 Good afternoon and welcome to CMC markets on Friday the 3rd of May and this month's non-farm payrolls Monthly webinar before we get started couple of housekeeping couple of housekeeping rules disclaimers. What have you? I will not be giving anyone Investment advice on this particular webinar. I won't be telling you where to buy I won't be telling you where to sell telling you where where I think the Important levels of support and resistance are likely to be and What might happen in the event that we don't get the numbers that we expect? But I'm not really expecting anything too much outside of market expectations with respect to Today's April's payrolls numbers. I think by and large it would be a surprise if the Market came in anywhere outside consensus and As a result, I think that's probably where where we'll where we'll start in terms of What's happened earlier this week if we look at what the US dollar has done That I think that gives us a decent indication of the direction of travel When it comes to currencies the dollar index as you regular viewers will know is something that I look at quite a lot And it gives me a fairly decent indication As to the overall direction of the dollar as a whole and it's been a it's been it's been an uptrend for quite some time now I've seen no evidence whatsoever that it's likely to end This particular uptrend and as such on that basis, I would expect the euro to continue to decline against the dollar and Obviously the pound to remain under some form of pressure, but I would expect The pound to probably outperform More than say for example the euro the euro remains under pressure continues to remain under pressure on the back of a weak Macro economic outlook and the European Central Bank that is unlikely to be moving on rates anytime soon And if anything is likely to ease more than it's likely to hike and I think in terms of and in in that context, I think This week's FOMC Fed meeting was particularly interesting because I think if you look at what expectations Were and the reaction of the dollar to what happened in the wake of Jerome Powell's comments Earlier this week. I think there was an expectation Expectation that the Federal Reserve was probably going to cut rates sometime later this year now To my mind Given the direction of the data that was never a realistic outcome Now this is a screen that I look at fairly regularly on my Bloomberg terminal What this shows me is market expectations of whether or not we're going to get a rate cut At the end of the share And if you look at this orange line Here this is basically the market probability that rates will go down Between now and December. So this is December the 11th 2019 and at the beginning of the week the market was assigning potentially 68% probability of a rate cut So let's look at how likely that is The political noise out of the US government Donald Trump wants a 1% cut in rates Larry Kudlow wants a 50 basis point curtain rates. So When I listen to that and then I look up the economic data Is US economic data bad enough to warrant a curtain rates now It's not not by any stretch of the imagination. If you look at what non-farm payrolls expectations are for Payrolls are still adding jobs at in and around 190 200,000 jobs a month Which suggests that the US economy is ticking along nicely and even though we saw a very disappointing number of around about 33,000 in February We've we've seen that we saw a big pickup in the March number as a result of that slowdown And I think a large part of the slowdown in February was as a result of the US government shutdown So you have to put that in the context and earlier this week the ADP private payrolls report Added at 275,000 new jobs in April now a lot of people would suggest to me that there's a distinct correlation between ADP payrolls Non-farm payrolls there isn't okay quite simply There is not a great deal of correlation between the two sometimes ADP can be very good non farms can be very bad What I would say is the headline number is not as important as what the wages data is going to tell us and ultimately earlier this week There was the probability a 68% of probability of a rate cut was just ridiculous So what Powell did earlier this week is he rebalanced or reorientated market expectations of a December rate cut They are now 47.7% so what that does is it gives the Federal Reserve more Optionality in terms of what it can and wants to do what it can and might do between now and the end of the year It also tells me they're data dependent So the big question is really not is the Fed gonna cut rates this year and how likely are they to do so is Whether or not they're going to remain on hold This year because given where the data is now I think and if it continues to remain this way, it's unlikely that they'll do anything. They're going to be patient So you've got the unemployment rate. There you go 3.8% we're expecting that to come in at 3.8% all good non-farm payrolls expecting a number of 185,000 from a previous of 196,000 again all good There's never any likelihood of these if these numbers come in as expected that the Fed will be cutting rates Now what is more likely is the ECB may ease policy further? So really it's a question of Well, what do we go from here? so you saw a bit of a