 Hello and welcome to this week's, this week's, or this month's, non-farm payrolls webinar with me, Michael Huston and my colleague in Canada, Colin Zizinski. Hopefully we won't have any of the technical problems that we had last month. I apologise for that. I wasn't here so I don't really know what the problems were. But before we get started, I have to bring up the various risk warnings for compliance purposes. And once we've got past then Colin and I can then move on and really start to get started with respect to what's expected with respect to these numbers, what's particularly important about these numbers, or what parts of the internals of these numbers that we are particularly interested in. Because I think it's the internals more than anything else of our interest rather than the headline numbers. So we're pretty much done there. I can now get rid of that. And we can now start to move on towards what's expected for the actual numbers themselves. Now it's a double report today. It's not only US non-farm payrolls, but it's also the Canadian jobs report. And we've just come off the back of a Bank of Canada rate hike, and obviously a June rate hike by the US Federal Reserve. And I think the big question I think that I'm wrestling with, well actually I'm not wrestling with that much, is whether or not the Fed will do another rate rise this year. It's coming to the opinion that I think they're pretty much done in terms of rate hikes. And I think the Bank of Canada is debatable whether they'll get another one in, but I'll let Colin talk to you about that. But what we are seeing, Colin, and I think you've noticed this as well, is that while US markets continue to make progressively new highs on an almost daily basis, particularly the Dow Jones, the S&P and the NASDAQ, the Indian markets appear to have topped out. Yes, and in fact, even in the US, it's really just the Dow now. The S&P still stuck between below 2482, and the NASDAQ, NASDAQ 100 hit 6,000 in the last two days. It's just been hanging around 5,900, even with Apple earnings, even with Tesla earnings, even with some good numbers out of the big tech stocks. NASDAQ just hasn't been able to get any farther ahead, and what this is telling me is the breadth in the market is terrible right now. We've got this ongoing rally, it's nearing exhaustion, and the number of stocks keeps shrinking. We'd be talking a month ago about the 5 or 6 NASDAQ stocks that were driving the market. More recently, it's been down to 1. It's been Boeing basically driving the Dow higher, and that's about it. It's really getting tired here in the markets. We can see the NASDAQ here, and the NASDAQ really topped out towards the end of July. This is a four-hour chart we're looking at at the moment, so there's a big base around about 5845, that sort of area. If we take that out to the daily, we can see that once again, look at the shadows on those candles. We can see there's still plenty of buying interest, judging by the long shadows on these daily candle charts. When we look at the weekly, I think we're still really predominantly showing that the market is very undecided of these sorts of areas, or these sorts of levels, and I think it's going to be very difficult to establish where we go to next, but Colin is right. The Dow has been the one market that continues to push higher, but ultimately, if we look at the S&P, the S&P, again, peaked at the end of July and really has pretty much gone sideways. That's not to say that it can't continue to go higher, but ultimately, what these markets are telling us is that there's an awful lot of what I would call caution out there. Okay, this is a five-minute chart, it's probably not very instructive. Yeah, and I ask myself if some of this is starting to become distribution, but it's too early to make a definitive statement on that. Yeah, you've also got the weaker dollar, and I think the weaker dollar is also playing into, I think, the resilience of US markets, because ultimately, if you've got a 10% decline in the dollar, and that's what we've had since the beginning of the year, that is going to translate quite well into foreign earnings in terms of the amount of dollars that you can basically bring back into the country. So on a purely exchange rate basis, that does act as a significant tailwind, whereas on the opposite side of that, if we look at the dollar index here, and this is over the last two years, we are now starting to approach a very, very key support level, a 200-week moving average. And we're also near the lowest level that we've been in over the last two years in terms of the weekly close. So we're at a very, very key point in time for the US dollar. Do I think we can go lower? Yes, I do. I really do think that we can go lower. Can we go lower today? That's the big question, and I'm not entirely convinced about that. That being said, we have broken above the 200-week moving average on euro-dollar. So there's an awful lot of conflicting signals out there with respect to the technical levels. And I think that's great. Yes, and one more on that, Michael. The dollar index is flashing oversold on the RSI, but it's just kind of bouncing around under 30. It's not deeply, deeply