The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3% just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly earnings fell to 2.1% on the yearly data which remains stubbornly low.

1. Weekly Outlook
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10th August 2015 by Richard Perry, Market Analyst
Macro Commentary
The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could
be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs
added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3%
just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly
earnings fell to 2.1% on the yearly data which remains stubbornly low. Also, the labor force participation rate remains at
62.6% which is multi year lows. Although there is apparently mixed empirical proof of the link between wage growth and
inflation in the US, this still has to be a concern for the Fed that wage growth has been stuck around 2.0% for around two
and a half years now, despite the sharp decline in unemployment back towards what is seen as full employment. This
could mean there is more slack in the labor market than unemployment of 5.3% suggests, with the low participation rate
surely a factor to play in this. This could put enough doubt in the minds of the doves on the FOMC to push back a rate
hike until December. I seem to be in the minority, but I still think that the Fed will bottle it in September.
. WHEN: Thu, 13th August, 1330BST
LAST: -0.1%
FORECAST: +0.4%
Impact: Retail Sales are a drag on expectations of
a Fed rate hike. Time and time again in 2015
expectations have been missed, with the only beat
coming two months ago. This May not be top of
the list of considerations for the FOMC but core
retail sales languishing less than 1% having been
over 4% less than a year ago will be a concern for
any doves on the committee contemplating a rate
hike. US economic data remains closely watched
and the US dollar will be a prime mover on the
announcement of retail sales. Hitting a consensus
of +0.4% on the month will be a minor positive but
still be less than 1.0% for the year.
Must watch for: US Retail Sales
Key Economic Releases
Date Time Country Indicator Consensus Last
Tue 11th Aug 10:00 Eurozone German ZEW Economic Sentiment 32.0 29.7
Wed 12th Aug 06:30 China Industrial Production +6.6% +6.8%
Wed 12th Aug 09:30 UK Unemployment (Average Weekly Earnings) 5.6% (+2.8%) 5.6% (+2.8%)
Wed 12th Aug 15:00 US JOLTS job openings 5.42m 5.36m
Wed 12th Aug 15:30 US Crude Oil Inventories -4.4m
Thu 13th Aug 13:30 US Retail Sales (core MoM) +0.4% -0.1%
Fri 14th Aug 10:00 Eurozone CPI (final YoY) +0.2% +0.2%
Fri 14th Aug 10:00 Eurozone GDP (flash QoQ) +0.4% +0.4%
Fri 14th Aug 14:15 US Industrial Production (Capacity Utilization) +0.3% (78.0%) +0.2% (78.4%)
Fri 14th Aug 15:00 US University of Michigan Consumer Sentiment 95.0 93.1
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1N.B. Please note all times are BST (GMT+1), data source Reuters

2. Weekly Outlook
10th August 2015
by Richard Perry, Market Analyst
Foreign Exchange
After a solid Non-farm Payrolls report the market is again looking to convince itself that a September rate hike is on
again. I remain unconvinced and the movement on forex majors in response to the report as Friday’s trading reacted
suggested that either it is no done deal, or that it has already been priced in. I favour the former view as I see further
corrective forces at play on the euro, whilst a retest of the multi-year highs on Dollar/Yen are also likely in the coming
weeks, if not days. The dollar index has been choppy for much of the past week in the run up to the payrolls report and
as yet it is still unable to find direction. The rebound on commodity prices could not help to drive a near term rebound
across majors such as the Aussie, Kiwi and the Canadian dollar. However, I would still see these as being counter trend.
The prospect of a sustainable recovery in commodities is still some way off and this should help to keep an anchor on any
recoveries. Sterling has taken a bit of a hit in the wake of the dovish lean at the Bank of England, however the economic
data remains a positive and with the MPC “data dependent” do not expect the weakness on sterling to last long.
WATCH FOR: A clutch of second stream US economic data this week will keep the focus on the US dollar,
with Retail Sales key. Euro traders will be watching out for the German ZEW, CPI and also a first look at
GDP; whilst sterling bulls will be hoping for more good news on the employment/earnings front.
EUR/USD
Watch for: Continues pressure on
$1.0810/20 as rallies remain a chance to sell
Outlook: Rallies are a chance to sell. The
sequence of lower highs in the past two
months whilst also being flanked lower by
the resistance of the falling 144 day moving
average suggests that the bears remain in
control for a test of the May/July lows
around $1.0810/20. This is the key medium
term support and is likely to remain under
pressure whilst the US data suggests
everything remains on course for a rate hike
in 2015 and possibly as early as September.
Resistance at $1.1130 is key.
NZD/USD
Watch for: Bears in control until resistance
band at $0.6740/$0.6770 is taken out
Outlook: The rally at the end of last week
was seen as the US dollar came under a bit
of late pressure. This has meant that the well
defined 3 month downtrend channel that
has been puling the Kiwi lower has now been
broken. I still only see this as near term
respite for the Kiwi bears. Momentum
indicators remain negative and suggest that
rallies are a chance to sell. Unless there is a
significant rebound this week, the resistance
band at $0.6740/$0.6770 will remain intact
and while this is the case then the bears will
remain in control and a retest of the low
around $0.6500 will be seen in due course.
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FX Outlook
2

