 Hello and welcome to CMC Markets on Friday the 6th of December and this month's non-farm payrolls Webinar for November before we get started just do a quick risk warning Do a little bit of housekeeping What have you and look ahead to look ahead not only to Today's jobs report, which I think it's obviously going to be important in terms of the overall direction of the dollar But I think in terms of where markets go and what the Federal Reserve does next week It's probably not going to be to market It's not going to have a big market impact I think the expectations around the jobs report They're going to have to be very very bad in terms of or a big miss in terms of the actual headline numbers for it to really drive any change in US monetary policy We do have a Federal Reserve rate meeting next week at the moment the market is pricing a zero percent probability That the federal cut rates next week In fact, I think when you actually look ahead towards the Federal Reserve meeting next week What we've seen over the past few days has been US economic data that has been pretty ambiguous In terms of the state of the US economy I Think more than anything what's driving The markets at the moment as we head into year-end and I think we do have to bear that in mind We are do we are coming towards the end of the year There's probably only really two full trading weeks left now until January because if we take next week obviously next week is a very very big week in terms of macro risk Not only do we have a Fed meeting, but we also have a small matter of the UK general election European Central Bank rate meeting as well. We also have China trade numbers for November and One of the big drivers this week obviously has been The rather ambiguous statements coming out from President Trump the change of tone That we saw at the NATO summit when he held open the possibility that there wouldn't be any trade deal between the US and China much before the presidential election on the 3rd of November 2020 Which I think threw a little bit of a fly in the ointment as you can see from this correction that we saw on Monday, and then Tuesday That being said Whether we get a trade deal or not. I think is neither. Well, I'm not gonna say it's neither here nor there We're not really going to know what the state of play is until the 15th of December When the US decides whether or not to impose those tariffs On Chinese goods 156 billion dollars of Chinese goods the remaining 156 billion dollars of Chinese goods so in that context today's payrolls report while important in Terms of the direction of the dollar. I Don't think it's going to really influence much where stock markets go in the longer term so let's look at what we are expecting to see and Hear from the numbers when they come out in 15 minutes time Now you may recall last month Expectations around the payrolls report were a little bit low shall we say? There was an expectation because of the general motor strike that the numbers and the headline number would come in around about 1995 K in the event we got a reading of 128 K Which was a little bit I suppose of a mixed blessing because what it did was it essentially told us that Despite the despite the general motor strike The US labor market still remains fairly robust But then again, we look at the ADP payrolls report on Wednesday, which came in at a very weak number of of Around about 67,000 and then you sort of wonder well actually is it as healthy as We think it is and then of course you have weekly jobless claims which come in at a seven month low Generally the November jobs report tends to be fairly decent Because of seasonal hiring trends seasonal hiring patterns So expectations for today's payrolls report are for a number in and around 180,000 jobs I think more importantly will be is what sort of revision we get to the October number as well because I think while we're expecting a better number for November, obviously the The general most Jobs will get added back into the number so that will artificially inflate it in the same way that It's artificially held down the October jobs report Well when you actually look at The two ISM reports out earlier this week the manufacturing number pasted a very weak picture of the US economy in terms of Manufacturing, but then when you look at the services side of it while the headline number was slightly weaker at 53.9 All the key internal indicators were actually stronger than expected So new orders increased to 57.1 the employment component rose to 55.5 And prices paid rose to 58.5 all above the October readings So given that services is a much greater proportion of The US economy We should we should find that Overall the US economy is still looking in fairly decent shape now. I do understand I think some people are saying they can't get any audio might be worth just checking your sound settings on the PC Check the speaker levels and what have you to see whether or not that's the part of your problem I've had I've got a load of people telling me that they can hear me So I'm guessing it's not a technology problem my end. It's more likely to be a technical problem the other end So could you just please confirm? Ladies and gentlemen that you can hear me and those of you who are logged in Just to be sure that it's not a technical problem my side I'm seeing that my microphone is working properly. I can hear the audio I can see the bars moving up and down on my screen which suggests that the audio is working and I haven't muted myself by mistake I know some people would like to