 Okay, good afternoon. Welcome to CMC markets on Friday the 2nd of December and this month non-farm payrolls report for November with me, Michael Houston. Before we get started, the general risk warning, I will be recording the video. So if any of you want to go back and re-listen to any parts that might be of interest to you, you can feel free to do so. I'll post it on YouTube after the event and then we can go on and talk in general terms about obviously what I'm expecting from the report, whether or not the report actually matters in the wider scheme of things in terms of US monetary policy. And also once I've finished going through the key chart points on the various indices as well as currencies have also a quick preview of next week's USPPI numbers, obviously the CPI numbers that come after that, and obviously the Fed meeting, which also coincides with in the same week, the European Central Bank and the Bank of England. So it's going to be very, very busy week, the week beginning the 12th of December. But for the here and now, let's concentrate on the US payrolls report. And it's coming off the back of a very strong month for European stock markets. And the DAX closed 8.6% higher on the month, obviously 100 made a gain of 6.74%. And the March higher in the dollar, US dollar has come to a shuttering halt posted its biggest monthly decline on the dollar index since 2010. So I mean, what's what's caused this sharp turnaround when it comes to the US dollar? Well, quite simply, it's down to the fact that I think, and the market is starting to think that inflation has peaked. And I mean, there's certainly been evidence of that for quite some time. I've been talking about the prospect the US CPI peaked as long as four or five weeks ago, and perhaps even longer. Because if you look at how the headline number has been coming down over the course of the past few months, it's come down every single month on the headline number in the US since June. And those those drops have now started to accelerate. And that's no better illustrated not just in the US numbers, but also in the headline PPI numbers for Europe, particularly in Italy, in Germany, and this morning as well, in the EU PPI numbers that came out at 10am this morning, where we saw a monthly decline in October of 2.9% PPI month on month, which dropped the annual number from 41.9 to 30.8. Now, obviously, that is still very, very high. But it's the extent of the decline that I think is really shaping the narrative, if you like about, you've got central banks, you've got central bankers talking about the fact that they don't think inflation has peaked. You got Madam Lagarde earlier this week, making that very same statement and that inflation expectations, you know, needs to be well anchored. Well, they haven't been well anchored for about the last 12 months. And for the last for a good part of the previous two years, you've had central bankers saying inflation is transitory. And they were saying inflation was transitory as recently as February this year. I mean, up until March this year, the Fed was still growing its balance sheet. And then since March, the upper bound of the Fed funds rate has gone from 0.25% to 4% since March. You know, that is a big, big jump. Now you've got central bankers articulating concerns about policy lags, about gross slowdowns. You've seen a slowdown rate hikes from the likes of the RBA. In November, they hiked by 25 basis points when they're expected to hike by 50. You've got the Bank of Canada next week and the RBA is next week as well. You've got the Bank of Canada who were expected to hike by 75 basis points last month and hiked by 50. So there is growing evidence that inflation has already peaked. And yet you've got central bankers now saying, well, actually, we don't think that it has. Well, why should we believe you? You were telling us inflation was transitory up until February this year. Now that it looks as if it's coming down, you're saying that it's going to be staying up at current levels for quite some time to come. So sorry, don't believe you. You know, you've already proved that you're not particularly reliable when it comes to transitory. So why should we believe you when you're starting to say it's become more persistent? Now, obviously, maybe I'm being a little bit harsh. I would argue that I'm not. You know, some of what central bankers have done has been the architects of why we're in the situation that we're in at the moment. Nonetheless, we are approaching some very, very key levels on a number of major indices, notwithstanding the S&P 500. If we look at this daily chart here, if I draw a line through the peaks from earlier this year, we come in pretty much where we are at the moment. And yes, we have broken above the 200 day moving average. So that does suggest that we're starting to see a turnaround in sentiment. The bigger question is whether or not we see a breakout today. And I got to