 Hello and welcome to this week's non-farm payrolls webinar. It's 1.15 on Friday, the 5th of September. Let's just quickly get the disclaimer out of the way so that we can keep our compliance boys and girls happy that we're both doing the right thing, the UK one, and obviously the Canadian one for my colleague in Canada who's now, just this minute, cheer up to my ear. So, welcome Colin. Thank you very much. So, to this month's webinar. And good afternoon everyone. Certainly expectations are pretty high that we're going to get a good number. To be quite honest, I think whatever number we get, and I don't know whether you agree with this Colin, whatever number we get, unless it's less than say 200, we're pretty much nailed on that the Fed's going to finish its tapering program next month, irrespective of the number that we get. Would you agree? I agree with that. We're looking at $10 billion for tapering that this month's meeting and then a $15 billion wrap up at the end of, at the final meeting which is at the rate at the end of October. And the September meeting is on the 17th and 18th of September for those of you who don't know. So, the next Fed meeting, there's going to be another $10 billion taper. That'll leave the final $15 and that'll be wrapped up then. So, what are the expectations for non-farms? Well, let's pull my Bloomberg over and we'll have a quick roll through the numbers. So, let me just roll this down. Apparently the Canadian jobs numbers are going to be delayed because of a fire alarm apparently. You couldn't make it up. I don't know whether that's true or not Colin. Unbelievable after the last one Michael. For those of you that might have missed it, last one's Canadian job numbers were a fiasco. The first set of numbers they put out were completely wrong. They had to come back a week later and reissue them. Now, the good news was the reissued number was a little, was not so bad on the full-time side, but still this just is, it's unbelievable what's going on there. We're not used to this. Usually they use historically, they were pretty good. So, let's hope that the US numbers are completely uneventful. So, anyway, what are we expecting? Well, we're expecting a number of 230,000. That's up slightly from the 209,000 that we saw last month. Always be aware that you could well get some revisions to that number, the previous number. Also the unemployment rate, which is this number down here, that's expected to drop from 6.2% to 6.1%. Again, you know, whether it dips up or it dips down, I think it's probably not going to have that much of an effect. If we get a number in excess of 250, that will probably be extremely dollar-positive. And also, keep an eye on the average hourly earnings numbers. Now, I was asked about that by one of the delegates on this particular webinar. The average hourly earnings is important in the context of wage growth. Central banks in the US and the UK, one of their reasons for not raising interest rates or keeping interest rates low has really been because wage rates have been fairly weak, wage growth has been fairly weak. So, if there's any sign of a significant rise in average earnings from the US, and it's this number down here, the 2.1, which we're expecting there. If that comes in at 2.2 or 2.3, again, that's going to be very dollar-positive and potentially could actually be negative for stocks. Why? Because it means that it brings a rate hike that much closer. At the moment, I think Mark is surprising in a rate hike for the third quarter of 2015. If average earnings comes in particularly strong, if jobs growth comes in particularly strong, we've already got one dissenter on the FOMC in the name of Charles Plosser. We could get more. We could get Richard Fisher in September. He's another hawk on the FOMC, and certainly the FOMC does appear to be drifting in the direction of a tightening of policy. Can I add something there, Michael? You can. The other possible dissenter at the next meeting is Dr. Messer from the Cleveland Fed. She just took over there, but she had been the assistant to Dr. Plosser at Philadelphia before she moved over. So we expect that she's also in the hawkish camp. Okay. That's good to know. I saw comments from her, I think, overnight. Is that right? Yeah, she was just talking yesterday about wanting to be more clear on some of the guidance. I've been asked if I think that most of the expectations are well-priced into equities. That's a big question, because equity markets are particularly soft. If we look at the S&P futures here, the S&P futures are actually trading at 1990-1, well down on their previous close. And one of the things I've noticed over the past couple of days, three days, actually every day this week, is that the S&P has opened in U.S. trading above the previous close of the previous day and closed lower, despite putting in new all-time highs. That suggests to me that markets are getting a little bit tired. And I think you have a view on that, don't you, Colin? Yes, I think we're getting very close to exhaustion here. Every time we try to push up above 