 Very good morning Friday 6th of December. I hope you're doing well As you can see to the side of me going to talk a little bit about the OPEC meeting still ongoing Comments have been coming as you would expect thick and fast this morning So I'll update you on everything you need to know on that But overall the price of oil relatively unmoved this morning because much of the detail has already come out as we were kind of Explaining before these types of meetings very rarely need or require an end press conference to know the end definitive outcome And the same things happened again otherwise Pretty quiet open overall fairly typical ahead of the release of US non-farm payrolls if you are watching this and you're not already subscribed to our YouTube channel Please click subscribe and hit the bell icon And then you'll get notified immediately when we go live from 1 p.m. London 8, New York And we're going to be covering non-farm payrolls live as it happens. The other subjects. I'm going to talk to you about On the coattails of the OPEC meeting We've got the Aramco pricing of their IPO a couple of stats that I think will probably blow your mind about just how How sizeable Aramco is then we're going to quick Look at the trade war what's going on few comments out of China this morning There's been some further German data, which again has followed that general trend of being weaker than expected And then of course we'll we'll have a look in a preview for non-farm payrolls. So Just a quick look at the charts across asset class. So again, just to remind you Euro top left Cable in the top in the middle gold futures on the top right and got the DAX NASDAQ S&P in the middle WTI crude at the bottom and the US tenure in the bottom right hand corner. So as you can see fairly quiet a little bit of Divergence slightly US stock index futures slightly positive Having got a little bit of a kick first thing this morning Just testing up it around the high end of the some of the range from yesterday's trade I'll leave that to Sam to go into in more detail But the DAX touch bit of underperformance just breaking really that pivot and overnight Asia-Pacific range Things just adding to a little bit of momentum Given how the DAX tends to trade at this time in the morning It's overall pretty quiet before I get into the news one thing I just wanted to bring into shot and have a just a brief chat about is is these charts so as You may may not be aware Sam, and I put out a weekly strategy report on the Monday of each week and Normally Sam, you know, he did he marks up the levels. I'll give the fundamental view but this is one that we marked up from two weeks ago and This is a good practice that that typically I'm in on a on a Sunday In preparation for the week ahead So that's when I compile that calendar, but not just of economic data of any geopolitical events Any political domestic things happening like the recess of polls and things like that And then I look at the charts on a much bigger time frame To give me an idea in a sense of where do I think this market could go to over the kind of medium term What would be my idea of realistic targets and I was just having a look and granted This was two weeks ago when the any of these levels were marked up but just how well they've been respected when you're looking at some of these bigger broader moves and Kind of where the market then you can say could get to under these two different types of circumstances So here let me just mark it up with an ellipse So I've got the Area here, which is where the current price is but you can see actually when this was Created if you like the price was obviously way down here in the euro down around a lower one tens We've come up to quite a clear and distinct level that we had already marked up from I mean This is going back to the October price action as resistance support here in late October Resistance again mid-month and acting as a pretty decent target for the latest push that we've had Cable as well. I mean we again it was that that range played out Really well. I mean if we look to Where we are at the moment 6th, so if you go back to where we were we were right in the middle of that range That we had identified was quite key for price within the pair the break of that range then subsequently acting as a really strong Point so push above We got to that 131 handle and you can see the break pull back to that level and then another push up to that 13th of May high which would there be the next relevant level to keep an eye on and the markets respected that both yesterday and this morning And then the other one would be crude respecting Continuing that trend line as you can see from October The three touches we've had got a little bit more hairy as we've gone into the beginning of December But again just you know a little bit of faith that the levels are gonna hold with the bias as we'd be discussing in the briefings about this idea that the OPEC meeting we knew was looming the Ramco IPO pricing was looming could the Saudis allow the price of oil to move lower and technically a break Obviously helps exacerbate downside pressure. And so that in combination now with what's looking like a half a million Additional deepening of the existing OPEC agreement prices have rallied and where if they rally to well right back up to that Previous level that we'd be marking up which encapsulates then some of these previous price action as you can see already marked so again Although we operate in the intraday market. I think it's it's always a Prudent thing