say that it wouldn't be a bad thing for me to mute myself by mistake But I'm sure at the moment you guys aren't in that category So anyway moving seamlessly back to the seminar Are we likely to get a correction as a result of the ambiguity that we're seeing about trade and Will a poor payrolls report undermine the narrative for The move higher that we've been seeing in markets over the course of the past few weeks I for one don't believe in trying to pick the top or trying to pick the bottom I just basically trade what's in front of me So at the moment what I'm seeing is we are very much in an upward trend Despite the fact that we have come off the back of three successive daily declines but more importantly than that what we have seen is That we have managed to rebound quite nicely and I think that more than anything is Important let me just pull all of these things over here Actually, I'll just get rid of the unemployment rate because I don't think there's enough room for that And I'll just bring up the average earnings numbers So the key numbers for me are as follows because it's not just the US employment report It's also the Canadian jobs report and obviously that will that will Really push dollar CAD around and dollar CAD has been trading In a quite choppy fashion because of obviously what's happening in the oil markets But let's let's start obviously with the let's start and I've got to stop saying obviously let's start with the S&P 500 so 50 day moving average were above that the trend still is Upward if we look at a weekly chart and we do have to understand that the week's not over yet So the candle hasn't closed but this long shadow here Suggest to me that there's plenty of buying interest at lower levels We can see it in these candles here and here That patterns repeated it would suggest to me that there's a moment for the moment that there's there's no appetite really to Sell out of long positions as we come into year end normally what happens is If there's an appetite the move to the downside follows through these long shadows suggest to me particularly over the course of the past few weeks There's plenty of demand to buy on dips and that continues to be the case Based on the charts that I'm currently looking at. So if we look at the S&P Decent support around about 3,100 if we look at the Germany 30 or the DAX as it's known to you better known to you and you and I Again, 50-day moving average is Looking to support any thrusts to the downside On the upside it does sort of does appear to be finding a little bit of a cap in and around 13,200 so 13,200 is likely to be a key level Certainly does to be a little bit of failing momentum on the DAX Unlike the S&P which still looks fairly well supported, but crucially it's still above the 50-day moving average So I think while it's above the 50-day moving average It's very much by the dips and it's the same and I think the same thing applies to The Nikkei 225 I think it's important that when you're looking at equity markets, you don't just look at one you look at them in the round and in the round What they what these markets are telling me is that we are still in an upward trend. Yes We're consolidating a little bit. Certainly that's Born out in the DAX and we're also seeing it born out in the Nikkei as well. So In terms of in terms of where do we go to next I think at the moment despite the fact that we did see a Little bit of a push to the downside this week. They're still there still remains fairly decent demand barring any interventions from President Trump and I Don't think it's I don't think it was a surprise that after saying that he didn't think that he was quite relaxed about a trade deal with China After the next presidential election It was no surprise after two days of equity markets falling quite sharply that he came out and said well actually trade talks are going quite nicely Thank you very much and suddenly the markets go back up again So it's this ambiguity that's causing the choppiness and it's likely to continue to do so So what about the dollar index? I've just been asked well again We've seen a bit of a sell-off in the dollar index over the course of the past few days Crucially, however, it is still above that key support level that I identified a month ago around about 97 10 97 20 and until such times and we can see from this chart here It's still very much in an uptrend. So again it's a case of very much by the dips in the US dollar and That would suggest to me that the upside in euro dollar is likely to be fairly limited So if we look at the upside in euro dollar, we can see straight away From this chart here that even if we get a good dollar number It's it's likely even sorry if we get a bad dollar number It's unlikely to drive euro dollar much higher Than it is now we can see this one-eleven area here one eleven ten fifteen Even if we move above this red line here, and I'm going to zoom it in for you We've also got the 200 day moving average Which comes in around about one eleven fifty five and then we've got the downtrend line from those highs We've drawn in all the way back in 2018 So euro dollar is still very much I think a case of sell the rally when it comes to looking at that particular currency pair and let's not forget We also have the ECB rate meeting on the Thursday of the general election just being asked how I get the data boxes on the non farms basically you go to This drop down here where it says use an analysis go to market calendar select that and then on the right hand side There will be a checkbox