sell-off in the S&P earlier this week as a result of the slightly less than dovish tilt of Chairman Powell and as a result you've got a key reversal day on the S&P 500 Which under normal circumstances might suggest the top is in we did break out above the previous record highs And we have made new record highs this week I think the big question for me is do we have the upside Capacity to make new record highs now. I would suggest that we do but I don't think we do Yet, so the big question for me is can we get back above 2940? Because that was the resistance level. There's decent support at 2900 And as such if I drill down that into a four-hour chart I can see straight away here that we've certainly got potential on the S&P To head back to around about the highs that we saw Around about 29, 2931 in the middle of yesterday afternoon. So 2931 Can see a decent rebound here. We've closed well off the lows Which suggests we're probably not ready to go down quite yet if we do get a dip would probably come in around about 2920 and the big number that I'm going to be looking out for is this average earnings number here because basically that's the number That could make them the Federal Reserve nervous about inflation One other thing to keep an eye out for late later today ladies and gentlemen is that we have a raft of Federal Reserve speakers coming on the wires This afternoon So it may not be the payrolls numbers that drive the particular market move today It may be what Richard Clarida says who's the Fed Vice Chair It could be what Charles Evans says with respect to monetary policy I think expectations of a rate cut at the moment are Probably overbaked. I don't think the Fed is going to raise rates this year Really depends on how strong the wages numbers are really depends on how strong the headline Payrolls numbers are but if we're getting payrolls and ADP of 200 Around 200,000 and I don't think wage growth is going to be a problem because if you're getting 200,000 new jobs added There's plenty of slack in the labor market and as such wages are probably going to hold up But they're not going to go racing away. So key levels to summarize 29 2932 On the S&P on the upside and then 2940 on the downside this series of loads through here around about 2915 But while we're below 2940 think the bias is slightly towards the downside But we could we could tick higher first Right, let's have a quick look at the FTSE 100 again. We're in the uptrend here have been in the uptrend bounced off the 50-day moving average and the fact that we posted a golden cross Suggests that upward momentum is still very much at play with respect to the FTSE 100 We managed to bounce off the 50-day moving average hold above that while we do so I'm still inclined to buy dips on the FTSE 100 unless or until We close below the 50-day moving average. So if we look at the 50-day moving average If I click on this button here, I can see what the value is in the left corner there and it's 7,300 so I think while we're above 7,300 on the FTSE 100 It should remain fairly well supported if we look at the DAX. It's a similar story the Germany 30 12,400 we've made a new seven month high today. It is looking a little stretched on the upside And with a Mayday Bank holiday for the UK on Monday I probably would be a little bit cautious about being aggressively long at these sorts of levels given that we have Decent resistance up around the August highs as well as these September peaks here which come in around about 12,460 so there is potential for us to go a little bit higher But the oscillator is telling us we're overstretched and as such We could drift back down towards the 12,300 level over the course of the next few days But a weaker euro is certainly feeding in to a stronger DAX Weak a euro generally tends to help German exporters and at the moment they need all the help they can get given concerns about trade wars and a very and a very sickly manufacturing sector for the German economy, so Weak euro certainly helps when it comes to German exporters And that's why you that's why I think you're seeing the DAX outperforming now Let's have a quick look at euro dollar Head of the numbers again very much in a downtrend Still below the 50-day moving average. I did a video on this At the end of last week where I suggested that the line of least resistance for euro dollar remains a move towards 111 110 and eventually 108 So that suggests a stronger dollar. It doesn't necessarily mean that the Fed is going to be raising rates It doesn't necessarily mean that The the US economic data is going to continue But but what it does what what it does tell us is that We're likely to find any rallies in euro dollar likely to be sold into so this peak here that we saw This week around about 112 70 and the 50-day moving average is likely to act as a decent cap and if we look at what the highs are doing the highs are getting progressively lower and a Decent dollar number here is likely to push us back down to the lows that we saw at around about 111 40 but what I would say is again This is very much a case of sell the rally on euro dollar for a move towards 110 over the course of The next few weeks and months. We're not talking hours here. We're not talking days We're talking over a concerted period of time. So