to just take a bit of a step back at the weekend re-evaluate your kind of fundamental view And and take a look at some of the bigger Outlying technical levels here. So as of this weekend the thing I'll be doing now is okay So if this upside level and WTI which is holding at 58 69, which is near term quite critical for price Restricting some of the further upside that breaks will then where next and obviously you've got this descending trend line And then you've got these other levels that start to come in probably around here Which brings in those highs that we had back on kind of mid to late September And then you've got those highs that we had as well encapsulating as you can see if I mark it up The high points from going all the way back in the beginning of the year really March time Some support that we saw in around May the summer resistance that was pretty strong in July So if we get a push up with that trend line very key area coinciding as well with the psychological 61 handle as good upside levels so Coming off of that. Let's bring it back Straight into the news and I'm gonna try to go through this fairly prompt Given the fact we want to talk a little bit about payroll. So OPEC first near this deal on cutting output target after fraught talks obviously a lot of different countries and a lot of different agendas and objectives Depending on how largely they're influence Toward balancing their books as a government on the fiscal side Obviously countries like Libya Nigeria not uncommon for them to be calling for much more aggressive cuts And so no surprise to hear the kind of comments that we've had also out of Iraq over the last few days But what has happened? Well the preliminary meetings and ministers yesterday involving Saudi and Russia recommended it produces deep and existing Production cuts. So if you look at OPEC first, the production cut stands at 1.2 million bowels per day They want to extend that by deepening of an additional 500,000 to give a lift to a overall sluggish crude market now given the overall Expectation of a further slow down and therefore consequently an oversupply and market going into 2020 That's the reasoning they're given of obviously the Saudis not being explicit saying they want to Manipulate the price to make their IPO more more appealing or successful the Russian energy minister obviously very key Component of this deal being successful said yesterday that a committee of ministers had agreed to a cut production until March of 2020 When the current deal expires by 1.7 million bowels per day. So again bolting on that extra half a million the biggest thing here and The takeaway and the reason why oil prices if you look at the WCI chart hasn't really moved Most people are of the belief that the additional half a million bowels per day cut Isn't really going to be enough to really have any type of influence on the underlying price that we're trading right at this moment and the reason for that is because of the extreme lack of compliance that's happening amongst a variety of different nations and so really 500,000 doesn't even Start to be factored in it just brings everyone back up to levels of which they should have been in the first place So a lot of this meeting has been and this cut I think is more symbolic and the pressure really is coming from the likes of the soundies of course to really target the likes of Iraq and others to be more compliant. I think that's the takeaway message from really these meetings So confirmation later on today if it does get ratified completely officially this 500,000 I wouldn't really be expecting fireworks in the price. I think we had that volatility yesterday So I'd be looking for other cues coming from potentially movement in the dollar post payrolls or updates on the trade war Of course that are going to have a meaningful knock-on effect for crude oil as of this morning later source comments have said the OPEC plus Additional 500k barrels per day output cuts could be split roughly two-thirds OPEC one-third non-OPEC Just so you're aware of the details Here is the agenda for today. So all of these times are Vienna So one hour ahead of London the opening session then happening at 10 a.m The closed session happening from midday so looking out for more comments as we go through the morning The other thing of course is Aramco. They raised 25.6 billion in the world's largest IPO I think it values the company at around 1.7 trillion which although is Huge is a far cry from some of the the banks that were tendering to run the IPO Which had valuations north of two and a half trillion only a short while ago But nonetheless, this has been oversubscribed by 4.6 times pretty strategic play by the Saudis to really Target the monarchs within the areas of the Middle East and keeping it quite domestic based in terms of who's being able to buy These because obviously their appetite is going to be far different from potentially the Western world So there's been a lot of I'd say protection around this particular IPO to ensure its success And I think this OPEC deal also is part of that that strategy couple of numbers for you the company Aramco had 260.2 billion barrels of oil equivalent in 2017 that's larger than the combined reserves of ExxonMobil, Chevron, Royal Dutch Shell, BP and Total combined So all of those companies which are the largest oil companies on the planet Saudi Aramco has the same amount of reserves as those top five combined The reserves that Aramco has have a reported estimated life of 54 years and they pump the equivalent of 