3. Weekly Outlook
10th August 2015
by Richard Perry, Market Analyst
Indices
According to data agency, Factset, US earnings season for Q2 has hardly been a blowout, but has not been too bad either.
With almost 90% of the S&P 500 companies having now reported earnings, the earnings decline for the who market
across Q2 is looking to be around -1.0% (which would be better than the -4.6% expected before the announcements
began), whilst revenues are expected to be around -3.3% (better than the -4.4% originally expected). This decline in
earnings is expected to continue in Q3 whilst the revenue decline is expected to last into Q4. It must be said that these
figures are hugely impacted by the catastrophic decline in the performance of the energy sector, and if this was stripped
out then Q2 revenue decline of 3.3% would turn into a growth of 1.6%. This shows what a drag the commodities continue
to be on the equity markets and without prices stabilizing it is difficult to see any real traction in the equity markets. The
US companies are also complaining of the impact of the stronger currency on their future prospects. So then, if you flip
this round and look at the point of view of the European corporates with a dramatic decline in the value of the euro and
less exposure to energy stocks and you see DAX and CAC are faring much better. Unfortunately for the UK, the FTSE 100 is
stuck in the same boat as Wall Street, with huge exposure to energy and basic materials amid a big run on sterling.
WATCH FOR: With only 15 S&P 500 companies to announce, earnings season is beginning to wind down a
touch now. Commodity prices remain an issue for FTSE and S&P 500.
DAX Xetra
Watch for: Buying into corrections for
further pressure on the 23.6% Fib level
Outlook: Reversal at Fibonacci retracements
of the 9216/12389 rally is an ongoing theme
playing out with remarkable consistency.
The latest at the 23.6% at 11,640 which
provided a ceiling in the rally. The bulls will
be hoping that this is a mere consolidation
and that the RSI rolling over around 60 is not
a sign of another cycle lower. The general
trend with DAX trading above its moving
averages remains positive and I still see
corrections as a chance to buy. Support
band 11,050 up to the 38.2% Fib at 11,177.
FTSE 100
Watch for: The bulls have a battle on the
prevent another lower high forming
Outlook: The disappointment of another
rally falling over will be magnified if the
resistance at 6813 remain untested. Since
the April high there have been a series of
lower highs on FTSE and with momentum
indicators remaining in correction mode the
bulls have got a lot of work to convince this
is anything more than a bear market rally.
The MACD lines remain below neutral but
also watch for the RSI failing in the mid-50s
again. The near term support of the reaction
low at 6645 will be a key early test this week
as a failure could re-open the flood gates
again.
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INDEX Outlook
3

4. Weekly Outlook
10th August 2015
by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
A precipitous fall in commodity prices remains a concern for market sentiment. Questions over Chinese demand and
continued US dollar strength are providing the downward force on prices across the commodities complex. Gold maybe
consolidating for now but this still seems to be little more than a pause for breath in the selling pressure. The oil price
remains in a perfect storm of lack of demand, oversupply and a strong dollar. Barring the occasional technical rally there
is very little to suggest any real support coming in. Expectations over a Fed rate hike grow ever tighter and the volatility
around US data releases is elevated, with the impending impact on the US dollar and subsequently commodities.
The reason that yields on US Treasuries (and UK Gilts for that matter) are not flying away in the face of potential rate
tightening (although the Bank of England was a touch more dovish than previously thought) is due to the concerns over
long term global growth. This is weighing on yields which cannot break the shackles. Hawkish Fed rhetoric will help to
boost Treasury yields in the coming weeks but seemingly not substantially.
WATCH FOR: US economic data continues to drive the US dollar, with Retail Sales, Industrial Production
and Michigan Sentiment key for both commodities and bond yields. Watch for Fed speakers too.
Gold
Watch for: The consolidation is still likely
to be resolved to the downside
Outlook: The consolidation continues and
the range that has built up over the past
three weeks is keeping the bears at bay,
but for how long? This range still has an
air of a consolidation that is simply
unwinding oversold momentum before
the downside potential is renewed for the
next leg lower. The RSI has now unwound
from below 20 to almost 40 whilst the
price has basically gone sideways for 3
weeks. Rallies are a chance to sell with
resistance still between $1100/$1120
before $1131 is key.
Brent Crude
Watch for: Continued downside with rallies
sold into and a test of $45.20
Outlook: Both Brent Crude and WTI have
got downside potential for a test of the key
2015 lows. As Brent has broken support
after support it is now within 10% of the
$45.20 January low. Momentum remains
extremely bearish and although the RSI is
close to 20, with January’s low reaching 14
before any support was formed, so there is
precedent for further downside yet.
Resistance comes in between $52/$55 for a
technical rally this week. I continue to see
rallies as a chance to sell.
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COMMODITIES & BONDS Outlook
4

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Weekly Outlook
10th August 2015
by Richard Perry, Market Analyst