that's the way I would look to position in terms of euro dollar I'll be looking to sell any rallies back to 112 and a half Even as high as this downward trend line here, which I've drawn in from the September peaks The line of lease resistance is still to sell euro dollar on rallies. We could well see a retest of these lows here I'll be surprised if we break significantly below it today in the event of a good dollar number So again, it's really a question of how you play the percentages when it comes to euro dollar now a good Dollar number is likely to manifest itself in a rebound in dolly and now dolly and really it's like watching paint dry It's been a very very difficult Currency to pick in terms of direction But I think while US data remains largely positive and equity markets remain fairly strong You're likely to see dolly and push higher back towards 111 60 111 80 and 112. So This wages number if we get anything like three point three three point four, it's going to be dollar positive Get anything like three point one or three percent. It's going to be mildly dollar negative The dollar is not going to collapse But you might see a little bit of dollar weakness if the headline wages numbers Disappoint in any way shape or form if they beat expectations you get a little bit of a rally But what we're not going to see and I think it's important to stress that we're not going to see the dollar Go aggressively in one way in one direction or the other Quickly just do the US 30 For the numbers come out again. It's a similar sort of story Finding support the 50-day moving average This is probably one of my least favorite Products to trade because it is very much driven by by an awful lot of large cap stock So if you if you get a strong move in Apple It's going to manifestly influence it quite significantly, but again, we've seen a bearish reversal So that suggests that maybe we could get if we get a strong dollar number We could see equity markets come under pressure. I think this is the key point here if the dollar number is strong That could cap the out the upside for the US 30 and the S&P 500 Obviously earnings numbers notwithstanding. So these are the key numbers here 185 3.3 on the average earnings year on year and The unemployment rate of 3.8 I'm tempted to dismiss the unemployment rate because that can move up or down either way So here we go 263 very strong number good headline number 3.2 slightly softer So again a very strong headline number on the payrolls, which is positive But the wages numbers are flat. They're unchanged from the previous numbers So a mildly dollar positive there. You should see the dollar tick higher You may see equity markets also Have a little bit of a journey to the upside as well on the back of that because it's going to make it much less likely That the Federal Reserve will be Hiking rates anytime soon. So 3.6 the unemployment rate has fallen to 3.6 Let me just check as to why the unemployment rate dropped there because that could just be a fall That could just be as a result of a fall in the US participation rate So just having just just give me a minute to check that and the and the participation rate has dropped. It's dropped to 62.8 Along So that's that that can be explained away very very easily Private payrolls have also jumped quite strongly as well. So this is very very strong It tells me that the US labor market still has plenty of slack in it and inflation is not a problem So actually this is a what do you might call a Goldilocks report? It's good for stocks and it's and it's and it's good for the dollar But is it going to is it going to see a breakout of the range now? I think what will happen is we'll see the dollar move lower Towards the lows for euro dollar and we'll see stock markets move higher And and retest the highs it's going to be very I think it's going to be very difficult to really Garner any significant direction one way or the other so let's move on to gold because obviously with respect to gold prices It's going to be significant and as such we are testing a very key support level on gold Drawn in drew I drew in this line earlier And I think if we take out this low here on gold at around about 1265 Then we could well see further losses on gold towards the 200-day moving average You hear an awful lot of people talking about buying gold but I think While things are the way they are at the moment what we're likely to see is the trend being your friend and Anyone who tries to pick tops and bottoms In gold is playing a very dangerous game. You have to trade the way the market is is trending and at the moment We're on a key support area I would be surprised if we break below 1260 with any degree of Conviction and as such we could we'll see a move back towards these highs that we saw at the beginning of the week 1285 or 1290 now I got asked about Palladian, so I'm going to look at that now Seeing as I'm doing precious metals And I'll be surprised if it didn't show a similar sort of pattern And this is actually quite an interesting chart. I can see straight away here that we have got a decent area of support at around 10,000 sorry 10,000 1,300 So let's just draw in a to we've got 200 day moving average I'm just going to drop another moving average in there and do a little bit of