say, I struggle with that. We've basically rallied thus far on the premise that inflation has peaked, but that it won't cause a significant earning slowdown and a significant period of economic recession, even though bomb markets are potentially arguing for that very scenario. They're pricing in a significant recession in 2023. In fact, here in the UK, we're probably already in a recession, given the fact that Q3 GDP contracted and Q4 is unlikely to be any better, given some of the data. And the same applies to the EU as well, certain countries in the EU. It's going to be a significant struggle to really suggest that we're going to see any sort of growth in Q4 and that could well spill over into Q1. So things are going to remain very difficult. So we've seen a fairly decent rebound. The bigger question is, can we sustain it? We're certainly on the basis of dollar weakness. I think we can certainly sustain dollar weakness. Why do I say that? Because we've seen such a big decline. What we've also seen is a big technical breakout on amongst a number of key currency pairs, euro dollar, being a case in point. Now, I thought that it would go a lot lower than it has. The fact that we're back above parity and are broken above the 200 day moving average, the 50 day moving average is moving to more positive, suggests that we can definitely potentially see 10620. Why 10620? Well, that's basically using FIB levels here. We can project 38.2 Fibonacci retracement from the highs this year to the lows and a pullback from there. So there's certainly potential for us to go quite a bit higher or a little bit higher. Also, we can draw a little trend line through these peaks here and you've got a nice little upward channel forming through these levels here. So certainly I'm expecting to see further dollar weakness in the short term. Nowhere is that better illustrated in the way that dollar yen has behaved over the course of the past few days. In fact, I think we can go quite a bit lower and we can head back towards these lows in August at around about 130 40. That's that was the key breakout level to the upside. We've now tested lower. We've broken below the previous support 140. There's 140 to 250. But 140 here is likely to be a very key barrier to further gains. And we're also below the 200 day moving average. So momentum is clearly against the dollar when it comes to dollar yen. And you've also got Bank of Japan officials certainly arguing the case for further or potential change in monetary policy from the Bank of Japan. And that's likely to be positive for the yen and negative for the dollar. So you'll potentially be doubling down on that as well. So I've got the countdown marker going there. Cable, you asked me about cable, Richard. So big question here for me is cable has, have we got further to go higher? Really what's happened in cable has been a symptom of dollar weakness. We've broken above the 200 day moving average. We're testing the 50% retracement level of the moves from the peaks back in June last year to the record lows that we saw a 10340. We certainly have potential. I'm more bullish on cable now, despite the deteriorating fundamentals than I was, say, for example, a couple of months ago. But everyone was bearish on cable pretty much every man and his dog. So even if you are very negative on the UK economy, that doesn't necessarily mean that the pound can't go higher, because bearish sentiment is so negative. As we head towards year in, you're going to have a certain amount of short covering. So certainly against the dollar, an awful lot of the more hawkish scenarios as far as dollar gains are getting priced out, which is basically why you're seeing the pound ratchet higher, much more aggressively than is the case against the euro. And essentially, that's also why you're seeing a game against the euro. But in the context of the overall range that it's been in over the course of the past year or so, if you look at the pound there, it's not really going anywhere. And it's holding above the 200 day moving average. So I think euro sterling is likely to continue to remain in a range. And while the dollar remains weak, the likelihood is we'll potentially see further sterling gains. Certainly, I think my mindset is that we could potentially see 130 cable within the first six months of next year, obviously depending on how the data plays out. But certainly in the context of these payrolls numbers, let's talk about the actual numbers themselves. I'm just going to quickly look at the DAX. And again, here, we're pushing against key resistance on the DAX, again, from the highs this year, 61.85 level, big, big level around about 14,576. So it's going to take quite something to push the DAX much above this series of peaks through here. So again, pushing against resistance in the on the S&P, pushing against resistance on the DAX, and also pushing against the upper end of the recent ranges on the FTSE 100 as