 Good afternoon ladies and gentlemen and welcome to this month's non-farm payrolls webinar on Friday the 9th of March and the February payrolls report before I get started I have to do a little bit of a housekeeping in the form of various various disclaimers So basically it's just a reminder to say that anything that you hear from me over the course of the next half an hour Should not be construed as direct trading advice. I'll obviously highlight some the important key levels What effects that I think the numbers may well have on the overall direction of the markets and hopefully try and shed some light on where there is a Significant shade, but so to say once I once we get the risk warnings out of the way I Can I can get started and that's precisely What we're about to do so right we've got the price action up and When I when I looked ahead to this week, I have to say I really thought that the payrolls number will probably be the one of the important items Certainly in terms of direction for the US dollar this week Turns out that there are have other been factors at play. Obviously. We've got the discussions about trade tariffs and trade Mr. Trump's Decision to implement a 25% tariff on steel and a 10% tariff on aluminium subject to certain caveats and opt-outs So markets have reacted rather well to that. I'm just wondering whether or not that is basically a Risk on or a risk off scenario deferred or whether or not it's mr. Trump's way of Essentially extricating himself from a fairly tricky situation That being said we've seen a decent rebound in equity markets this week and I use the term advisedly We haven't in any way Reverse the gains of last week. We've managed to pull back some of the losses And we can certainly see that in the context of say for example the S&P 500 Which is currently trading around 2736 now this particular chart I have a particular interest in because at the moment this is a four-hour chart So I've drawn a number of Fibonacci levels in here on a slightly longer term basis And this was a chart that I looked at quite some time ago with respect to this 2745 level In the aftermath of the rebound of the February lows we did pop above it for a couple of days, but We weren't able to sustain those moves higher and I've subsequently pushed back lower again But the dip that we've seen hasn't been particularly Substantial and that suggests to me that maybe just maybe we could be looking to carve out a base But what we really need to see here I think is a move back above this 2745 2746 level at the moment There doesn't appear to be an awful lot of momentum Behind this particular move, but we are coming into the weekend We have seen a significant rebound thus far this week one two three four successive daily rises so The rebound that we've seen has been quite substantial But in the context of the overall down move that we've got here that we saw the week before We haven't quite been able to completely reverse it Once again US markets are diverging slightly away from what European markets are doing because if we compare this say for example The S&P to for example the Germany 30 or the DAX We can see the rebound in the DAX has been much more subdued We can see that in the basis of this particular Fibonacci retracement chart here that I've just drawn in but again in a similar fashion to the DAX We have seen We didn't see a break of the February lows We we fell a little bit short of it. Obviously. This is our chart. It doesn't match the underlying chart, but nonetheless There does appear to be some evidence of a little bit of a break Sorry about that. I was trying to get away without coughing. I felt abysmally I do apologize for that if I was just deaf and jaw so looking at 12,420 I think is the key level on the top side with respect to the DAX now Let's drill that down a little bit into four hours because on a four-hour chart We do look a little bit overbought now That's not to say that we can't trade above it and certainly if we look at the price action here We can see that we're making higher highs and higher lows But we're hitting a bit of a barrier around this 12,420 level and we are looking a little bit overbought and we do have negative divergence on the slow stochastic So once again, I think the question I would be asking given the rebound that we've seen today What will it take to ratchet at ratchet us even higher? And I'm not convinced this payrolls report will do that Now yesterday's European Central Bank meeting of those of you who listened to my periscope recording earlier today Was on the face of it either hawkish or dovish depending on who you speak to now personally Despite the fact that they took that paragraph out with respect to the guidance I felt it was more on the dovish side than the hawkish side Which does explain to a certain extent why the euro has fallen off those highs that we saw yesterday at 120 just above 124 Now I've been talking about this box range in the euro for quite some time now around about the tops around about 125 and the lows around about 120 160 But what I think what we can be sure of is if the if this is a good number This is a good payrolls number in particular. I'm looking at the year-on-year average earnings number, which was 2.9% Last month a large part of that was because 18 US states Raised the level of their minimum wage and that helped ratchet the overall average quite a bit higher Now What I'm looking for is to see whether or not we come in anywhere near close to that 2.9% The forecast is 2.8 the Federal Reserve this week in its page book Suggested that wage pressures are building up yet for all of that and this is something that I've been thinking about quite a lot The labor market still appears to have an awful lot of slack in it Now what do I mean by that? Well ultimately the US jobs market is still adding 200,000 jobs Month-on-month well that doesn't suggest to me that the labor market is tightening