 Okay, very good morning. It is Friday the 2nd of July. I hope you're doing well and just a reminder like I do on every Friday to check out Their market watch Podcasts where I'll be chatting with our head of trading peers Cohen. Hopefully later today We've both got a pretty busy day ahead of us with non-farm payrolls, of course But we'll do our best to try and get an episode out for the weekend if we don't of course I'll let you guys know but otherwise look let's just get straight into What's going to be happening in the markets and of course then the focus is going to be on US non-farm payroll So as you will be accustomed to if you've been looking at markets for long enough then the morning before The madness is always quite quite calm and across the different asset classes things are relatively flat But before I go into that in more detail We closed at record highs once again in the S&P 500 So gains were 0.5 percent for the spools about 0.4 for the Dow and pretty flat actually for the Nasdaq after it had seen Quite a decent amount of outperformance throughout the week The energy sector was helping lift things obviously we saw oil prices move higher yesterday We did momentarily in the futures market Trade up to a high of 76 22 We've paired a little bit from that point just holding a 75 handle at the moment And of course that came after the number that was kind of being Banded around by the JMMC was more about the recommendations of 400,000 barrels per day Which was a low ball number compared to where expectations from the market resided Otherwise though Let's go and have a look at what happened in Asia So despite that more firmer clothes that we had on on Wall Street Chinese stocks are actually on pace to post their biggest one-day drop in more than three months in fact What is the reason behind that? Well, there's not really one singular catalyst There's a couple of things that people are looking at First of the kind of slowing economic growth We've had some economic data more recently still pretty solid but moderating And then we've also got this idea of tighter credit conditions The central bank just looking to tame any kind of asset price bubbles ongoing The declines in China and Hong Kong were pretty broad based property stocks faltered the Hang Seng tech index Which tracks some of China's biggest technology giants was actually Down over 3% so it was underperforming in those gross names Otherwise the other thing that is off obviously ongoing and Definitely is a little bit more at the forefront of investors' attentions given that we had the party in China's centenary yesterday Is the fact that there's also been further criticism from the US State Department regarding China's nuclear build-up as well as its actions concerning the Weak of Muslims and Tibet and Hong Kong So a lot of friction at the moment on a geopolitical front Again, it's kind of ongoing But perhaps as well just a few people looking at that given to that Situation politically we had with that event in Beijing yesterday. So yeah China a little week overnight I don't see that as a read across though into what's going to impact the market open from a sentiment perspective this morning I'd say we're pretty neutral overall Most of the asset class is a pretty flat Oils just edging a little lower for the moment But that doesn't come with too much of surprise with a bit of Short-term profit-taking off that initial run-up high that we had as we await the actual official OPEC plus meeting Which is going to happen this afternoon at 3 30 London time in the FX markets What was quite interesting is yesterday. We were looking on the daily charts a couple of key levels for Cable and the euro predominantly based on key areas of technical support amid then Ongoing appreciation of the dollar and I'm quite interested to look at this morning the calendar for the UK European morning is really quiet And there's just nothing going on. So will we get a little bit of pre-positioning people generally still as we've been In this place for the last two NFP readings kind of erring on the side of perhaps a decent a strong upside number If that does materialize and so the Dixie actually as Europe has come in It's just perked up a little bit and it's trading back up to the range high that we had yesterday and in the overnight Asia pack Sessions so the euro at the moment is below those levels and Just intraday. It's just had a brief flirt with that low that was seen and this time yesterday morning So I'm quite interested to keep an eye on those currency pairs Not only over the release, but also going into the release if we start to see a bit of further dollar bid going in on Anticipation of a firm and number cable You can see with that dollar strength as European players have come in has just moved a little bit a little bit lower again You've got the lows seen late in US session and with cable definitely much more Confirmation on the break technically through that area of 138 that we were looking at yesterday So definitely a firm NFP today and further injection of pace and the dollar on the upside Would then target much deeper moves down to 137 in that double bottom that we had for the March April move of this year Let's get into some of the stories though and talk about a few different things so gonna kick it off with OPEC So the joint ministerial monitoring committee. So again, don't don't get confused It's easy to do that because you have the JMMC which was delayed and it was those guys that were meeting yesterday They were trying to put forward their recommendations then for the actual formal OPEC plus meeting Which is due to happen today, which was supposed to be yesterday that got bumped because of all those subsequent delays that have happened So hopefully that makes sense But we're still yet to really get this deal ratified So we could still see a fairly large