2,000, then we get a new high, and it's all over the media, especially the first couple of days, but less as it's gone a new high or all-time high for the S&P, but it's only by a point. We're not getting this huge... If you want to get a new high, you need to go crashing through like you saw with the Nasdaq where it went through 4,000 and drove on to 4,100, and we're just not getting that with the S&P. And if we look at today's candle, we're actually seeing 2,000 almost starting to kick in as the new resistance level. That's already a fairly large red candle there, and something else to note here. So 1990 is the big level we've got to watch. That was the old resistance level, and that's been acting as support for now, so that's been bullish. If that gets breached, it would signal the start of a downturn, and we're already seeing the rollover on the stochastics at the bottom of this chart where it's already crossed back under the 80-line, and I'm pretty sure if you looked at the RSI, you'd see it's rolled back under 70 as well. So we're seeing that the momentum indicators are telling us that we're starting to run out of gas here and we're vulnerable to a correction. The other thing to note with the stocks is stocks have been somewhat... writing on vapors too, because on the one hand, you've got the stocks have continued to go up and up and up, thinking that liquidity will continue, and I guess we are going to get that from the ECB as of yesterday, but still, the happy days are here, the Fed's not going to change, and yet on the other hand, you've got the U.S. dollar absolutely screaming higher, suggesting that everybody thinks the Fed's going to start moving sooner, and sooner or later, one of these two has to give. Either the stocks are wrong about their double stance on the Fed, or the U.S. dollar is wrong about its more hawk stance on the Fed, and I think over the next day or two, we're going to start to see which one's going to come out on top, the strong U.S. dollar, you're seeing gold getting crushed, you've seen other currencies getting crushed, and so on. No, and that's absolutely right, and certainly I think when you look at what the ECB did yesterday, we can see straight away that monetary policy from the ECB and the Fed is a completely divergent path. They're moving in opposite directions, so you certainly think that, if I look at, say for example, Euro dollar, the direction of travel there is for a lower Euro and a higher dollar. The only caveat I would add to that is given how far we've fallen in the past few days, at some point we're probably going to need to get a bounce, and we'll look at the key levels on that. But first and foremost, let's look at the S&P because this key support level at 1989, 1988, which is basically where I've drawn this, it's through the previous highs in July and August. It acted as a base at the beginning or the end of August, and ever since then we've managed to stay above it. If we break below there, then I think we could well see a little bit of a sharp sell-off. But for the time being, I think there probably could be some buying interest around that level. Certainly if we look at the Dow, the US 30, it's a similar sort of story, only in so much as we haven't really made, again, significant new highs. We've had a little bit of a push above, but again, we haven't actually pushed significantly below. Now again, I think it's similar to the S&P here. There's good support, 17,000. So I think as long as we hold above 17,000, there's certainly scope for a rebound. But if we break below 17,000, then again, I think we could see a sharp move down to around about 16,900, where we've got what I would call a little bit of congestion around here through these lows through here. But if I just draw a horizontal line in there, we can see that around about that 17,000 area, there's probably quite a little bit of what I would call buying interest. But if we break through it, that buying interest could actually subside very, very quickly. Can I just mention, and of course, 17,000 is a big round number, which presents a psychological barrier. If you start to see that fail, you could see the selling pressure really start to kick in, particularly as you start to run into algorithmic trading or just start taking out stop losses below that. Also yesterday, I was actually watching the Dow trade as it got up to 17,150, and it just hit it like a wall and just did not want to go through. So there's a lot of resistance there. One other thing back on the Dow, we start to see a roll down. You've got a huge double top forming. Yeah, let me just bring that up again, and then we can look at the small cap, because another thing that's really bothered me about this particular rally in the Dow and the S&P is that the small caps haven't followed it. In fact, they haven't even got anywhere near their previous highs. No, it's a big non-confirmation. Yeah, so for me, if you believe in Dow theory, which I do, the averages need to confirm each other. And at the moment, I have got significant number of doubts with respect to the sustainability