oversold, but at the same time it's not that encouraging either. It's not, but also... Either way. Yeah, absolutely. But I think there's also other things we need to bear in mind when we look at the dollar index. Let's look at all the other dollar major currencies. So let's start with Aussie-dollar, because I think that's actually quite... I thought that could also be quite instructive in terms of where it is with respect to its own 200-week moving average. So we've broken above the 200-week moving average on euro-dollar. And that's very important because euro-dollar makes up around about 58% of the dollar index. So it's a significant driver of the dollar index. But it certainly doesn't mean that we're potentially going to go... Oh, we haven't had confirmation on the dollar index. The euro-dollar is going to go higher, so we could potentially drift back. This is the Aussie-dollar on a weekly chart, 200-week moving average. Let's look at the Canada chart, dollar CAD, because I think that could be important in light of the Canadian Jobs Report. I was looking at that just before we came on air. And this is the daily chart. Let me just bring it up into a weekly chart. Now, there's potential here for a potential bullish weekly reversal on the dollar CAD. We can see that, but look also where the 200-day moving average is as well. So we've had one, two, three, four, five successive weekly declines on the dollar CAD. We've had four successive weekly declines on the dollar index. So this, I think, speaks to first and foremost confidence in the Trump administration, but also, I think, in a fairly weak inflation outlook in terms of what the Fed is going to do going forward. So if I'm looking at dollar CAD here, do I want to be long or do I want to be short dollars? And ultimately, I think even if we get a weak number, I'm going to take some doing to get back below this very key support level on the 200-week moving average, but also this trend line support that I've drawn in from the lows that we saw in 2012. So dollar CAD is approaching a very, very key level here. Is there anything you want to add to that, Colin? No, Jen, just to note that on the, what do I do with the Canada Jobs right now? So we had the rate hike in July. There's a reason why they raised rates, which is basically the Canadian economy is doing extremely well. The Canadian economy has continued to do well. We'll see if there was any kind of a hiccup in hiring around the rate hike, although, finally, they did a pretty good job in the month proceeding to signal to the market and to businesses and everybody else that they were going to raise rates, why they were going to raise rates. And basically for Canada, what we're looking at is in 2010, they raised rates twice from half a percent to 1%. In 2015, they cut them back twice, and now it's looking like they'll probably go back up twice. So we're basically looking and they've done one. They'll probably do another one later in the year. But it's overall, it's a function of the fact that the Canadian economy is doing really well. So the streets are taking 10,000, actually 12,000 increase this month down from 45,000 increase in jobs last month. We had two huge months in a row in May and June, so I wouldn't be surprised to see a bit of a retrenchment in July. However, I also think the streets have been overly pessimistic about Canada all year. So I'm looking at 25,000, which is pretty much the middle between those two numbers. That's pretty bullish, mate. In terms of US payrolls, you're going 200. The consensus, I believe, is 183. We can see that down here. I'm going the other way. I'm going to go 150. And the reason I'm going to go 150 on US payrolls is because of the weak readings in the employment components of the ISM manufacturing that we saw earlier this week, but also the services as well. The employment components were a little bit softer than the previous month. Now, the previous month we showed a fairly decent 222. We may get a downward revision to that. I think it could be all about the revision. But also I think there's been a breakdown in correlations between the ADP report and the non-farms in the past two or three months. If you can see from this spreadsheet here, the yellow column is the ADP numbers. And there's never been more than, say, for example, a 50,000 deviation between the various numbers. So we've got 268 there. Some of these are revised, 248. And then in March, we saw a big miss on non-farms. We had ADP at 255, non-farms at 50. And then we had 148. We had a weak pay ADP report and a strong non-farms. And then we had strong ADP, weak non-farms. Now, last month, June, there wasn't that much of a deviation between the two. So now we're expecting 183 in the non-farm number, whereas we got 178 in the ADP. Personally, I think that's too close. There's usually a bigger variance between the two. But as we well know, sometimes these correlations break down and the correlation between the ADP and the non-farms broke down in March quite significantly. So I don't think we can really draw too much in the way of conclusions as to what to expect today. Yeah, and there's a lot of mixed signals out there. So you focused more on the ISM, and I kind