degree of volatility for oil prices as we go throughout the day And again, not so much triggered by NFP and you know, if you think about the implication NFP has for oil It's very much several dominoes down down the road although payrolls is quite integral to What the Fed assessment of the economy has looked like and subsequently the timing on their tightening whether tapering and rate rises Subsequently that will reshape then forward thinking about the trajectory of the economy and and that will impact then people's outlook for Demand for example for for oil, but this is you know, several things have got to happen before then so with with oil It's not really the product to trade for for over the release of NFP and on a day like today definitely the focus in that particular market will be heavily on the OPEC situation still and Needless to say that it wouldn't be a surprise at all to hear a completely different Contradictory kind of outcome to what we've heard yesterday So at the moment the markets fairly buoyant and we saw a decent rally yesterday going from really around 74 to a 76 Handle we've kind of midpoint now at 75 And so there is still scope for kind of movement either way Confirmation on ratification of the the announcements from yesterday, which were a recommendation the group should add 400,000 miles per day a month from August to December cut of two ways to look at this You're looking at the depth of the cut and the duration of which it's implemented And that will dictate then the overall type of speed and pace Of what they're they're trying to achieve and so they had still bit to play for The panel the JMMC yesterday suggested the duration of cartels production cuts agreement should be extended to December of 2022 The current deal is set to expire in April So they're feeding back a little bit more into the market perhaps a little bit less than anticipated But they want to roll over the production cuts for a little bit longer There's kind of a give-and-take kind of strategy in that sense. So that's the OPEC side of things Otherwise elsewhere. I'm quite interesting. We're talking about vaccines and Moderna and and Pfizer and so on and their efficacy rates against the Delta variant J&J was one that's Been looked at and they've come out with a company announcement overnight where they've said they've had positive data on its single shot Vaccine Demonstrating strong results against the Delta variant and providing long-lasting durability of response and the J&J one Of course was a bit in focus for a few different reasons For one it's a single shot Method if you like and so the general efficacy rate is lower than a two-shot Regime was what you'd see was a lot of the other vaccines and the people were Asking the question is that enough protection against the Delta variant of which the company studies and they've come out and said it is J&J's faced a few other manufacturing kind of bottlenecks They've also had problems with blood clots as well in a similar fashion to Astra So it's not being the smoothest sailing for the company But certainly this would be somewhat warmly received Generally by the medical community and the fact that it's proved to be Up to the mark in that sense against the mutations and the more transmissible Delta variant The company itself J&J's to report efficacy data from a late-stage trial It's happening at the moment of a two-shot regime and that information is set to come out at the end of next month The end of August so to be aware of these kind of top ups to then further lift the protection levels Could be quite interesting The other thing on the the coattails of that of course is lockdown strategies and The UK Prime Minister Boris Johnson has said there could be quote extra precautions Could still be required even after the July 19th date Which at this point in time looks very much like that will go ahead as planned for the final unlocking of the UK economy And that comes as latest figures show just over 26,000 new cases were reported Midweek the most since the end of January, but as we know Thankfully hospitalizations and deaths still remain relatively low Looking then at the day ahead as I said there is as you can see here from a data perspective Absolutely nothing coming out this morning producer prices in the eurozone. I wouldn't really See as a market moving Data release irrespective of the fact that perhaps half and I just given the inflation Focus of the market and we are expected a year and a year to perk up to 6.5 from 7.6 Percent but all eyes will be on of course non-farm payrolls. There's a couple of things to cover here And that is that non-farm payrolls is quite key in the context of where we're at at the moment in terms of what the markets are looking for In regards to signs of when the Fed might start to then change in terms of what powell and the more centrist members Of the fmc are thinking we've seen over the last week or so a real ramp up in the hawks becoming more vocal about their idea of Accelerating the kind of timelines with tapering With rate rises and so forth and of course this is all triggered on the back of that To rate hike surprise for the dot plots in 2023 But so far powell has kind of just towed the line He's continued to keep a fairly firm And straightforward message, which is one of a much more dovish Starts of being cautious and gradual and the jobs market has really been an area that's allowed him to keep that stance So why this particular payrolls report is quite important is well if this Headline figure an overall report is a knockout. I mean Really strong It just eliminates one of the main core reasons of what's making him be more Dubbish and if you lose that the markets might continue then to continue to price in a more accelerated tightening Kind of future going forward and that could mean then that you could see today a decent pop in