of this current rally. Now, you know, that doesn't necessarily mean it can't go higher and make a new high, but there's just, you know, my ducks are not lining up in a row here, and that makes me a little bit cautious about significant further gains in equity markets. And certainly the price action does give the impression that there's a certain amount of fatigue creeping in to the stock market, particularly with respect to the U.S. benchmarks. If we look at, for example, the Germany 30, we again, we had a very strong breakout. If you saw my video earlier this week, there was a key level around about 9,600. We're now well above that, largely as a result of obviously the ECB's actions yesterday, but we do appear to be posting what looks like a death cross on the moving average. Having said that, again, any disappointing number or any sell-off, it's going to find support around about 9,600. Why? Simply because it was significant resistance on the way up. And it's just a basic rule of technical analysis. Support and resistance tend to reverse their roles. We've got three minutes to go. Let's quickly just breeze through the major currencies and look at the key levels on the major currencies. Looking at Eurodollar first, I usually post some analysis every day on Eurodollar on the chart forums, but we can see that yesterday's down candle. I mean, that's really, really brutal. So I think if we have a positive, a negative dollar number, then 130.20 is going to be a significant resistance level simply because it's a fib number. And they generally tend to be fairly important. It's a 50% retracement level of the entire up move from the draggy lows when he said whatever it takes to the highs that we saw in May at just below 140. So 130.20, we could get a pullback in Eurodollar. It's looking very oversold. The next target is 127.90. More importantly, if we get a very strong positive dollar number, watch Dolly N. Dolly N is very, very important. 105.50.60. That's a big, big level. It's 61.8% retracement of the entire down move from the 2007 highs to the all-time lows in 2011. It was also the peak at the end of last year, 2013. 105.60. If we get a strong move through that, you could see an awful lot of stops ripped out. If it's a poor number, then you could well see the Dolly N move back down towards 104.80 again, which was the lows that we saw yesterday. So there's a number of key chart points that we're very, very close to going into these numbers. And certainly a strong number is going to be positive for the dollar, and we could well see a significant move higher in the dollar. The key question is how much of it is already priced in? 162.80 here on cable, big, big level. We're pretty much on it right now. We really need to push and close below that to argue for a move down towards the 50% level around about 160. Can I mention one thing here, Michael? Sure. If you look at all these charts, just looking at the stochastics, if you look at the euro dollar and the pound dollar are really, really oversold on the stochastics, and the dollar yen, of course, is getting quite overbought. So at some point we may get a technical correction here, but it'll depend on whether we get it today or not. It'll depend on the number we get coming up in a few seconds from now. But certainly I think with respect to momentum, even if we do get a strong dollar number, the key question for me is whether it will be strong enough to sustain the move through these support and resistance levels. And I think that's really the key. We're coming into a weekend and that will have an effect on trader sentiment going forward. We've had a strong week for the dollar. The big question is, will it get even stronger? We're certainly getting some dollar buying interest going into these numbers. So certainly the numbers appear to be being front run. We appear to be getting a fairly positive dollar number or expectation of a dollar number right now. And in 10 seconds we'll find out whether we get a positive number or a negative number. So watch the numbers down the middle where it says actual. They're coming out now. 142. Oh, that's a dreadful number. That is a dreadful number. Very low. That's low. So that's dollar negative. That is dollar negative. 142. Let's look at the revision for July 212. That's absolutely like I figured. Yeah, the unemployment rate, 6.1. Let's look at average earnings, 2.1. They're pretty much as expected. So pretty much a dollar negative number. That's a massive miss. So you should see the euro bounce. You should see the dolly income crashing off. And let's just quickly, yep, you can see that straight away on this chart here. Let's have a look at the cable. There you go. So we pretty much know where the support and resistance levels are. We're probably not going to break through 105.50. We're not going to, we'll probably go back to test 130.20. And one thing is actually quite interesting, Colin. The participation rate, it's dropped again. 