of focused more on the upward revision to ADP and also the fact that Jobless Claims 7 remained low, still hanging around below 250. So I think this is a report that really could go either way. I could have just as easily, as Michael did, made the case for 150 as I did for 200. And something else that's important that Michael and I have been looking at and discussing and Michael alluded to earlier is what does this mean for the Fed? And the answer is this time around, we've had a heck of a lot in terms of the headline number. And the reason for this is that it's really unlikely, despite all the chatter we've heard out there, that the Fed's going to actually do anything in September. And the reason for that is the U.S. hits their fiscal year-end on September the 30th. Budget negotiations are underway, but certainly we've seen that there's a lot of contention in Congress. Flally, they can't agree on anything, and the parties can't even really, on the Republican side, they can't even agree among themselves on what they want to do. There's infrastructure spending. There's all kinds of things to argue about. The Russian investigation has ramped up into a grand jury, and there's all kinds of chatter and noise out there. But also, though, the U.S. is heading towards hitting its death ceiling again, and there's a possibility that in October you could get a government shutdown. The last time we were staring at a government shutdown in October was in 2013. And at that time, the Fed delayed tapering its Kiwi program from September to December and waited for the whole thing to blow over. And we would expect that we'll probably see that again with the Fed's, the people out there that think that the Fed's going to start running down their balance sheet in September. I think they're dreaming. I think even October is pushing it on the basis that their problems could still be ongoing, or they might be just trying to get reorganized coming out of it. So I think more likely what you're going to see is the Fed start running down its balance sheet in September. And because of that, Michael and I are in agreement, the Fed probably won't raise rates again this year. Regardless of what the headline number is. Which is quite unusual for me, and you two agree on anything, isn't it? So the key number I'm looking for this week is the wages number. So that is expected to decline from 2.5% in June to 2.4%. And if it does do that, then ultimately I think that will be slightly dollar negative. It's certainly, I don't think, going to prompt an awful lot of dollar buying. But I would say one thing above all, I think the risk is for a bit of a dollar rebound today, simply because of the fact that we are at the lows of the week. And it's unlikely that people want to be overly aggressively short dollars into the payrolls numbers. Also on this cable chart, a key reversal day on the cable. So that suggests to me that we could get some dollar strength, particularly against the pound. And if we do get it against the pound, then we're probably likely to see it also against the euro and against the yen. Because if we look at the yen, there's a decent proxy for dollar strength and a decent payrolls number. We're at a very big support level on dollar yen, around about 109.80, 109.70. There's a conglomeration of support levels all the way through here between 109.40 and 109.50. It is very oversold. So the likelihood is that we could, well, get a semi-decent number. And I say semi-decent, you know, this is all relative. You could see a dollar rebound and dollar yen head back towards around about 110.40, 110.50. It certainly doesn't expect to see it much above 110.80. And as such, I think the risky side is towards the downside. We may get a moderate sell-off in the wake of the numbers, but I would be surprised, I'd be hugely surprised, if we break aggressively lower over the course of the next few hours, simply because of how far we've come already. We've come a long way. I think there's an awful lot of what I would call bad news already priced into this week's dollar move. And as such, I would be surprised if we move much above the highs of the day in the dollar. Can I add one more quick thing? In addition to all the payrolls data, we're also getting trade numbers out this morning. And I am keeping an eye on those because this is the last trade reports in the U.S. and Canada before NAFTA renegotiation started about the 15th of August. I'm going to be keeping an eye on that in the background as well. Oh, cool. Yeah, they are there. 10 seconds. I'm going 150, you're going 200. 200. 