whereby you select the option there and It comes as a little bell and what will happen is that when you select those items There will be a ten minute warning For the particular data item that you check that that that particular item is due to come out So hopefully that answers your question go to news and analysis drop down Select market calendar, and then select the alert box For the data point that you want to send an alert for and then that just pops up ten minutes before the numbers are due Out as a reminder to you that there's data coming out So hopefully that answers your question. So what let's have a quick look at dollar CAD because obviously we've got the Canadian payrolls report as well coming up and what we saw in October was a slightly disappointing number from The Canadian jobs market that does tend to be a very flaky number It does tend to fluctuate quite a lot expectations for that for Gains of 10,000 new jobs against a loss in October of minus 1.8 non farms you can see here 180 128 and obviously the jobs numbers not the jobs numbers at the wages numbers Which I think as long as they're around about 3% we did see a big drop last month From around about 3.2 3.3 to 3% and I think that did prompt a little bit of dollar weakness, but overall Overall, I don't think it changes the overall picture With respect to US central bank monetary policy We are not going to get another rate cut this year and it's highly unlikely that we'll probably get one much before March Next year markets aren't priced for it at the moment bond markets aren't priced for it and The gold market is not priced for it What we've got at the moment is dollar CAD is vulnerable to further weakness further Canada strength for the dollar weakness Back down towards this line here. We've been trading sideways for pretty much the last Six months and I don't think that's likely to change to this 50-day moving average could act as a little bit of resistance So we could get a rebound back to 132 But overall, I think the direction of travel for dollar CAD is for slightly weaker US dollar is slightly stronger Canadian dollar Gonna look at cable very very briefly And I'll talk a little bit about that a little bit of more about that in the UK election over the course After the payrolls numbers, but I think I think there's potential for further sterling upside And it's not because of US dollar weakness I think that will be largely as a result of Sterling strength and I'll I'll I'll articulate why that is after the payrolls numbers have come out But overall, I think if we get a little bit of sterling weakness, we're likely to find buyers around about 130 or 70 130 80 Certainly looking for a move higher on the pound against the dollar dolly end very briefly Before the numbers come out in around about 35 seconds in a range decent support around about 108 40 It's also where the 50-day moving average is here I think if we get a weak number on the payrolls numbers, the downside is likely to be fairly limited Unless it misses by quite a substantial amount So if you're talking sub 100,000 you might get a sharp dollar sell-off And certainly the markets do appear to be starting to price that in you're getting a little bit of dollar selling But let me just put that on a five-minute chart and then Wait the numbers Here we go Okay, that's a really bad Canadian jobs number minus 71.2 Overall the non-farm payrolls numbers 266. I mean that is just an absolutely stonking number And an upward revision to 156 They've revised upwards the wages numbers well you can see for yourself. Well, that's doing pushing euro dollar down Pushing dollar yen up pushing cable down in 3.5 percent the unemployment rate I mean that is not just a Goldilocks report. That is a gangbusters report for the US US non-farm payrolls So I don't know about no no rate cut in December. I don't think we're gonna get a rate cut at all I mean, I know I was talking about seasonal hiring boosting the November numbers, but I mean that's just boosting the numbers on steroids 266,000 128 to 156 on the revision hire Really disappointing Canadian number and that's that's going to send dollar CAD higher Canadian dollar lower US dollar higher The big level on dollar yen On any move to the upside is going to be Once the chart loads Let me just quickly reset that and zoom in just zooming in now It's going to be around about 109 20109 30 If we get that high There we go So we're talking about the highs of yesterday around about 109, but 109 20109 30 That's that's the key level. Let's just get rid of those flash numbers there and there and Move swiftly on so Higher stock markets on the back of that not surprisingly Stronger dollar more importantly gold prices are likely to continue to fall But the way that they have been over the course of the past few months The direction and trap the direction of travel On that is quite clear from this daily chart here Talking about selling the rally on Gold prices at the moment and that's pretty much borne out by This chart here linking the highs from September Looking at the lows We're making Progressively lower highs and lower lows so at the moment There's no real upward upward momentum in terms of gold prices and the next key support level on gold is around about 1450 I think there's potential in gold for us to come back to around about 1420 1410 But Certainly, I think we can expect to get a tweet from POTUS president of the United States saying that the US economy is on fire and I'm just timing that now three two one and I'm sure we will get one Because