well. Potentially bullish candle there. But if you look at what the FTSE has done this year, it's towards the top end of its recent range. I don't see that changing much between now and the end of the year. So what are we expecting on the headline numbers? We can see the forecasts in red here, 200,000, which is down from last month's 261, which was better than forecast. Unemployment rate 3.7% average hourly earnings expected to come in slightly lower. If we come in pretty much in line with expectations, I don't anticipate there being a significant move one way or the other. It's going to take a sizable miss towards the downside to the downside for markets to come off quite significantly, because at the moment, there's a bit of a balance. Markets are pricing in inflation coming down and a soft landing. If job growth collapses, which is unlikely at the moment because of 10 million vacancies in the US economy, if job growth collapses, then obviously that predicates a much harder landing than perhaps markets are pricing in. So anything over and above 150, 180, 200,000 is probably going to be in line with expectations. But certainly in terms of the data that we've seen this week, particularly in manufacturing, the ADP report saw the loss of 86,000 manufacturing jobs. So it'll be interesting to see whether or not the non-farm payrolls report manufacturing payrolls numbers there show a similar decline. Certainly there was weak growth in the October numbers of only 32,000 manufacturing jobs were added in October, expecting a rise of 18,000 manufacturing jobs in the November ones. So it'll be interesting to see whether or not that continues. The bigger thing here, I think with respect to the actual report itself is wage growth. So at the moment, we're expecting 4.6%. That's going to be a 12 month low. So again, that will keep the Fed sweet in terms of, yeah, we're going to go 50 basis points. We already know we're going to go 50 basis points. It's really about what comes after that. And what will shape what comes after that will be not only today's payrolls report, but it will also be USPPI next week, which is due to come out on the 9th of December and USCPI the following week. And USPPI next week is expected to fall by quite a significant amount. 8% was the headline rate for PPI in October. Market projections for that from a drop to 7.1. And in October core PPI was 6.7. That's expected to fall to 5.8. So again, that feeds into the weaker dollar narrative and the potential that January rate hike could be as little as 25 basis points. And that's essentially what we're talking about here. The terminal rate after the 50 basis point rate hike that we're going to get this month will be could be as low as 5% or even lower than that because the Fed funds rate will be four, four and a half after the payrolls number, not the payrolls number the Fed meets in December. So counting down in terms of Euro dollar, I'm still very much a seller of dollar strength. So sell dollar on rallies. Now that we've broken out on these key chart points on the on the on the upside in terms of Euro dollar and cable, dollar yen selling into weakness around about 137.50 overall, I think given the progress that we've seen this week, we're on I would be surprised if we see a break to new highs on the S&P and the DAX and that's probably going to come back and bite me in about five seconds time. So here we go over now. Keep quiet. 263. That's a strong number. A positive revision higher 284. So that's very positive five. Wow. That's dollar stress. That's a really dollar strength story there wage growth. The Fed will not want to see that 5.1% and revised up in previous months to 4.9. So and unchanged at 2.9. Let's have a look at the other numbers. Manufacturing payrolls rose by 14,000. So yeah, I mean, all of this makes is a complete contrast to what we've seen earlier this week. Week data, there is nothing wrong with the US labor market on the basis of those numbers. Even the Canadian jobs report is stronger than was anticipated 10.10,100 jobs added in November. So we're going to let it get a little bit of a pause here. And obviously equity markets are lower on the back of the dollar rebounding. Not really a surprise there. Dollar going a little bit bid. Let's have a look at the 10 year yield. That's up 10 basis points from 3.5 to 3.6% nine basis points now. So certainly no soft landing. No hard landing either. Probably a US economy that's an awful lot more resilient than perhaps an awful lot of us gave it credit for. But certainly I think the tenure or the tone of Powell's comments earlier this week do suggest that the Fed is starting to worry about policy lags and the policy lag effects. So very strong number, very good for the dollar. That particular payrolls report also got a price in the fact that generally as we head towards Christmas, you get an awful lot of what I would call temporary hires. As a result, retailers hiring for Thanksgiving