62.8. That's another 35 year low. So again, I think what it does is in essence, it keeps the Fed on hold in terms of interest rates, which in essence should be positive for equity markets. Yeah, so that definitely does, it should keep them on hold for longer, at least it should cool the hawkish disenters and cool the pressure on the Fed to act any sooner than they were planning to previously. It's neutral I think for the Fed or at least cuts back on the feeling that they may move earlier. Yeah. A big bucket of cold water on that one. That's the thing, isn't it? I mean, we talked about the dollar having a very, very strong week this week. This has taken some of the gloss off it. And I think that was always the risk, wasn't it? Absolutely. As I said just before the numbers came out, the US dollar has moved to gotten very overextended. Against a number of currencies and was getting raped for a correction. Okay, so what does this mean ladies and gents? Well, I think it essentially means that we're probably going to see a little bit of profit-taking in terms of the dollar. Let's look at the dolly yen here. And actually this is quite interesting because if you look at this daily candle here, depending on where we close tonight and that very long shadow up there, maybe there's a good chance we could actually see the yen, the dolly yen move lower. So that could then feed into lower dolly yen, possibly lower euro yen, lower sterling yen. Simply because the momentum simply isn't there for the dolly yen to move higher. And I think that more than anything is the fundamentals that are most important to watch for in dolly yen. It's really about expectations of where you see US monetary policy relative to Japanese monetary policy. It's less about the fundamentals. Okay, it's not just about the fundamentals, but it's certainly, you're looking at the comparisons between the two. The likelihood is that the Japanese monetary, I've just been asked a question here Colin, so bear with me. One of the questions that I've been asked is what fundamentals are most important to watch for in dolly yen? And for me it's about the direction of monetary policy, more than anything else. So if you look at Japanese fundamentals, what likelihood is there that the Bank of Japan will do more to boost the money supply? And I would suggest they're quite high. They're probably going to need to raise taxes again. If they need to raise the sales tax again, the Bank of Japan is going to need to be more accommodative. And therefore, given the fact that the Fed is likely to be raising interest rates long before the Bank of Japan, you're really looking to buy dolly yen on dips. But the 105, 50, 60 level, that's a big, big level. I think the likelihood is we're going to struggle to break that in the short to medium term. And more than likely we're going to probably get a drift back over the next week or so towards the 103, 80 level on dolly yen, as long as we stay below 105, 60. So hopefully that answers your questions, sir. Quickly look at some of the major currencies again. Let's have a quick look back at cable. Again, we've had a strong move off 160, 280. Again, I think that's probably going to prompt a little bit of a short squeeze back to this moving average here, which is the 50-day moving average and which has basically held this downtrend on the hourly chart. So it's the hourly chart here, not the daily chart. It's held this downtrend since the beginning of September, but certainly think we can probably get a move back to around about 164 there. Definitely a little short-term double bottom there on cable too. Yeah, it is. It's a nice little chart there. And Eurodollar. Eurodollar, we're going to get a bit of a pullback here. We're around about 129.75. 130 is always going to be a little bit of a resistance level in any case, but certainly 130.20. Probably we'll find a little bit of selling interest there. Yes, it is very oversold on the daily. Let's have a look at what it looks like on the hourly. And we're probably finding that it's looking a little bit overbought. So I think we may struggle to get much above 130 today. But overall, I think what we'll see is that those that we saw so far this week could actually prompt a bit of a rebound back to around about 130.20 before we then track lower again. And I think that for me is, you know, the key indicates here because when you look at the different timeframes here, you get completely divergent pictures. But it's oversold on the four hour. It's overbought on the one hour, which suggests to me that you're probably going to get a little bit of sideways trading below 130 while the overbought on the hourly unwinds itself and then you'll get the move higher on the four hourly back through 130, back towards 131. The question is being asked, will they end QE in October? I still think they will. Daniel, Colin? Absolutely. Even with this, there's no reason to change it. I mean, we're talking about August. August is a summer month. A lot of people are on vacation. The August numbers can be distorted. The July upward revision was still positive, even in small. The other thing to remember, of course, is that it's been a pretty rotten year for weather in North