209. And in upward revision, I thought we'd get it downward. That's interesting. Okay, the street was actually right this time. 11K. Wages stay at 2.5. So I'd say that's moderately dollar bullish. Oh, one more. Manufacturing payroll, 16,000. Street was expecting 5,000. That should make Trump happy. And upward revision to manufacturing last month, up to 12K from 1K. So we'll probably see Trump tweeting about that in the next hour sometime. Absolutely. So all in all, a fairly positive job support. The unemployment rate drops to 4.3%. The participation rates gone up to 62.9% from 62.8%. So again, that's fairly positive. More people are coming back to the workforce and yet the unemployment rate is continuing to fall. Jobs growth, sorry, wage growth, 2.5, not 0.3 month-on-month. So again, that's slightly positive. There is the stirrings of a little bit of wage inflation there. And all a fairly decent report. And I think it's rallying on the back of those wage numbers probably. And also the fact that you've got a decent upward revision to the number in June. So we'd expect to see a little bit of... Trade numbers, $43.6 billion deficit for the US. That's a little better than the $44.5 expected. Canada trade deficit, $3.6 billion. That's substantially worse than what the street was expecting. So, yeah, dollar positive. And you can see how supermark it was by that dolly end chart. Nice little move higher there. That's really popped up. So let's have a look at where the resistance level is on that. And I would suggest that it's on the high of Wednesday around about 111. I think if we can break through that, we'll probably head back towards the mid-111s on that. Looking at euro-dollar a little bit. I think there's certainly potential on euro-dollar now to slip back if we can drill that in to around about 116, what am I talking about? Around about 117.80 in the short-term and potentially even back to 116.20 which was the initial breakout point. A little bit of profit-taking I would expect to see on the dollar here. A little bit of sterling weakness so I certainly think we can see the pound drift back to the trend line support that I drew on earlier in the session. Particularly given the fact that we've seen this key reversal day here and that would suggest that we're probably going to come back to this line here and potentially even as low as 130-40 which was this series of highs through here. We are starting to also turn over on the slow stochastic which would suggest to me that I think we've got some scope for a little bit of dollar strength now on the back of those numbers as we head into the weekend. Let's look at dollar CAD because I think when we're talking about being long of dollars against the CAD I think that was definitely the right move and we can certainly see that now based on the daily chart that we've got here. It's up to a half a cent on the numbers. I think looking at that looking at the resistance level on this particular chart I would suggest on a short-term basis if we can get back above 126.20 then that might trigger a little bit of buying but certainly I think if we then come all the way out I think there's certainly potential now looking at this weekly chart for a weekly reversal and that would suggest to me that there's potential scope for dollar CAD to head back to 128 in the longer term on the basis of that pattern there a bullish engulfing week or it's not a key reversal because it hasn't made a new low but it's certainly the body of this particular candle those appear to suggest that we're probably going to go for a little bit of a rebound so I would suggest that it's probably buying the dips on dollar CAD is the way to go now over the course of the next few weeks in terms of where we go to next given where we are with respect to long-term support on this particular chart let's have a look at if you've got any questions about any other indices or any other indices or any other markets please feel free to chip in the FTSE 100 looks as if it's going to be head higher that's not a surprise, weaker pound stronger FTSE it's the seesaw trade as I call it so if the pound goes up FTSE goes down if the pound goes down the FTSE goes up it's generally tended to work fairly well and would account for the recent resilience of the FTSE particularly particularly with respect to the sterling weakness against the euro so it looks to me as if we're probably going to head back towards around about 75-30 on the FTSE 100 with respect to the DAX the weaker euro is probably going to play into a slightly more positive outlook on the German DAX over the course of the next few hours and we can see that born out from this particular move here once again it's a currency story with respect to European markets set off in the euro is going to translate into a fairly decent rebound in the DAX but if the euro starts to go back towards 120 over the course of the next few weeks expect the upside on the DAX to be fairly limited in fact let's draw a trend line in on this particular chart here to give you an indication of where I think the resistance levels are on this particular downward trend that we've got in the DAX at the moment and you can see it there so I'll be keeping an eye on around about 12,400 but I would expect I would expect 118 to come under pressure in the euro dollar over the course of the next couple of days always assuming that of course Donald Trump doesn't say anything stupid and that's by no means a given I mean we saw how the dollar sold off last night when Robert Muller came out and suggested that he was going to convene a grand jury so we can see that the dollar is very much driven by politics at the moment and it doesn't take much and the other one to keep an eye on is that Trump has been they've been talking about potentially doing trade sanctions against China and