up It still suggests to me there's still plenty of jobs out there and the wage growth that is That which has been lacking is only now Starting to trickle down or trickle up depending on however, whatever adjective you want to use with respect to that so The wage growth is important and certainly in the context of where the dollar goes to next. It's doubly important But will it be enough to really ratchet us out of the range that we've been in over the course of the past few weeks? And I'm doubtful about that. Let's look at this 91 level. I've talked about it At great length over the course of the last few weeks now at the beginning of March We saw a bearish daily reversal on the dollar index Or a key reversal day Now we have rebounded back in the past two or three days, but this just suggests to me That we're in a little bit of a range, but what I would say Is that it's not in the interest of the European Central Bank? For the euro to get stronger So a wiki euro should be margely supportive of the DAX and we certainly saw that yesterday in the aftermath of the ECB Ray meeting when the euro went up above 124 European stocks rolled over and when it's negative territory as soon as the Euro ran out of steam up above 124 The DAX started to push higher again And I think something similar could play out today if we get a fairly decent payrolls number Now there's two numbers that I'm going to be paying particular attention to today The most important number is obviously the average earnings number But the second number is the unemployment rate and that's expected to fall back from 4.1 to 4% it's also for our Canadian clients the Canadian jobs report and That could be particularly important in the context of dollar CAD now I did do a little brief periscope update earlier this week on dollar CAD Unfortunately, I think I would have needed a bit more of it a bit more than a periscope because the trade probably would have gone under water Simply because of the fact that I was suggesting that it was a sell the rally type of trade It was but we squeezed all the way back to 130. Now that 130 is likely to be a significant barrier to Further dollar Canada gains Having said that if we get a decent Canadian jobs report that could actually Offset a decent US jobs report and push the Canadian dollar There's a dollar CAD or the Canadian dollar higher the dollar CAD lower The Canadian dollars also got a bit of a boost because they carved out an exemption from those Tariffs that President Trump is implementing in 15 days time. I think that's another reason why You've got what I would call a little bit of a deferred or a delayed reaction equity markets are pretty Underwhelming at the moment certainly here in Europe. We're down pretty much across the board The DAX is down half a percent the footsies down around about one tenths of 1% and the cat current is round about flat But in the context of the gains that we've seen so far this week, it's not I think that's neither here nor there I think if we get a decent jobs report, then I think equity markets could start to wedge back Towards the top end of this week's range So the footsie 100 could well edge back about 7200 a decent Canadian jobs report and here the bar is very low because in January we saw a big decline in Canadian employment 88,000 jobs were lost in January and part-time employment as well showed a very very big loss And I think that's one of the reasons why the Bank of Canada Decided to keep rates on hold earlier this week So I think any sort of any sort of Canadian jobs report that comes in slightly better than expected is likely to see dollar can push down through 12875 towards the 1128 level a poor number and a decent US jobs report We're going to go probably back above 129 30 And I think that's really that I think that's really the key level that I'm paying particular attention to With the Canadian jobs report now in terms of the overall dollar direction We've seen a pretty decent rebound in dolly in in the past few days We can see that here This could be the potential for a little bit of a source of bottom here or a rounded bottom You've got a little bit of a less shoulder here Perhaps a little bit of a neckline there but for me the important level I think in dolly in is not only the highs that we saw at the beginning of March around about 107 107 20107 30 But this does appear here to show that there is a little bit of a Little bit of a short squeeze building up on the dolly in certainly if we look at the client sentiment Indicator the market is fun of top clients are fundamentally long in terms of cash value That's usually a decent indicator of The way the markets positioned with respect to dolly in and to be quite honest looking at that It's a fairly sensible position to hold Given how close to the lows that we are but it also does make us very susceptible to a Fall back down if I draw a trend line in here Then we've got a little bit of a short-term break above here The big question is can we sustain it now at the moment around about 106 85 I think a decent payrolls number will see us move higher towards 107 30 Euro dollar similar sort of story with respect to here Now we've been talking I've been talking about this 126 level for quite some time now I talked about it yesterday in my periscope update here We've seen a very significant down move now the 50 day moving average for me Is the next significant support level and below that these lows that we saw In the middle of February around about 122 10122 30 23 20 30 I still think we're in a range in euro dollar So I wouldn't expect us in the event of a good payrolls number to go much below 122 121 60 In the event of a bad payrolls number, we could well head back to all around 123 70 120 123 80 124 there or there about certainly looking at the four hour chart Again, we can we can see that here. It's not really conclusive But I think what it is telling us is that we are susceptible