolly Yen on Canada Yen. So bit of a top at the moment of 108 on Canada Yen. If we look at Dolly Yen, this is my Dolly Yen chart, we could have seen a reversal here on the Dolly Yen. Big level is 145, the lows back in June, July. But this price pattern here is particularly interesting after the rally that we saw off the lows at 136, it's in the 200 day moving average. This looks like a potential evening star candle formation. If we drift back below 142, which is so far held the sell-off from the peaks just below 144, we could see prices move back into the cloud, retest the 50 day moving average and then test the bottom end of this cloud, which is currently around about 139. My longer term view on the Dolly Yen is that we'll see a move back towards 140 towards 135 by year end, I haven't changed on that. So if that plays out, then Canada Yen should drift lower. So hopefully that helps you in the context of your view on Canada Yen, but certainly in terms of Dolly Yen, I'm still very much of the opinion that by the end of the year, it'll be lower from what it is now. So hopefully that helps you in the context of your directional view or your directional bias when it comes to Canada Yen. Getting asked about gold, that's slightly trickier because obviously gold has been impacted quite a bit by the directional bias of long-term yields on US treasuries. But ultimately, I think the biggest concern I have about gold is the higher for longer narrative when it comes to US rates. And that's really what's borne down on gold prices over the course of the last few sessions. We've come in with lower highs and lower lows. We are starting to see a little bit of a rebound today. The big level for me, I think the gold is this series of lows down here. So let's quickly draw them in for you. So anywhere around 1890, 1900, I think as long as we can stay above them, then we should continue to remain fairly well supported. But at the moment, gold seems stuck in a range between 1900 and $2,000 an ounce. And I would expect that to continue. 1900, $2,000 an ounce. We're not getting rate cuts anytime soon. They're not being priced. And until such times as we do, I think it's unlikely that the gold is gonna be able to break out of that range. So we'll certainly look for any depths to be bought anywhere near towards 1900 and any upside to be contained by any moves towards $2,000 an ounce. So hopefully that helps in terms of gold going forward. I'm just making sure that I haven't missed anything else in terms of questions that I've been asked. Okay, right. Okay, so before I sign off, I just wanna bring your attention to some key events for next week. I've already mentioned them. USCPI, my big concern about USCPI is we've been falling pretty much every month since June last year, falling from 9.1% to 3% in June. The big concern I have with the July numbers is we could see headline CPI tick higher to 3.2, 3.3%. How will the market react to USCPI starting to tick higher again? Will we start getting a new bid come into the US dollar? Could we see yield start to continue to push higher? We've also got new issuance of bonds next week of around about 103 billion. How does that go? When it comes to the directional bias of what we've seen in yields this week. We've also got China trade on the 8th of August. Got China, CPI and PPI. What will that do to yields if that falls into deflationary territory? And we've got UK second quarter GDP on the 11th of August. So those series of macro announcements could dictate the direction of the dollar. But I would expect the dollar to weaken a little bit next week. Euro dollar to push higher. Cable to push back towards 1.28 and a half going forward and the dollar yen to slip back lower. In the absence of any further questions, ladies and gentlemen, thank you once again for your time this week. Thank you very much for listening. Obviously tune into my weekly video. That should be up on the news and analysis section of the website later today, where I'll talk about some of the things I've talked about in slightly greater detail. Otherwise, thank you very much for listening. Hope you all have a great weekend and speech all same time, same place next month. Thanks a lot. Bye for now.