that's the kind of thing that could really upset stock markets and currencies so we keep an eye on that he was supposed to announce something today apparently that's been kicked off to who knows when but that's one of those things that can pop up anytime just keeping an eye on that in the background just been asked about when I think the DAO is going to reverse honestly don't know and if you're trying to pick the top on the DAO or thinking about it don't because ultimately you're trading against the trend and looking at this chart here it's difficult to say where the DAO is going to top out we can easily go to 22,000, 22,500 very very quickly the problem we're trying to pick the top on the market is that you can be right in the long term so it causes the next five or six months but in the short term over five or six weeks you can get squeezed out quite horribly so trade what you see and what I see at the moment is one, two, three, four, five, six, seven, eight, nine consecutive updates don't try and pick the top, trade with the trend so at the moment it's finding support above 22,000 once it's above 22,000 you've really got to be long of it until such times it drops below this series of lows that we've got down here so if we look at around about here you've got a little bit of what I would call congestion or sideways consolidation so essentially what I would do is draw a horizontal line through that try and drill down to see whether or not there's any short term support levels through there and it does appear to be a little bit but ultimately what we've seen or we can see from this chart here in the early chart is we've got a whole host of support coming in there and then we've gone parabolic since we went through 22,000 simply because simply because the market was basically banking on the fact that 22,000 or cap it didn't and what we've got is a series of stop losses all the way up to 22,100 and this candle here or the alley candle suggests that ultimately it's finding decent buyers now around about 22,070 and on a short term basis you're going to go poor very very quickly if you continue to try and pick the top in these sorts of markets the trend is your friend until it comes to an end and I know that sounds very cliched but ultimately it's true there's been no evidence so far that I can see that this Dow trend higher is showing any signs of reversing and yeah the S&P is not following it and the NASDAQ is not following it but that doesn't mean that it can't all of a sudden play catch up and we can see that here 2,480 decent top there but just above that we've also got resistance to 24,85 and it looks like it's a move up consolidation and then a move up again so I don't know whether there's anything you want to chip in on that particular at this point in time it's an interesting one because we find ourselves here at the beginning of August we're staring at what's historically the weakest time of the year for stocks between mid-August and mid-October there's all the potential for turmoil in the US government and the government shutdown which historically has knocked stocks down at some point I think we're in definitely a long-term bull trend here that started on the US election but at some point we're going to get a correction but tightening the correction is really difficult right now and at this point Michael's right you need to see an actual break before calling the trend change because people have been asking me this for months now it's like we're in a bull trend until it changes and at this point it's not changing but all the signs are there everything's flashing yellow but we're not at red yet as far as trading is concerned and this is the best advice I think I can give trade what you see not trade what you think you want to see you have to trade what you see in front of you, the charts ultimately are the ultimate clues and benchmarks as to what the market is doing it's like this oil price chart here that we've got in front of us here we've seen a decent rebound in prices in the oil price over the course of the past couple of days and if we actually look at it on a weekly basis we saw a very strong up move last week and this week we've seen a little bit of a consolidation but ultimately what this chart is telling me here is we've got 1, 2, 3 areas of resistance at $53 and around about $53.50 so until such times as that $53.50 level breaks then really you need to sell the rally on crude oil and even if it does break you've then got trend line resistance coming in all the way across from here a lot of the reasons why oil has been rebounding is because partly I think we've seen five successive weeks of draws on US inventories but the dollar's been weak as well so if the dollar's weak generally that tends to be fairly broadly supported with commodity prices and as such I think that's why you haven't seen much of a bit of a sell-off in crude oil prices but we've got an OPEC non-OPEC meeting next week where these members will be discussing non-compliance and I think the market has also been pricing that in a little bit with respect to the meeting in Abu Dhabi now I'm not convinced they're going to be able to agree anything over and above what they already