even though The Don watches the stock market you can be sure that this won't have escaped his attention so I was talking about the dollar earlier and the fact that We were near support and it was still in an uptrend Well, I think that pretty much confirms it and I also think it confirms the fact that maybe the October Great cut was a little bit premature Um, certainly a number of Fed policy makers have been articulating that and When we look at next week's Fed meeting and Ladies and gentlemen, next week's Fed meeting is important in the context of where The Fed is likely to see the US economy as we head into the year end But more importantly in terms of the direction of monetary policy because next Next month the Fed voting members change and when the Fed voting members change sometimes the the steering of The dot plots changes as well as different members Start to be start to wield a vote who didn't have a vote this year so When we when we when we're monitoring the Fed next week It's very important to hear first and foremost what Jay Powell has to say and More importantly what the statement says and I think there's nothing in that statement That is going to be compelling the Fed to cut rates anytime soon irrespective of what President Trump says He wants lower rates from that jobs report the US economy doesn't need lower rates so 1445 is good support. I've just been Asked by one of One of the one of the listeners. Yes, it is good support. It's the previous low through here And that's that's what I'm targeting initially. So you will get a move to 1445. We've got a nice low there We've got a nice low there but all I'm saying is that Subsequent rebounds at the moment have been getting lower and lower if we look at this one here There's a lower high to there. That's a lower high. That's a lower high. That's a lower high So we're now below the 50 day moving average. So taking that To its obvious conclusion If we break below 1440 1445 1450 My my support is 1450 if we break significantly below 1450 Then the next target is this series of lows down here between 1410 and 1400. So I'm not calling for 1410 yet But what I'm saying is that unless Gold is able to push back above the 50 day moving average Then by the laws of momentum Then 1450 could well break and head down to 1410 1420. So You're not wrong by saying 1440 45 is good support it is But unless we get a break above the 50 day moving average that will give way To a move down towards 1410 1420. So hopefully that clarifies My thought processes. I'm sorry if that wasn't clear Key I'm being asked about Kiwi dollar more than happy to talk to you about that That has broken above the 200 day moving average That in itself is not that significant because it did that Here as well So I think for the moment Kiwi dollar is probably going to find a little bit of resistance around about 66. Why? Because it'll it found support in and around this area Back in july. So where we are now Is likely to be a fairly decent area to potentially get short of Kiwi dollar and generally Kiwi and the Aussie tend to move pretty much in lockstep with each other And I think it would be highly unusual if Kiwi broke away to the upside And the Aussie dollar didn't So the Aussie dollar at the moment still remains very much in a downtrend and for that Basically for clues to Kiwi keep an eye on the Aussie. Yes, I know Aussie Kiwi is a fairly decent cross I used to work for Commonwealth Bank of Australia So I know all about Aussie Kiwi and how that that currency pair moves But if we look at the Aussie dollar, we are very much in a downtrend very much so We can draw in the line that we've got From these highs back in december last year and also the 200 day moving average And at the moment while we have hit What I would call an interim bottom around about 66 85 What we haven't been able to do is break above This downtrend line from those those from those highs that we saw in december last year until we do so And until we break above the 200 day moving average the Aussie hasn't done that Then I think the Kiwi upside is likely to be fairly limited because generally they do tend to have similar Dynamics when it comes to moving higher or lower So that's the Aussie dollar. I'm going to get on to cable in a minute I'm just being asked about crude oil Um for me, that's very much in a range. It's 55 65 on the wide of it. So I would be selling Oil anywhere near the top end of the range around about 65 dollars a barrel We've also got the 200 day moving average. I'm guessing you mean oh not I you just said our wti. I'm talking about Brent. So I'll come to wti in a minute Brent We've also got the 200 day moving average this series of highs through here So I would suggest that as long as we stay below this series of peaks here in 200 day moving average Very much in a range. We're probably going to come back down To these lows around about 61 60 61 dollars a barrel as for wti That's here Just wait for it to load. Let's get rid of that line because it's superfluous to requirements. So just click on that and delete Um very much in an uptrend but it towards the top end of its recent range Certainly wouldn't be long at these levels I'll probably potentially be looking for a little bit of a move lower Um, this candlestick here is quite instructive Very long up a shadow try to move higher Failed call it a doji star And as such the likelihood is we're probably going to drift back down Towards these levels here and let's not forget that even though um This is the last three days. We are towards the top end