America, and August is one of the few good months we've had, so you may have seen more people putting off decisions, taking vacations, things like that. It's not totally unexpected that it would come in low, but it is a surprise that it came in as low as it did. I figured if you're disappointed, you might get 190, 180, not 140. And it's the lowest figure this year. If you look at my little graph here, we've got 142 in August, and it's 144 in January. Now, that figure could get revised up, because the July number did all be very, very slightly to 212. But overall, when you actually look at the jobs growth that we've seen so far this year, it's not been too shabby. So I certainly wouldn't read too much into one number. Unemployment is still low, but having said that, the participation rate is low. So we've got a market, a jobs market that is going in the right direction. The biggest concern is the participation rate. Let me have another thing here, Michael. Sure. If we look at the private payrolls, yesterday, of course, we had ADP at 204,000, and today the private payrolls for NFP was 134,000. So that's a 70,000 difference, which is pretty big in terms of the spread between the two. So something has probably gone off a little bit between one of them, and you may see a revision to either of them to kind of narrow that going forward. I know something that we could see in September. So I think it's September, October. I'm getting mixed up. In the September number is what I meant. So that's something that we'll probably see in the September number when we come back here in October. But overall, you can certainly look at the comparisons here. And certainly people talk about the American jobs market and people talk about it being strong, but certainly the American consumer isn't strong in any way because if you look at the confidence numbers on this graph that I've got here, since April, consumer confidence has been going up. We can see 81.7, 83, 85, 90, 92. But look at retail sales. You know, you've got 1.5, 0.6, 0.5, 0.2, flat. So when we get the August number later this month for retail sales, I'm really hoping that we see an improvement because at the moment while consumer confidence is rising, retail sales are falling, and that makes no sense to me whatsoever. None whatsoever. And durable goods are the same. They still look very, very weak. If you took out aircraft orders and big ticket items from the durable goods numbers, they were negative last month. So sometimes it's important to look past the headline numbers and actually look at the underlying dynamics underneath that. And they're not particularly positive at the moment. So anyway, digressing slightly. I got asked if I could look at Euro Aussie. I'm more than happy to do that. I think we've got time. Let's look at Euro Aussie. You're playing the carry trade there, whoever's playing it. So this is the chart forums, which is on the right-hand side. They say periodically we update these, and they can be accessed from the little button, the little bubble on the right-hand side of the chart. And you can see the latest analysis. Last time I updated that was on the 2nd of this month. Got that wrong. Could we see a short squeeze if we get a strong bullish candle today? Obviously not, because we didn't. We basically went lower, but that was largely as a result of the ECB. But certainly you can see here, the direction of travel remains lower. Again, we remain very oversold. I certainly wouldn't be looking to do anything at these sorts of levels unless I've already got something in it. And if I've already got something in it, then I would certainly be looking for a move back to this 200-week moving average here, now that we've broken below these lows or in the middle of 2013. I can draw a horizontal line straight across there. That's my resistance level, 140-50. As long as we stay below 140-50, then I think the likelihood is we will continue to push lower. And certainly that's been the direction of travel since the beginning of this year. Is there anything you want to talk about, Conor? Yes. Could you bring up US SolarCAD, please, Michael? I just wanted to take two minutes to talk about the Canadian employment numbers, which also came out. The net change in employment for Canada was down 11,000. The street had been expecting a 10,000 increase. The full-time employment number was down 2,000, which was an improvement from the previous month, which had shown an 18,000 decline. We've seen the big drop on the part-time side, where the previous month, July, it had a huge increase of 60,000 part-time jobs. That's a seasonal effect. And in August, we saw a decline of 8,000 jobs. So that's where we're seeing the softness was on the part-time side. Full-time was actually a little bit better, not great. And the action we've seen in DollarCAD since then is basically still fairly stable. We're sitting in the lower half of essentially a 108 to 110 channel. And based off these numbers, we may continue to trade back and forth through there. So we saw yesterday with trade numbers, Canada's economy is