10% of the entire Market supply So just a couple of a couple of facts for you moving on As far as the trade war is concerned Not a great deal of new movement. This is one of the Bloomberg articles from this morning the Chinese Finance Ministry saying they to waive trade war tariffs for some US soy and pork purchases We've had another comment out of Chinese TV this morning Saying China has taken countermeasures against US limit on diplomats. That's pretty much a reiteration what we had earlier this morning So not too much really for me to update you on but something of course We all need to remain vigilant for particularly as we go in toward the weekend Elsewhere we've had some German data this morning German industry gets reminder of fragility as output drops So let me just remind you of the actual number that came out in German industrial output So here it is I flick over came in at minus 1.7 percent Verses an expected plus zero point one. So much worse than expected for German industrial output Mimicking the factory order number that we had yesterday But if you look at really the euro absolutely Unfazed as to as the bund and I would say the move in the DAX is more technical So again people brushing over the weakness in German data Because if again if you look at this chart it comes really is not a big surprise at all 2019 the German economy has been Suffering and so that narrative has continued. It doesn't come as a great shock in that respect Just moving on to Non-farm payrolls and I'm gonna give you a bit of Heads up on some key points that you need to be aware of Starting firstly with us ADP employment change the figure that came out earlier this week Where if you remember if I change my chart to here This is the change in private industry employment and you can see just how the change in manufacturing mining Construction jobs has been particularly weak in the last couple of months Hence the reason why the Fed have cut rates by three times for this year Companies added the fewest workers to payrolls in six months in the latest ADP reading underscoring the trend of moderating hiring amid pullbacks in corporate investment all pointing then to a Growth slowdown in North America going into next year now with that in mind This is something that a lot of people in markets monitor and for those if you're a retail trader You've probably never heard of this, but it's something called the Atlanta Fed GDP now model Now this without getting too complicated. It uses the same So similar methodology is adopted by the BLS Which is the labor official government department that comprises then or compiles the non-farm payrolls Report but lots of other important US economic indicators the thing that makes the Atlanta Fed GDP now model so Follows and the reason behind it is because every time pieces of major US economic data comes out rather than waiting It automatically updates the model and it gives us then a generated expectation for the next quarter's growth Now we at the moment in the US Have experienced I say we The US economy has experienced growth annualized at 2.1 percent in the third quarter of 2019 remember that was surprisingly strong at the time. We've stabilized around this 2% reading But remember markets are forward-looking. Okay, that's the current situation But where are we heading because this is Q3? Well the GDP now model has the expectation at 1.5 percent So again, we've had some pretty weak data points. We've had ADP the various different ISM readings manufacturing non manufacturing Showing some of the the weakness is still very much apparent in the US economy And so therefore expectations are the growth is going to materially slow going into Q4's numbers Which will be getting in there in the near future Having a look then at payrolls There are a number of things you do need to be aware of and one is today's non-farm payroll number is expected the headline Changing non-farms at a hundred and eighty-three thousand if that does materialize that's one of the highest readings We've had in the entire year One of the things that's going to help prop up the number of course is that last time There was the impact of General Motors being one of the largest automotive strikes that we've seen so approximately 40,000 Workers should have returned and therefore added to the headline number this time round So if we did get a spectacular upside number, you know, just do do bear that in mind a couple of other things though to be aware of and here is well, here's the chart for example of The expectation against the previous just to give you a bit of context as to where we are at the moment So this is the the change in non-farm payrolls in the purple This lighter color is the estimated value which does put us at some of the better levels that we've had That would be the third best reading that we've had barring April And what would have been August when we were north of 200k now? I think I did read the estimate I don't have them to hand, but of course I'll cover them in the preview I think the lowest end of the range for the headline is 70k that I read the upside was around 240 So there certainly is a bit of divergence about how much Is a tight labor force the GM return of workers going to add to the top level creation of jobs But if I scroll down Goldman Sachs Do point out a couple of other factors. I think if you're more bearish they say that Temporary factors including the late Thanksgiving holiday and snowstorms in the Midwest Could likely weigh on the jobs number. So again some other factors to possibly