Of this week's range and even though we haven't reversed the declines of last week We almost have so I don't think there's much more upward momentum In wti the opaque me are being asked about the opaque meeting You know to be quite honest, they're an exercise in jaw boning um, they haven't really agreed anything and The move higher over the course of the past few days was predicated on a significant production cut We didn't get it And because we didn't get it we are not going to see Much in the way of further upside in oil prices barring obviously a geopolitical shock out of the Middle East um A ramco ipo might raise expectations about higher oil prices But if the world economy is weak Why would opec Push oil prices up and potentially choke off demand. They're not going to do that. They're not stupid If you choke off demand in the global economy when it's starting to look a little bit soft You're actually shooting yourself in the foot optimum level for oil prices. It's 55 65 I think if opec can keep oil prices within that range They will be happy because if it goes oil prices go much higher it helps the shale producers and Last thing opec wants to do is help out the us shale producers because Lower oil prices for us shale producers are not good for them And there does appear to be some evidence that the shale boom is starting to peter out so They're not they're not agreeing to cut some output. It's it's cosmetic Karen then they're already over producing So um You know for me, it's about messaging more than anything else at the end of the day if you actually look at the numbers Opec has already cut production quite significantly from the levels a year ago I am writing an article on that and I'll post it in the next couple of weeks On my outlook for oil prices. I do an end of year summary on a whole host of On a whole host of asset classes towards year end. So I'm doing one on sterling. I'm doing one on the euro I'm doing one on oil companies and crude oil prices. I'm doing one on retailers and I will probably be doing one also on bond yields the us dollar and what have you so keep an eye out for them I will be sending them out and I will be posting them on the news and analysis section of the website So for me the optimum level for oil prices is 55 65 not too low Not too high if they can keep them within that corridor. I think they'll broadly be happy Okay, so now let's look let's have a quick look ahead to next week Because for me what we've seen over the course of the past few days with respect to pound the pound Is financial markets pricing in the prospect of a conservative party majority? And that's why the pound has gone to the upside now I'm very much a technically driven trader So what we've seen over the course of the past few days with respect to sterling Is very encouraging from my point of view We've broken that area of resistance around about 130 20 and those of you who follow My daily commentary will know I was targeting 130 20 as a potential breakout level Now if we take the distance between this peak here and this low here, which is 127 70 130 20 127 70 250 points projected up from 130 20 brings us to around about 133 So my minimum price objective for cable is 133 over the course of the next few days And for me, I think if that plays out as I suspect it will Then that would suggest to me that we are probably going to not Get a labor government or a labor majority government more than anything else We should get a fairly positive outcome for the pound Now that's probably going to come back and bite me But for me, this is all about levels. We've broken to the top side The likelihood is as long as we stay above 130 20 Here this this this is a port line here and there's plenty of there's plenty of things that can go wrong And this is something that I can't stress Importantly enough Markets are pricing in the prospect the Conservatives will be able to win enough seats to gain a majority Now, of course This assumes that all the new voters who signed up to vote for the very first time Vote along the same lines as recent opinion polls suggest Now as we know From the 2017 experience, this is not the slam dunk Some think it might be Traditional party allegiances are breaking down. It's not going to take much for opinion pollsters to get all over their faces And we could see a rapid repricing in the event of the polls narrow Or obviously we have the exit poll just after 10 o'clock 10 o'clock in the evening Thursday night and we should also be mindful of the brexit referendum financial markets called that massively wrong so It's not the slam dunk that people would say would suggest that it is but certainly in terms of the price action here It does look positive for further gains towards this Like the towards the April highs here more importantly, euro sterling has also broken out towards the Downside which suggests that we could be in for a period of short-term sterling strength over the course of the next few days and Don't I think it's not just being asked a question here Don't I think these moves are about capitalizing on what the polls are saying before any conclusive decision on hung parliament Outcome on the 12 to 12. Yeah polls aren't definitive. Of course. They're not but financial markets also tend to be forward-looking in nature and You know generally generally They tend to get it right um It's not often they get it wrong Obviously when they do get it wrong and they get it wrong big style like they did in 2016 but I've always said this and I will continue to say this You can only