surgery on this Change that to 50 and try and work out in my head what I think this is likely to do based on the probabilities In front of me So bear with me I'm going to put in a nice little support and resistance line in here So I snapped it onto the low and then draw it straight across And then I'm going to extend it to the left like so So now that'll stay on my watch list for Palladian and I think while we're above 1,300 we could well see a retest of 1,400 There is one warning sign however with respect to this the fact that we made these record highs back in March We've come back down to test 1,300 we've rebounded But what we haven't done is we haven't taken out the previous highs which suggests that maybe It's time for a little bit of consolidation in Palladian And as such we could trade sideways above 1,300 Before making the next break higher or lower But certainly in the context of where we are at the moment. It does appear to be decent support around about 1295 1,300 on Palladian and while we're above that we could we'll see another retest of the highs being asked about cable Again this one here nice little cable chart To be quite honest with cable it's good It's going to be very very difficult for me to say with any degree of conviction as to what the directional Bias is for cable, but what I will say is while we're below well around about 130 129 80 The bias probably remains more to the upside than the downside The only caveat I would say with respect to that is if a UK economic data Continues to remain weak Then it's highly unlikely that we'll get Any speculation about a rate hike anytime soon now we had the Bank of England yesterday And I know mr. Carney said that the market was underestimating the probability of a rate hike this year But I would suggest the possibility of a rate hike this year is somewhere between slim and none and slim Just left the building so what I would say is unless Brexit is resolved Then the prospect of a rate hike is zero Which means then the pound is very susceptible to US monetary policy And as such is the dollar likely to strengthen significantly further certainly based on the dollar index I think that it is the big question is what is the pound do against the euro? And I think that's the big unknown with respect to euro sterling. I think euro sterling will probably drive cable more than The dollar will unless we get a significant move one way or the other so I think in terms of the pound I think Decent support here and around about the 128 128 70 128 8th area I think anytime we drop below into the sort of the 120 below 130 It's probably a decent buying opportunity The big question that you have is where you put your stop loss because you don't have an awful lot of margin for error So as such that makes it very very difficult to pick a buying entry point Let alone a selling entry point But one thing has been fairly consistent over the course of the past six months anywhere over 131 132 It's been a it's been a decent selling opportunity For the pound against the dollar if we look here we look here. We look here and here and here If you're patient enough the pound generally comes back and recalibrates itself and reorientates itself Around the 130 level so it tends to orientate around 130 200 points either side that's your range for the pound against the dollar so let's just pull that out of the way get rid of get rid of all of this stuff and Being asked about copper as well. So we'll look at copper I'm going to be covering Aussie dollar in a minute because we've got an RBA rate meeting next week and How they come across could be particularly interesting now copper This is a decent this is a fairly interesting one here because I think if you're looking at the China story and you think the Chinese economy is Going to recover then you've got to be longer copper and at the moment We're finding support around about the 200 day moving average The one thing that does worry me though is these very strong downward impulses that we're seeing in the daily candles Which would suggest that maybe Copper is struggling to really push higher And certainly the manufacturing PMIs that we saw out of China earlier this week would appear to suggest that the rebound that the rebound that we saw in March May be a little bit of a red herring and I think when we look at next week's China trade numbers we should get a better idea of first and foremost whether or not exports have picked up and Whether or not as a result of exports picking up there is a significant pick up in the global economy But what is happening with respect to internal demand? When I looked at the import numbers for the China trade for the past three months they've been negative Imports have been negative for the last three months of China trade which suggests that internal domestic demand in China is weak So if they continue to be weak Then that could well weigh on the copper price and send it lower But we're above the 200 day moving average. We could see what we could see a rebound back to 285 There or thereabouts, but I'm cautious on copper because of the susceptibility to the Chinese economy and obviously it also it also feeds in to the Australian dollar because if copper markets are weak Chinese markets are weak, then it's likely to be a case that