to a little bit of a short squeeze Maybe back to around about 123 50 given that we have A significant area of support all the way Around about through 122 60 120 270 so we might get a little bit of a push down there before I'll squeeze back Quickly go on to the pound against the dollar before we get cracking Um And again, it's a similar sort of story. This is a four hour chart Looking a little bit Looking a little bit oversold on the four hour chart But again in the context of an overall downtrend from those highs that we saw around about 143 um I still think that the pound is fairly well supported on dips 137 1020 was last week's lows We've also got the 136 20 level which was the previous peaks in september which we broke through I think that's probably going to be a fairly decent area of support If we get down there though I am a little bit concerned by the fact that we're getting lower highs and we're getting lower lows So I think to break this down with cycle. We really need to get back through 139 80 I don't certainly don't think that's likely today So I think it's very very much a question of picking your levels with respect to currencies and the u.s Dollar and looking at the u.s 10 year yield. That's around about 287. It's not too dissimilar from Where it was a week ago. So certainly no clues with respect to Whether or not we're going to get three or four u.s rate rises this year. But here we go here are the numbers 2.6. So that's disappointing. That's a bad number It's not a particularly good number on the average earnings slightly dollar negative there, but the payroll is numbers 313 So the market's probably not going to know No, not going to want to be a little bit uncertain as to what it wants to do at these sorts of levels That's a bumper u.s payrolls number But it also reinforces what I was saying about slack in the u.s labor market. So I think the initial knee-joke reaction is to buy to sort sell euro dollar by the dollar On the payrolls headline number, but on the wages number It suggests to me that potentially this talk of four u.s rate rises this year is probably a little bit premature and maybe we're only going to get three so You know this It's one of those numbers that it's got everything something for everybody It's got something for the hawks and it's got something for the doves But ultimately the headline number 313 the revision hire for january 239 Um, that suggests to me. There's still planning a slack in the u.s labor market And as such this talk of four u.s rate rises this year I think If i'm interpreted the way I would interpret it is that it's premature And as such the likelihood is that it's likely to probably be more dollar negative than dollar positive It's probably going to be a little bit of a tug of war at this point in time With respect to where we go to next but certainly I think the reaction of dolly n does appear to be the right I don't think I don't think it's the right one. I think we could test hire towards around about 1 7 20 1 7 30 But I can't imagine us really moving significantly above that Certainly, I think if we look at the us 10 year yield that should give us some indication as to whether or not The way the market's interpreting it the market's interpreting it as yields positive Which I find rather surprising the 10 year yields just hit 289 It is backing off that now around about 288 288, but it did hit a high Of 289 38 on those numbers and it's now starting to back off a little bit But my gut feeling is and this is really all I have to go on with respect to how these numbers get interpreted is That on the face of it the headline number It's it's it's a it's a decent number But is it enough to reinforce the case of four rate rises and I would argue it's not so ultimately It's going to be positive stocks And a little bit negative for the us dollar over the course of the rest of the afternoon looking at dollar cad again, let's have a look at that And yes, I mean, I think that's the right reaction in dollar cad To move lower simply because the canadian jobs report pretty much came in as it was 15.4 it was slightly less than was expected, but it was a significant improvement on the number that we saw in january also looking at Looking at the other canadian numbers part-time employment also rose 54 points 54,000 Which was a significant improvement of the 137,000 So I think the way the the canadian dollar is reacting with respect to that Is that the january numbers were a bit of a one-off and dollar cad should now I think Come down and test the 128 level which was around about these lows that we saw in february Now before I move on to anything else ladies and gents, is there anything Any is there any market that you guys Would like me to cover that I haven't covered already because what I'm going to do now is actually have a look at sterling cad Because I think with respect to sterling cad. I noticed something on that earlier today Which was actually quite interesting in terms of the overall direction of travel And we can see that there is some evidence that sterling cad may well have topped out So that could be another proxy for a little bit of a long canada trade Watch sterling canada head back towards around about 177 maybe 176 or 175 so Sterling cad does look a little bit bearish if we can look at the weekly chart we could see that Even more so with respect to this Weekly chart here. This could well be this could well turn out to be a gravestone doji on the weekly chart, which is historically um a fairly bearish It's a fairly bearish signal But what it does I think what it does really need with respect to this requires confirmation So in terms of the weekly chart and the direction and how far away it is from its moving average I certainly think there is potential sterling cad to come back back down to around about 175 from from where it is currently at the moment in terms of The I'm being asked as to whether or not