and Christmas. So it'll be very interesting to see whether or not the big jumps that we've seen not only in the October revision, but the November report carry themselves over into the new year. But certainly that number is a surprise. And what's even more surprising is the significant jump in wages, which the Fed will probably not welcome and could bring could could prompt a few analysts say, well, maybe the Fed should go by another 75 basis points. Personally, I think that is unlikely. It shifts the balance slightly towards 75 in December, but given Powell's comments earlier this week, it would be unusual for the Fed to continue to go down the route, tightening aggressively from the 75 they've seen thus far. So let me just double check to make sure I've answered all of your questions because it's just going down. So I've done sterling dollar, dolly and dollar CAD. Let's have a quick look at dollar CAD for you, Richard. I missed that out. My apologies for that. So this is what I did earlier. Let me just get out of that. Of course, in doing that, I've forgotten to send I've forgotten to send out the the price alert for it, which is a little bit disappointing. Never mind. I will do that now. Well, it's three minutes late. A little bit disappointing. There we go. So where was I? Okay, so we're going to be doing dollar CAD. So the strength of the dollar could well take it back to this trend line here. We got the 50 day moving average, which thus far over the course of the past few weeks has managed to cap any dollar gains. And I would expect that to continue to be the case. So we could see further Canadian dollar weakness, dollar strength, particularly if the Bank of Canada goes by 25 basis points next week. Because we do have a central bank meeting next week. And the Bank of Canada is likely to go by 25 and not 50, given the fact that it dialed back from 75 previous month, which should see the Canada weaken potentially further the dollar gain run into resistance through there. But certainly in terms of this particular chart, we would look to see a little bit of a dollar gain up to around 135, 60, 70, and then for it to drift back down again on the back of that. So certainly still nothing changes in terms of my selling dollar strength scenario in terms of these payrolls numbers. But what if these payroll numbers will do is will keep the dollar bid heading into the end of the week. So we could we'll see Euro dollar slip back down towards the bottom of yesterday's range there, which is around about 104, 103, 80, be a little bit of support there. What we won't want to see is a close on the lows here because that would then signal a bearish reversal and signal a little bit of weakness back down towards 102. And perhaps that's what we need in terms of a shakeout of some of those dollar positions that are probably a little bit stale, where people have got long of euros and a little bit of short dollars. But certainly it does tie in quite nicely with the FIB level on the cable chart here, which held really nicely at 123 in the move higher yesterday and was unable to break through today. So we could see a little bit of a pullback in cable and Euro over the course of the next few days on the back of these numbers, but much will depend on PPI US PPI, which is due on the 9th of December, which is next Thursday. And if that comes in particularly weak, we could say three or four days of a little bit of dollar strength and then we'll get a little bit of dollar weakness on the back of the US PPI number as the oversold nature of the recent dollar losses starts to unwind itself. So hopefully that helps you out with the dollar CAD. Can I talk about Sentinel-1? What if I knew what it was? Let me just see if I can find it. I'm guessing it's a, wow, okay. Let's have a look at that. From a technical basis, I'm assuming you mean and nothing else. Let me just bring the chart up. Well that's interesting. I mean potentially we could be near a short-term base with gap lower. I mean this sort pattern on a technical level usually tends to be positive. It looks like a hammer if that helps. So I think if we get a break back above 16 here, we could well see a little bit of a pullback in the short to medium term. Let's also have a look a little bit from the technical point of view. There we go. I mean it's definitely bearish but I would be certainly interested to see what happens and whether or not this move off the lows. We filled the gap. What we want to do is now get back above the gap. So there's a little bit of gapology in terms of this particular chart here. We gap lower. We've got a hammer. We've now come higher. We filled the gap. The big question is do we basically re-surface up here or do we come back down here? At the moment it looks as if a base could be in but you know it's a fairly high risk trade based on the chart and the price action that I'm seeing at the moment on this particular chart there. So hopefully that