the Aussie dollar will be weak And let's look at the Aussie dollar because we've got a big meeting Coming up on the 7th of May it's the RBA rate decision and We've seen Aussie dollar come off quite aggressively in the last few days and it's big big support at 6980 I've drawn a horizontal line through it for you there What I would caution against is getting overly bearish on the Aussie dollar because Whilst there is speculation that the RBA may well cut rates Next week. I think the speculation is misplaced. Why do I think that? Well? there's a small matter of an Australian federal election in May and Those of you who are familiar with the political process and central banks Will know that central bankers don't really want to start adjusting monetary policy in the lead-up to an election because they can get accused by the opposition of trying to influence the vote of being party political and we know all about party political and Central bank politicization from the way Mark Carney has been treated with respect to his Interventions over the Brexit process. We even saw it with respect to the Federal Reserve and the lead-up to the 2016 presidential elections Central bankers will want to be seen and not heard when it comes into the lead-up to an election And I don't think the RBA is going to be any different unless Australian Economic data is falling off a cliff. The RBA will do nothing next week and if they do do something Then I think you'll find that the Australian head of the RBA will find himself looking for work the next time He his post comes up for appointment. So For me the big level on the Aussie dollar is 6980 and the The oscillator is starting to look as if it could we'll start to tick higher which might suggest that in the absence of Dovish RBA an awful lot of the negativity may already be priced in and we could see a move higher now Of course, I could be completely way off base and the RBA could bring a surprise The Chinese trade data could be absolutely awful and this is why you have to work with stop losses So any long position above 6980 Stop loss was needs to be a good good level away from 6980 around about 69 and a half If you're looking for a rebound to around about 71 or 72 But we can certainly see from these lower highs lower lows that the Australian dollar is in a downtrend We've also got the Royal Bank the Reserve Bank of New Zealand and their latest Monetary policy decision as well and the RBNZ usually follows the RBA But again recent economic data from New Zealand has been on the weak side But I don't think it warrants an overly dovish RBNZ and if we look at the way the Kiwi has been trading we can also see that it's found some decent support in and around 6580 so good support 6580 while we're above that then the Likelihood of a short squeeze remains fairly decent and we can see that from this chart here for me It's about trading the levels and balancing the probabilities of whether or not a market will find support at those levels Rally off them or go through them and that's always That's always the mindset that you need to have when it comes to trading these markets identifying where the key support and resistance Levels are and then trying to trade around them wait for the market to come to you Don't chase the market. I think that's probably the Best bit of advice I was ever given when I was a trainee currency trader all the way back in the 1990s when I was trading spot currencies for Commonwealth Bank of Australia trade what you see Don't trade what you think you see And as long as you manage your risk along those lines you should manage to avoid Big losses now. Let's have a look at Brent crude. We've seen a little bit of a sell-off in the past couple of days But again, we're in a decent uptrend have been in a decent uptrend for quite some time and again We're looking and again the technical outlook looks fairly positive We're in an uptrend We've got the 50 day and the 200 day moving averages crossing above each other so any downside is likely to be limited towards this series of lows through here and The two important long-term moving averages through here So as I say, don't always look for the big move because the big move could be quite some way away Sometimes it's a better idea to trade the range, you know and take your 20 or 30 points Either either side get in and out. Don't take big risks It's just not worth the aggravation simply because you need an awful lot of patience And one of the biggest mistakes I always used to make when I was a young trader was I used to sit in front of the screen And my impatience used to always get the best of me Which is why it's important to have that only as take profit level a stop-loss level But also take profit level as well as identifying a decent entry level Okay, so and what else have we got next week? Well, there is one thing that could be quite could be of interest to you We do have Ubers IPO. We will be covering that on the 10th of May And that'll be particularly interested to be interesting rather in light of how lift Barely flopped and lift will also be reporting its latest Q1 numbers on the 7th of May So we could get some sort of guidance with respect to how Ubers prices on the 10th When lifts results Q first quarter results come out on the 7th Uber is