consider This is the the graphic of course, which is particularly useful and I will share this in the chat room While Sam is on the mic, but this is when we look at all of the pre non-farms employment indicators that have come up and act as our best indication of how this employment report might fare and Just giving you a top-level Assessment challenge job cuts one of the lower kind of awaited factors I'd say but nonetheless was positive corporate layers were actually down in October From just over 50k in September initial jobless claims positive the number of first-time Unemployment claimants has diminished in the last couple of weeks Continuing claims though has been negative receiving people receiving unemployment benefits has actually increased in the last week ISM non-manufacturing PMI Positive despite the disappointing generic reading the subcomponent remember of which ISM reports consist of many the employment one Actually improved to fifty five point five fifty three point seven, but was negative when it comes to the manufacturing sector Consumer confidence in Michigan was positive, but the conference board reading was negative ADP obviously was a dismal 67,000 way below expectations of 140 that is a number that people do assign typically quite a large degree of rate Waiting to and then the Jolt's job openings fell below expectations in September. So on the balance a little bit mixed and So as per usual really with non-farms and as Sam will probably explain I'd be more inclined to be marking up looking at all outcomes scenario building accordingly Not trying to go into it with too much of a preconceived idea about how you think and then Falling into the trap of forcing your view on the market. I think payoffs is much better given how How bad economists? Expectations can be and it can be such a difficult Datasets to really put your finger on better than to just digest it review and take action accordingly dependent on the composition of the numbers Okay, that's it. I will see you guys live later for now. Here's Sam North Hi guys, happy Friday last non-farm payrolls of the decade. Can you believe that? Hope you're always excited as I am we'll start off with with the SMP Actually the pounds as we're just having a bit of a move lower here Just breaking what has been some solid support over the last a few hours or so So just keeping a watch on that pivot just going here I guess if we have a little retracement towards that pivots keep an eye if you were liking the look of a short on Well, what was the previous low a few ticks above that as well They you can see that would offer some sort of resistance before that has broken through But overall the pound is strong and I don't you know, is anything going to stop that right now that can come out today Maybe some Incredible dollar strength perhaps but other than that It would be a bit of a surprise to see it and I might move lower However a bit profit taken to the back end of the week wouldn't be all too surprised And so let's have a look at some of those levels lower down Which might attract some buyers to come back in and having a look here s1 Low of yesterday afternoon high that we had back on the fourth looks like a pretty good level Has to be said although, you know, just having a look here at some of those previous lows And you can see also the move lower this morning coincided with a break of that trend How long is the move lower going to be? Well, I think s1 is a good enough place for some support to be found So also with that retest if you are looking for the shortest make sure You would have that stop above that trend line Also below the the s1 in that area We just talked about coming in on the futures one 31 25 be keeping a watch on other previous lows Here you've got one of about ten ticks below that one 30 109 and then quite a lot of support from previous levels that we had broken through They could obviously act as a decent enough point Of support as well. The the highest from today is the high from overnight and yesterday nice double top there 31 70 so keep a watch on that should we get any further move euro pound yesterday broke its Or confirmed a break I should say below the March 2019 level and was trading at levels not seen since 2017 having a bit of a recovery here. I actually do quite like them. We put that back on the day I do quite like the look of This point as an area to potentially get short especially the pounds gonna recover however this market Incredibly incredibly range bound over the last two and a bit years you can see when we hit the the level upper what was that around August was the 2017 high as well. We came all the way back down Is this now a point actually where the euro is gonna start to strengthen against the pound and we push higher Well, I still think there's a bit more pound strength in it. So overall target for me here Maybe not gonna get there in a straight line, but we'll be looking at those 2016 lows from August December and then April 2017 So fair bit of work to do to before we get there and of course depends on not just the pound But the euro as well bit of a line in the sand. You can see here using that March the 19th level of Support Previous support, I should say euro We know how important this whole area is up where we're trading previous highs galore up here You can see just how we've struggled to get above it, but we are you can see certainly over the last We put it on a 60 minute. We are getting higher lows here We are perhaps getting squeezed for a move to happen as with non farms as with that