 Hello and welcome to CMC Markets on Tuesday the 9th of June and the weekly market update and we're fresh off the back of a very good US payrolls number on Friday. 280,000 new jobs with some positive revisions to the March data which came in at 85 that's been revised upwards to 119 and that has once again put the prospect or put the question of whether or not we'll get a US rate rise sometime this year. Some of the data that we saw last week wasn't particularly positive. It pointed to a very mixed picture for the US economy and I think it had raised expectations given some of the comments from Fed policy makers last week that potentially a September rate hike could well get put back. What Friday's number has done is has put the prospect of a September rate hike back on the table. Now we saw a sharp rally in the dollar on Friday and we saw a sharp decline in the euro but I think what was important about what happened on Friday is we didn't take out that 110.50 area in euro dollar which I think is likely to continue to act as support. So we're going to have a quick look at the dollar index for some clues as to the next move with respect to the US dollar. We're also going to talk about the Bund market the German Bund market in the context of the recent rebound in yields that we've seen pretty much across the bond curve not only here in Europe but also in the US as well and also going to revisit a chart that I looked at last week Euro Canada to see whether or not that to see whether or not essentially whether the breakout of the inverse head and shoulders is likely to continue to push away from the neckline. But let's make a start with the US dollar index and I'm going to start with this four hour chart because I think it's quite important in the context of the declines in the dollar that we've seen since we posted those peaks in the middle of April. Now a lot of you may well have seen this chart before but I think it's well worth revisiting because it suggests to me that despite the rebound that we've seen in the dollar over the course of the last couple of days the downside pressure to the dollar still remains intact irrespective of that very positive payrolls number on Friday and I think it's important to actually look at that payrolls number and actually look at it in the context of all the other data that we've seen over the last six months. One positive payrolls report does not a rate hike make and I think that's really what you have to look at when you're looking at perceptions not only about the future direction of the dollar but you also have to look at it in the context of the future direction of yields in Europe and I think we're I think we're facing the very real prospect that we could see a significant rebound in yields in Europe and that could well be Euro positive and as the euro is a significant component of the dollar index that could put downward pressure or put further downward pressure on the dollar index. So what we need to do looking back at this for our chart is look at that resistance level from the double top breakout that we saw at the end of May the beginning of June and that little sideways channel that we broke out from we can see the dollar spike that happened on Friday but we didn't actually close back within that channel so that is likely to continue to act as resistance and that resistance level is at 96.72 while we remain below that resistance level on the dollar index at 96.72 then I think the possibility of a further dollar losses remains a real possibility. Now you may recall just over a month ago I warned about a potential reversal in the Eurobund. I talked about a bearish engulfing month on the monthly candle chart I also talked about a bearish engulfing week and I suggested the potential that we could see some significant losses one month on and we're quite a bit lower and now the question that really needs to be asked is whether or not we're going to continue to build on the losses that we've seen over the past four to five weeks and the honest answer to that question is I think it's a distinct possibility that we could well see further losses in German bunds and that could well push yields above 1% so we'll take a look at this weekly bund chart in front of me and we can see from the lows that we saw last week that that low equates to a 1% yield level on the German Bund and that for me I think is a key I think that's a key support level certainly in the context of the price action and I think the question we need to ask ourselves with respect to this weekly chart is whether or not we're likely to see further losses well I think the key resistance level on the Bund chart can be better seen on the daily chart which we're going to look at now and we can see I've drawn a horizontal line through the lows that we saw at the end of April and that comes in around about 152 20 there or thereabouts and that is the next resistance level on the price action and we can see since we posted those lows at the end of last week we have managed to actually close above the 50% retracement level from the up move from the December 2010 lows to the peaks that we saw in April so we can see from this daily chart that the 150 30 level on the price action is a very key support level we need to close below that and if we close below that we could well see further losses on the price towards the 147 60 level which would put German Bund yields there or thereabouts around about 1.25% now if that happens unless you see a corresponding move in us yields that's going to be extremely euro supportive so looking in the context of the yield differentials between German bunds and US Treasury if we get a move that magnitude in the price that will push Bund yields up and actually make it much less attractive to hold US dollars and more attractive to actually own euros now we're going to revisit the Euro CAD chart that I talked to you about last week simply because of the price action we've seen over the past week or so we broke significantly higher and as a result of Friday's payrolls data on Friday we slid back quite sharply and I think that move lower actually shook out a few long positions I think what was important about that down move that we saw on Friday in the Euro CAD was it didn't actually close or move below the neckline from the breakout level which is at 137 80 so as we can see from this daily chart as long as we hold above the neckline breakout which is at 137 80 and also the 200 week moving average which is also I think a very very key component of this particular trade setup or trade breakout as long as we hold above that 137 80 level and the potential for further Euro gains up towards the highs that we saw last week and beyond remains very much intact so that's pretty much it for this week once again thanks very much for listening this is Michael Houston talking to you from CMC Markets