trade what you see and what I see is cable breaking to the top side and based on that In the absence of any other news whatsoever If I didn't know what the political background was and I was just looking at that chart Without the benefit of news without the benefit of any inputs from anyone or anywhere I would be looking to buy cable on any dips with a stop loss Below 130 for a move to 133 just based on that price action alone not knowing anything else That's what you do when you're a technical trader one of the things about technical trading is that it affords you the luxury of ignoring the news or the noise as I like to call it because essentially You've got news coming at you from all angles Particularly when currencies are concerned because not only do you have sterling related news You also have dollar related news and you've got that push-pull effect on the exchange rate So trading currencies sometimes is an awful lot easier than changing The the uk 100 the german decks or anything else because you have two competing sets of fundamentals Banging up against each other And for me, I think the fact that number was so good for us payrolls and we only got a very minimal dip in cable Suggest to me there's still an awful lot of stale sterling short positions out there That are still priced for a pessimistic outcome there's an awful lot of cautious shorts and You know if the conservatives do win a majority then you could well see cable pop on that exit pole when it comes out on thursday or If that pole lead widens if the pole lead narrows you could see sterling weakness kick in and we could head back towards 130 But as long as we hold above 130 Then i'm of the opinion that we could well see a higher pound a year from now So certainly in terms of my one-year target the cable is 138 now I could end up wearing that prediction, but you've got to be in it to win it and I think it's likely to be near a 138 than 125 My feel on the outcome of the election is based on the price action in cable Um, and if currency markets are right then the Tories should get a majority now The big question is how big will that majority be? Will it be 10 seats? Will it be 20? Will it be 30? You know, or will it be a minority government? We're not priced for a minority government We're not priced for a hung parliament. We're priced for a Tory majority And that's where the risk is at the moment that they come up short or 20 seats or 30 seats or 40 seats or 50 seats for me What's the majority at the moment the markets are pricing in 45 50 it's there or thereabouts anything over and above that Could be construed as sterling positive in the long term It's not sterling positive But in the short term it is because once we've moved past the withdrawal agreement You've then got the thorny issue of the transition period But certainly on the basis of what we are looking at over the course of the next few weeks You should see a pop in sterling towards 135 And I've just said what you've just said Okay, ladies and gents. Are there any other questions? Obviously we've got a european central bank meeting as well Also on the same day the the 12th of december and then this is important as well So you need to bear this in mind. This will be christine the guards first meeting as ecb president And while we're not expecting anything particularly Earth moving from the ecb One thing it does strike me mario dragui was very adept. He was very adroit at fielding questions from journalists about monetary policy And money and the use of financial instruments to move the markets christine the guard doesn't have that background She's a lawyer by trade. She used to be the french finance minister And her record there was questionable You could say the same About her record as chair of the imf the greek bailout argentina and what have you so my My take from next week's ecb meeting is how what sort of message she puts out there And who she has sitting next to her to deal with the questions on monetary policy of which she is not an expert Is chief economist philip lane there? To field any questions on monetary policy so Big big big meeting i think for the ecb next week not expecting any changes But certainly in terms of message delivery. I think it could be quite instructive fed's next move Um Nothing before march Nothing before march Um, and that's that's pretty much it. Also, we've got um If there is a conservative majority you should also see a um nationalization bounce In all of those stocks that are trading at a discount. Um, so companies like royal mail bt obviously the broadband thing Looking at the utilities like sse a united utilities panon Centrica to a greater or lesser extent and the train providers like go ahead group and stagecoach and national express and first group So you could also see a bit of a move higher in the footsie 250 in the event that we get a positive Outcome a positive outcome for markets So that's something else to bear in mind as well Okay, ladies and gentlemen, that's it for this year for this non-farm payrolls webinar I'd like to thank you all for um, tuning in every month to listen to me go on about the markets. It's been a pleasure and If I don't speak to any of you before I'd like to wish you all A great Christmas and a happy new year and um stay out of trouble for the next two weeks when it comes to trading You don't want to be going into Christmas with a dirty great big loss um hanging over you so Um, so yeah, thanks very much ladies and gents and um, I will speak to you all again Hopefully next year. Thanks very much