data later on It could spy kind of a direction and true course will then take it It's it's place. We are in a perhaps a bit of a key range now Where decision has to be made for the year and it'd be interesting certainly looking into the back end of the week what's going to happen and Yeah, those lows down the bottom 110 75 Basically, what's that low the fourth and the third if that is to go and that would be a big move down towards s2 today If we were to close below there, then well, it could get quite ugly But however, if we are to close above well, you're gonna get a bit of respite and then you're okay Really push on and and suddenly you're looking up towards 112 and the futures which would be those highs from the 31st or not as and mentioned just talking about non farm payroll I'm not expecting fireworks before that very rarely is there a good trading opportunity in that morning before Nothing wrong with planning ahead marking up these kind of levels having an early lunch and and coming back ready for The release if that's something that you wanted to to trade or not So I'm not expecting massive move in the euro, but those would be the key levels that I'd be focusing on having to look over At oil pretty much finished flat for the day yesterday But just the significance and and brought up that oil chart of where we're trading now is is massive It's almost like that euro with that resistance up here. You can see we've struggled every time to get above here We just can't close the day above really and this is obviously those levels going back to the 19th September Can we get the week above there would be big and then suddenly you are looking towards 61 62 dollars As the next sort of key level perhaps before I mean 60 you would expect some resistance as well So for oil having a look at where we finish will be will be key key support as well using yesterday's lows We've battered that area of of supports 5813 coming in There as well. I've quite a lot of Support I would expect here on the futures around 5775 And of course resistance even though it was choppy using 5865 as An area definitely to mark up have marked up as it was highs the days going back as long as September as well So definitely could be an interesting close into the week for euro for the pound And for oil as well. And of course the S&P and I just saw a tweet talking about 3129 Area and absolutely they were saying it was key and I completely agree got the high from the 18 You've got some really nice support. We broke through like it was nothing on On the Monday, so what's gonna happen? We get that first real retest of that gonna be key a break of that to the Upside then I don't think much stops it towards 31 43 And if you get to that point, well suddenly it's all-time high season again if they we do find resistance at 31 29 Just put this on to a 15 minute. You've also got the R1 Around there. There's nothing to say. We can't then drift back lower And I would at the same time going into the close of the week start to bring in these trend lines You can just see how good this one was yesterday. You also had the pivot You also had what would have been yesterday's yesterday's low Around that point here. You've got the third test definitely one now that market is looking at Let's have that on because if we close the week below there things could get ugly It's just getting squeezed in so really interesting close of the week for all these markets We've gone through and also gold as well and just having a look, you know Short a time frame just of the last couple of days look how important this area of support is for gold 76.9 previous high there then the low the fourth almost tested it yesterday Tested it again today. Is it a false break or not? We're about to find out a really important point because if that is to go I think 47 14 71 and a half comes in 1465.6 and then of course those big big lows down at 1460 Bad data release we push higher and therefore could be could be pretty important for any gold balls More intraday looking here sort of on the five minute. We had a decent break down This is probably around six. Yeah six o'clock 1480 Around there one two three get the push what's going to happen on that retest of that level one to keep a watch on Is where you can see those highs squeezing in and not too surprising that we've got the break towards what would have been The lower yesterday around 1478.2. Have a quick look over at the DAX which hasn't started its best But relatively quiet as expected on a Friday for the DAX is not usually a massive mover We put it in the context of the week big move to begin December to begin the month and we're kind of Been choppy been choppy around that we did yes They retest the bottom part of that overall bigger range and you can see it was met with some strong selling So still keep a watch on that do we finish the week above or below that will be it'll be key as well We are perhaps now that we put this back onto a 60 minute coming to test This potential trend line There you go So from the low that we had on the fourth to yesterday to today That's in the mix now as well as also a pretty key area failed to close below there yesterday Was the higher the early morning of the fourth and the evening of the third So the DAX pretty important point now to keep a watch on as usual any questions, please Do let us know where we will be live from one o'clock UK time for non-famperia. So I look forward to Speaking to you all then but if not any questions, please do let me know and I hope you'll have a good morning ahead