this was pushed the American indices back to the highs I think what it will well Yes, I mean I think it will because what we've seen now with the s&p Is we've pushed back above in the pre market at 2745 level So I certainly think there's potential For us to come back to these peaks that we saw at the end of february If we look at the four hour chart, we can see that we can see that here. There was this similar peak here On this four hour candle around about 2754 which is currently where we are at the moment, but certainly I think in terms of the overall story The the weakness of the wages numbers would appear to suggest that the The trickle down effect Of higher wages is probably not as aggressive As markets were originally pricing in And ultimately I think That could be Slightly bearish for the dollar in the short term and looking at the 10 year yield went out to 86 80 So again, we're backing off those highs that we saw earlier this week So so again, I think this is a slightly negative dollar story a slightly positive stock story And we're certainly seeing that now and I think that there's a good chance We can retest the highs that we saw at the end of february as a result of that Because it takes off the table albeit very very briefly Until the next Evidence that we've got high inflation trickling down the prospect of Four rate rises. So we're still going to get we're still going to get a third rate rise this month. I think that's pretty much priced in But the real debate is not about whether or not we'll get one rate rise This month It's whether or not we get one in june one in september and one in december and at the moment Markets were pricing in one this month one in june one in september one in december I think now the calculus has shifted back slightly two Three so one this month one possibly in june and maybe one in september or december but not both You know, and I certainly think that's what i'm i'm looking for but it's only in terms of of euro dollar We should see We should see the market come back and retest Certainly one twenty three forty I think I think one twenty three eighty could be stretching it a bit But certainly I think we need to take out this series of peaks through here But certainly on the four hour chart I think We've we've we could well have seen the lows in the short term And we could well start to wedge back towards this This sort of area one twenty three thirty initially and then retest This sort of area around about One twenty three seventies. So these series of peaks All the way through here. I'm very big I'm a very big proponent of looking at previous highs and lows To look for areas of congestion support and resistance So in terms of being Long euro dollar while not wanting to steer you in one direction or the other because I cannot do that I would say that ultimately we could well have seen the lows for today depending obviously on Any news that comes out from central bankers or what have you and We could well drift slightly higher over the course of The rest of the afternoon But as I say that's not to say that we won't retest that one twenty two eighty level That we saw earlier today because mark it's ever had a bit of doing that. They hammer out a low They bounce off it and then they look and read they look to retest it To see whether or not there's ready buying interest down there if we look at the client's sentiment We could get an idea of what our Most profitable clients are doing With respect to how they're positioned and we can see that it's not wholly conclusive But certainly there has been a move Higher to for cash positions around about 58 percent long 42 percent short and they're up four percent They're up four percent from where they were 24 hours ago So I think the bias here is that the cash positions Are slightly biased to the upside But um, you know not aggressively so because you also have to bear in mind the counterfactual in terms of what the ecb wants With respect to euro dollar. So, you know, I would argue 12380 is optimistic. That's not to say you won't have it But ultimately that seems to me at this point in time It could well be But any other questions Ladies and gents before I move on and have a quick look at gold Okay, so let's move on to gold Gold is not really particularly that exciting decent support around about 1305 Seeing a little bit of weakness in gold prices at the moment on the back of those numbers But ultimately I wouldn't expect to see um I wouldn't expect to see much of a decline below the lows that we've seen thus far But certainly I think it's difficult to make the case for gold to rally significantly on the back of those numbers. We could see a little bit of sideways trading between 1305 1310 and 1320 again We're heading into the weekend It's highly unlikely that we're going to be moving significantly one way or the other Um moving on to crude oil. I've been I've noticed actually some fairly interesting pattern starting to Evolve in the crude oil contract You can see that here. We're getting progressively lower highs I'm starting to get a little bit in terms of lower lows certainly in terms of west texas wti We can see that here getting a little bit of a rebound finding a bit of a base around about 60 bucks But we are still above the lows that we saw in february but As in the case of a lot of the other charts that i've been looking at The lows the rebounds are getting a little bit shallower And that suggests to me that maybe the long positions that we're seeing In crude oil are starting to get a little bit tired as traders wait A much shorter time frame to get out of their long positions this for our chart That suggests that we could we'll see a little bit of a rebound back to around about 61 and a half 62 But overall the the the trend in the medium term does appear to be For us to come back lower and retest those lows that we saw At in in the middle of february and if we look at the brend