supposed to be pricing between 44 and 50 dollars a share I still think that's overpriced Certainly doesn't mean that it won't go up in the same way that lift did. I think the big question for me is you know, how much How quickly can these companies turn themselves around you had a case in point yesterday where we had an IPO Come out I think it was before was it before me Was it yesterday's IPO before me? Beyond me, but beyond me which went up 160 percent the first day of trading. It's being valued up One now three point eight billion dollars on 87 million dollars of revenue So I think that gives you an indication of how out of kilter Valuations are at the moment with respect to some of these IPOs. They don't make an awful lot of sense But then again You can go poor a lot, you know faster than making sense of anything I think that's one of the things that I have learned something doesn't have to make sense for you to lose money so A big IPO next week should be quite interesting Has anyone got any other questions on anything that I haven't as yet covered covered euro dollar of covered cable Covered dollar yen US 30 S&P Aussie dollar Kiwi dollar gold crude oil Does anyone else have any questions before I wind this webinar up more than happy to answer the questions if you have them Okay, well in the absence of Any further Q&A ladies and gentlemen. Thank you very much for your time Oh got euro dollar reaction. Has there been a reaction? Let's have a look at the euro dollar reaction Okay, so we've gone down and we've gone up and now we're going back down again Basically we we're going to be very unlikely in my opinion to take out the lows of This week so I think at the moment it still play the range ahead of the weekend I think we could Well trade pretty much 111 80 111 30 I can't see it's moving too much one way or the other What do I think of canopy or cannabis stock? Okay, that's a new one. Let's have a look shall we? Unless you've got deep pockets I would be reluctant to get to it. It's very very volatile stock that canopy growth See if we can find it Here we go We do you want me to look at the Canadian one or the US one? Canada, okay looking at Canada canopy Goodness gracious me That's Right well clearly in an uptrend clearly broken out to the top side if we draw in a trend line through here It would actually help if I could actually the actual levels Then we can actually see it bear with me just gonna snap them to the highs and the lows So that we've got an accurate measurement of the line and Then add a moving average in a slow stochastic Looks a little bit toppy near 70 could well retest towards these series of lows from last Friday But overall I think with canopy you've just got to be very very careful not to get whipped one way or the other But it does appear to me to be finding it There seems to be a decent area of resistance between 70 and 80 and we can see that born out if we remove the noise from the chart If we remove the noise when I say the noise I mean the highs and the lows and just look at the line chart We can see straight away from there. It doesn't really like it much above 70. So I Think it's going to take something Significant to really push it above 70 if it does close above 70 for any any length of time Then we could well see further gains, but on a technical basis Just on a technical basis alone. It looks toppy. Hopefully that helps And that's why I like using line charts because in terms of line charts and the closing price it can give you an indication of Where the the selling pressures and the buying pressures come in Give you a better indication without the actual noise on the chart And the way the quickest way to do that is to click on where it says The charting options there and then we can go back and so select the midpoint on the candle The candle gives you slightly more detail, but it can also be slightly noisier Sometimes by stripping out just and putting in the line chart It can give you a much direction. It can give you a better directional steer Any comment on dollar Swiss? Again, that's really a more of a strong dollar story. So it looks a little bit toppy but overall I would expect that to Remain range bound with decent support 101 and would expect that to slowly edge higher back towards the highs around about 102 50 103 50 The fact that we have a very long shadow on this candle here tells me the markets fairly comfortable buying it anywhere near 101 So I wouldn't be expecting to see any significant moves to the downside in dollar Swiss. Well, we're above 101 Hopefully that helps lean hogs Not really. No in answer to your question. I don't really have a view on lean hogs Anything else? Ladies and gentlemen, I'm not even sure we do lean hogs. Let me just have a quick look It's having a good think. Oh, it is. There we go. Let's have a look Again toppy But any more than that, I really wouldn't want to commit myself one way or the other, but it does look a little bit Toppy at current levels And that's just that that's about as much as unprepared to say about lean hogs Okay. All right. Well, that's it for this month Back same time same place Next month for another payrolls report and another preview of the weekend until then. Thanks very much for listening and Have a good long weekend if you're having one