yields the dollar We've already looked at those currency pairs, which are susceptible to dollar strengths to see some decent runs to the downside from a technical perspective Gold as well would likely get bumped lower on the back of that Just to Reverse some of the appreciation we've had over the last 48 hours or so And so yeah, there's quite a lot of emphasis on this on the flip side though It feels like we've been here before right the last two months We've gone into payrolls each time On the balance looking for upside surprises And I think on the balance the market's kind of in that mentality once again And each time in the last two months we've been disappointed Much more so on the first print. You remember that was a real low ball number Last months came in a little bit better, but still was kind of lackluster against expectations And so if that does happen, well, then it's kind of an overall Um reaction function of the show goes on for equities Probably we continue to just claw away Slowly printing record highs the nasdaq's probably going to like that situation the growth stocks Gold obviously has been Pretty hammered in fact since mid-june on that hawkish tilt from the fed And subsequent pickup in some of the hawkish rhetoric and that has seen gold put in the worst month in june Performance going back since 2016. So although gold has bounced a decent amount over the last two days or so There's definitely room for further upside if we were to get a very low ball number again Because it just means that the strategy of the fed to be patient and calm and not really react too much about talking Up tightening at this point is the right one to adopt at this point in time Keep in mind that it is hawks that are making hawkish comments So hence the reason why it's fairly contained in terms of the market reactions to their commentary of late In terms of what people look at of course is kind of the the job indicator build up going into this And we've got a bit of a mixed picture The employment section of the us main service sector Survey so the pmi service pmi Dipped in may to 55.3 after hitting a three-year peak in april While ism manufacturing employment index dipped just below 50 and that of course is symbolic of it moving back into contraction Territory on a more positive note though. Obviously this week. We have private sector employment adp And that did come in showing a pretty robust 978,000 job gain In may and first time employment claims have continued their decline the jobless petitions and what we look at is the four week Moving average that fell below 400k for the first time since the pandemic has struck so Counterforces if you like if you're trying to kind of have a A foresight of how this might play out in terms of the actual expectation here the headlines is expected to 700k We've got a range of 376 to an upside top end most bullish estimate of 1.05 million And so for me this this provides a good framework I think for trying to determine the type of reaction that you're looking for Now I certainly think to see that scenario that I discussed of equities seeing Um kind of some downside If we see the dollar pop and those pairs get weighed on a gold get hit I think we've got to be seeing a headline figure Of around 1.25 to 1.5 Area plus I think to see that type of decent intraday reaction Um, yeah, obviously the other components of the report have got to fit that narrative as well So, uh, maybe if you had a bit of a pick up in average earnings Um, average hourly earnings and the unemployment rate drops more than expected That would all be uniform then of a really solid report and that's going to make people a bit apprehensive about fed Moving more increasingly hawkish And so definitely with equities up at record highs Obviously, they they are a bit susceptible here given the kind of positioning of late to a bit of a pullback Don't get me wrong though I don't think that would necessarily detract my view that you'd find some support lower down and I wouldn't see it as a dramatic sell-off But intraday could feel quite heavy So on the flip side, yeah, if we get 376 is the bottom end of the headline range And there will be a lot of emphasis on on the headline You know in years gone by there's been a lot of focus on things like average hourly earnings and things like that I think the show right now is on the headline and so 376 I think you've got to get a number of kind of yeah more like 250 If we get a 250 print and unemployment rate, uh, still remains On the high side say 5.9 percent Then I think then yeah equities actually you might get the dip and drive initial reaction Oh, this is bad. Oh, it puts off the fed and we rally and in that situation You might get yields come under some pressure T-note might go bid and gold might bust through those Previous highs from yesterday and continue to move to the upside and part of this recovery we've had of late So yeah, that's it for now. Um, I am going to be covering Um, the full non-famperal report from 1 p.m. London time on the amplified trading youtube channel So if you just search amplified training on youtube Subscribe to the channel Click on the bell icon and you'll get an alert as soon as we go live If you'd like to see some of our traders trade the event And talk to them while they're doing it and watch what they're doing check out amplify live.com Our man there tim will be steering the ship for the community And you'd be able to chat to him as he does as he goes about his business in real time And that's it. So hopefully I'll see you online later Um, good luck to Andy Murray. Firstly, he is third up on center court But I think he's playing the number 10 seed today and It's a big test But then even more important is for England and the football at the weekend And so come on England Bring it home Let's go And with that, I wish you a good weekend. Thanks guys