improving. We had a surplus of $2.6 billion, which was the best in quite a while. Today's employment data is still a little bit soft. So what we're seeing is, yes, there are signs of Canada starting to catch up or at least benefit from the improvement in the U.S., but that hasn't worked its way through into the job market as of yet. As it does, we expect that the Bank of Canada will continue to at least back away from making any dovish kind of hints or speculation back to neutrality, even if they don't raise rates right away. Is there anything you want me to add to that chart, Colin? Before I start talking about Brent and WTI, I've just been asked a question about that. No, go for it. Okay, so Brent and WTI. Again, I think what we've seen here is a fairly weak outlook. I'm certainly looking at my Brent chart here. I think while we're below 103, I think the direction of travel remains for a lower oil price. Certainly that's what the general consensus appears to be on this particular chart here. If I draw this trend line through these highs, we can see that the demand outlook, for me, I think continues to remain weak, even if you take into account geopolitical risk. Why do I think that? Because if you look at what's going on in Europe right now, the cumulative effect of any sanctions or any additional sanctions, we're going to get stagnation in Europe. That's going to keep the demand outlook fairly weak. And as such, barring any supply concerns or supply issues, then I think the likelihood is we're probably going to get a move through $100 and maybe down to around about $95. But at the moment, we're in a little bit of a range and have been for most of August and September. The bottom of that range is $100. The bottom of that range is $103 for Brent for WTI. Do you have a deal on WTI, Colin? Yes, please. Okay. WTI is still in a downtrend here. It had tried to rally recently, but it keeps running into resistance in the 97 to 9740 area and continues basically to work its way lower. You're still seeing lower highs, lower lows, initial support here is at $95, which also is a round number, a little more in place near $94. It does show signs that it wants to stabilize, but every time though it tries to actually rally, as we saw at the end of August, it just gets knocked right back down again. There's also an awful lot of chop in that. You've got significant resistance around about $97.50, and you've got, as I say, good support, as you mentioned, between $94 and $95. But absolutely the direction of travel remains for a lower oil price. We're getting lower highs and lower lows, and I would only revise my opinion on that is if we strongly take out $98, because that will then bring us back to this really strong area of resistance around about $99.50, which coincides with these series of lows through here, there, there, there, and those highs there. So $99.35, $99.50 is going to be a significant resistance level if we get through it, and that resistance at $97.40.50. And could you bring up the gold chart quickly before we wrap up, Michael? Yeah, sure. Let's put it on to... Put it on to one minute, please, or actually just leave it on the daily for a second. Gold is basically... Oh, yeah, even better. I'll bring up both charts. So you want a one-minute chart, do you? Yes, please. Okay. So I just want to talk a little bit about... Gold historically trades opposite to the U.S. dollars, so a couple of interesting things we've got going on here. On the right-hand side, the daily chart. Gold's firmly in the declining channel in a well-established downtrend here. It's currently trading in the 1260s. Upside resistance around 1280, and if it breaks 1260, that May-June low is down around 1240. But I think the action that's going on since the employment numbers come out is quite interesting. So we got a spike in gold as the U.S. dollar weekend from 1263 up to about 1273, ran into some resistance there. It's actually dropped back funny enough, and it's settling. So even though the U.S. dollar had an initial drop, it's actually been stabilized fairly quickly, and I've been watching similar action on minute charts in the Euro as well, that it jumped up and actually settled back a little bit. So it does look as though there was definitely some initial dollar disappointment, and a correction started right off of the news. But since then, in the last few minutes, it's actually starting to stabilize. This, however, could be a pause in the beginning of a larger correction for the U.S. dollar, simply because it's gotten so overbought against everything. Okay, great stuff. Thank you, Colin. Unless anyone else has any other questions, I'd like to thank you all for attending this seminar or webinar rather. I hope you've got an awful lot of use out of it. We're going to be posting it on YouTube later today. So if any one of you want to sort of listen back, you're more than welcome to do so. Otherwise, I'd like to thank you all for turning up, and I'll see you all. In fact, we'll both see you all. At the same time, next month. Absolutely. Thanks everyone for joining us today.