have and if that's the case then ultimately I think the upside in crude oil is likely to be fairly limited and as such we'll probably drift back down certainly if you look at the way that it's been trading so far since the beginning of this year we saw at the beginning of the year a decent support area around about $53.30 we've sort of oscillated around that yes we are above the 200-day moving average and haven't pushed below it yet but we did that here and we did that here and ultimately the 200-day moving average is all well and good in terms of the overall long-term trend but in the long-term trend for oil prices at the moment there isn't one that's the biggest trend so in that context the 200-day moving average doesn't have as much importance as say for example when we look at that dollar CAD chart we have the 200-week moving average where you had a very long-term uptrend in terms of the dollar CAD and it's more than likely it's less likely that it's going to break through it on the first attempt and I think it's can I add something here on Oil Michael something else to watch for this afternoon is the Baker Hughes U.S. drill rig count which comes out at 1 p.m. Eastern time 6 p.m. in London and what's important about this is that the rig count has been climbing and then that's to be expected first of all during the summer spring into the fall in the winter the rig count generally goes up that's the seasonal trend and that's the annual trend that's the way it usually goes but what's important to note is when the oil and gas oil earnings came out these drillers in the state said demand is flowing for oil field services several of the big U.S. oil companies cut their exploration budgets and their capital budget so something's going on there because a lot of the back and forth we've seen between the U.S. and OPEC has been based on this idea that well higher prices are coming and increased U.S. production will sop up whatever OPEC cuts back on but we're starting to see signs out of the U.S. that perhaps production may not continue to ramp up as much as it has in recent months so when we see the rig count today it should go up and if it goes up then that's not going to be a surprise to anybody the surprise would be if the rig count happens to drop then that could be a surprise a surprise that people would see as bullish for the oil price that's just one that's out there in the background but Keith and I because that could impact oil this afternoon I'm surprised that because U.S. production has gone up this week it has been going up no question it's really intriguing that the all the oil and gas companies have been getting bearish interesting certainly something worth keeping an eye on so let's have a quick look at gold because we haven't looked at that yet but unsurprisingly I would suggest that's probably going to drift lower but again with gold this has been one of the most boring trades this year we've pretty much been trading sideways since April decent support around about 1210 decent resistance around 1295 at the moment on the basis of those numbers we're probably going to drift back towards 1250 having failed to get back above 1275 so looking at the oscillator that looks like he's about to roll over as well so that suggests to me that this range is probably going to continue for quite some time to come and of course as you suspected Donald Trump has tweeted excellent jobs numbers just released and I've only just begun I'm sure there's a song there many job stifling regulations continue to fall movement back to the USA give yourself a pat on the back Mr Trump you're an absolute superstar so yeah sorry about that so any other questions ladies and gents before Colin and I wind this up and then we can sort of look ahead a little bit to what's happening next week no okay well every Monday we have a weekly webinar on 1215 which my colleague David Madden conducts 1215 to 1245 so we'll be looking ahead today and find out details about that on the education section of the website next week the main drivers I think that I will be looking at will be US CPI looking to see whether or not inflation is picking up Chinese CPI Chinese trade and one of my favourites snaps latest numbers which I think will be disappointing and certainly I think if we look at what snap has done over the course of the past few weeks I think really that sort of just really reinforces what I thought about the company when it first IPO'd that it was less crackle and more pop and that's exactly what it's doing it's basically now looking to pop lower well below the IPO price I think that those numbers are out on the 10th of August so I can't imagine they're going to be any good I think Facebook is eating its lunch and I think it's going to be very very difficult to make any money at all so looking ahead at snap Facebook is eating everybody's lunch it's just amazing even though to send to like Twitter and stuff yeah it's it's a beast it's a beast ok well guys I think we'll wrap this up thanks very much for listening thanks for joining today and I hope you all enjoy your upcoming weekends and until next month when Colin and I will pick this up once again have a great day trading everyone thank you