helps. Euro yen. Euro yen. Let's have a look at that. Right well nice little trend there. Let's have a look at see if we can find something discernible. Well I think I've just answered that particular question. Taken the lows from March. So big trend line currently which we rebounded from this morning on this particular daily chart. So as long as we hold above today's lows which are currently at 140 76 then we could see a fairly decent rebound. But what I would say is the fact that we're back in the cloud. Any rallies are likely to be limited to around about 144 on that basis before we drift back down again. So should see a limited rebound from current levels. Test back into the cloud. Draw a line through these peaks here for a retest of the line the uptrend line with a potential break towards the downside. So that's what my Euro yen chart looks like there. Okay so have I got have I missed anybody in terms of questions? So at the moment looking looking at the current state of play as we head into Christmas and the end of the year. I'm not convinced that there's an awful lot of further upside in terms of equity markets and the reason for that is if if you've made any money this year you're going to want to protect it. If you've done your boots this year you won't want to do any more and ultimately everything is waiting C mode for the Fed, the ECB and the Bank of England. So that suggests to me that we're probably seeing the short-term peaks will chop around in the S&P, the NASDAQ and the DAX and will retreat a little bit from the highs that we've seen in the past few days. That's not to say that we can't go higher but I think that for the here and now will probably chop around within the current range that we've been in. So with respect to the DAX we could slip back to around about 14-250, 14-500 between now and the central bank meetings barring anything black, swan-ified, black swan event, anything out of China, talk of a China reopening. I got to say I still think that's highly unlikely. I think what could happen or what's most likely to happen is that they'll be more flexible about lockdown restrictions. They won't be locking everyone up 24-7, padlocking them behind the front doors and throwing away the key. I think if anything what the recent unrest has taught us is that the natives are becoming restless and they need to be, there needs to be a much more nuanced approach to Chinese lockdowns. Infections are still going to continue to rise. There won't be a full relaxation of COVID restrictions much before the end of Q1 beginning of Q2 next year but I think you could see a certain degree of flexibility on the part of Chinese authorities that you probably haven't seen before and with China trade numbers due out next week it might lead to be awful. We're expecting to see declines in both imports and exports in excess of 4% for exports, a 4% decline and a 6.7% decline in imports. I think the Chinese authorities will want to at least try and keep the economy ticking over until the early part of next year when they can look to fully relax restrictions then. Let's just quickly have a quick look at gold as well because I know some people like to talk about that and that's run out of steam at the 200 day moving average. We did close above it but it also happened to coincide with, it did it a couple of times through here as well. The fact that we dropped back on the back of the jump higher in yields, the US 10 year is now 3.62% so it's now 11 and a half basis points higher. The inflation slowdown or the wage growth slowdown could take a little bit while to play out but certainly in terms of wages, the wages numbers welcome news for workers as narrow as the gap between headline inflation and wages but the Fed will be concerned about a wage price spiral so not that there is one it's just something that central bankers like to bang on about. Okay so it's now quarter two unless I'm assuming that was an attempt at humor, is England's play over the 50 day moving average? Yeah well it depends whether you're talking cricket or football Alan because if you're talking cricket yeah it's well above the 50 day moving average. If it's England's football then it's middling because they were quite good against Iran and rubbish against the US and they were pretty good against Wales so we'll have to see what they do against Senegal next week. Very hit and miss indeed. Does anyone else have any questions ladies and gents because if not I'm going to wind this up and I'm going to wish you all well obviously I won't speak to an awful lot of you before Christmas so I'd like to wish you all a very early merry Christmas and a happy new year and I'll speak to you all same time similar place in January otherwise thanks very much for tuning in over the last 12 months it's been a pleasure and I'll see you all next year as I say a very Christmas and happy new year and profitable trading to all of you thanks very much for listening