contract As well we can see a similar sort of pattern unfolding Before I sign off i'm going to do a quick sort of little pre preview of next week Um because next week we've got a couple of things that could actually affect the pound Um, but before I do that i'm going to be summing up The um the brent crude and again it's a similar sort of story here Um decent support around about 63 and 10 cents 63 20 finding a little bit of a rebound On the crude contract as a result of a slightly slightly weaker dollar And we could and I say we could head back to around about 65 or 66 dollars a barrel but um Yeah, similar sort of story with brent and wti potentially a little bit or Little bit of concern that um us shale output is likely to keep The oversupply in the overhang In favor of the supplies as opposed to the demand and we could get a move back towards these lows that we saw in february so looking ahead Looking ahead because I think this is important We've got a couple of items next week um, let's look at euro sterling in in that context because I think um In the context of euro sterling, I think the weakness of the euro could actually be beneficial to Pound we're certainly seeing on the daily chart every time we try to get back above 89 50 We've really struggled to really maintain any sort of traction 89 20 30 i've drawn it in there And if I just get rid of that Just reset that And then draw in another horizontal line Through through there. There we go. So around about 89 70 um Which is pretty much the highs that we've seen since So November last year every time we've tried to get back above that we've been bashed back down again So there's an awful lot of brexit headlines and sterling is an awful lot more political currency than probably any other currency at the moment Let's not forget that the italian elections have still thrown up an unresolved outcome and ultimately that's likely to um Way a little bit. I think on euro dollar. So you've got to you got to take that into account as well um But ultimately what I would expect to see Is that euro sterling Could actually weigh on the upside for euro dollar Because we're looking at the pound the pound still got fairly decent support around about 137 and a half um And looking at the way the two currencies have behaved today the pound is flat on the day But euro dollar is down Two tenths of one percent, which is pretty much in line with what euro sterling is doing at the moment So i'm looking euro sterling 88 70 80. That's a little bit of a support level in the short term I still expect this range to remain intact So I would expect over the course of the next week or so for us to come down in euro sterling towards 88 10 88 20 we've got the autumn not the autumn. We've got the spring statement On tuesday next week and the chancellor will basically the chancellor these chequers will basically lay out his um Latest plans with respect to the u.s economy the the latest u.s economy uk economy latest assessments borrowing targets gdp targets and what have you And he is on course to actually come in underneath His borrowing target for this year around a by around about 10 or 11 billion Which when you consider all the warnings of doom and gloom with respect to what brexit recalls Is no mean feat record tax revenues last year Would appear to suggest that while the uk economy is lagging behind Its european peers. It's also further along the economic cycle So I would expect that to be the case in any case We've also got chinese industrial production and retail sales data coming up next week And Again here as with the trade data earlier this week at the cpi data this morning I would expect chinese new year to skew this data So I'm not really expecting anything too substantive in terms of how well the chinese economy is doing But it could still be a driver. We've also got the u.s retail sales of february Now retail sales have been falling short of expectations in the u.s for the last couple of months Despite all this talk of rising wages Those average earnings numbers are disappointing So maybe Next week's retail sales numbers Could well be a little bit disappointing. Well, we'll have to wait and see But ultimately, I think those are the three key things that I'm looking out for next week And obviously any brexit headlines with respect to the e us and the uk's Negotiations when it comes to arriving in a final trade agreement are likely to move the pound around Um, otherwise unless anyone else has got any other questions. I'm going to wrap this up I'd like to thank you all for listening And um Wish you all a great weekend and before I do that Do you want to have another look at euro dollar? Okay, um I say up, you know, my my view on euro dollar hasn't changed I think we'll find some decent support around about This sort of area 122 60 here is the support level that I've been targeting if we break below that then I think we could well Um If we break below that Then we could go quite a bit lower, but as long as we hold above 120 260 I would expect to see a rebound back to rules around about 123 30 123 40 But no more than that with respect to periscope periscope If you if you follow me on twitter And look in my timeline You'll see where my periscope recordings are because it'll have a prs link to them Um, I'll record them at around about 8 30 in the morning But just look on my twitter timeline m hueson underscore cmc Okay, so as I say I record that I will always endeavor to try and record that every day when I'm in the office You know if um if uh technology permits But all it is it's just a quick praisey of my morning update Which um I post on the website So as I say, thank you very much for listening ladies and gentlemen Have a great weekend and um I'll speak to you all well. I hope to speak to you all either on twitter or um Join the monday market webinar with my colleague david at 12 15 on monday when he has a quick look at the week ahead