TRADESETUP

December 11, 2019

The Morning Jumpstart

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OVERNIGHT MARKET SNAPSHOT (as at 8:30am AEDT)

  • SPI200 (Dec) overnight futures up 2 pts to 6719
  • SP500 down 3.45 pts to 3132.51
  • NASDAQ down 5.64 pts to 8616.18
  • Dow Jones down 27.88 pts to 27,881.72
  • FTSE100 down 20.14 pts to 7213.76
  • DAX30 down 34.89 pts to 13,070.72
  • GOLD futures US Session (Feb Contract) up $4.00 to $1468.90 an ounce
  • COPPER futures US Session (Comex Mar) up $0.005 to $2.764 a pound
  • OIL futures US Session (Nymex Jan) up $0.30 to $59.32 a barrel
  • CRB Index up 0.99 pts to 182.17
  • AUDUSD trading at 0.6815
  • EURUSD trading at 1.1096
  • GBPUSD trading at 1.3184
  • USDJPY trading at 108.7600
  • USD Index US Session (ICE Dec) down 0.189 to 97.420

The US share market ended the session slightly weaker after some choppy trading as the tariff deadline of Dec 15th edges closer. Traders were not willing to add risk to the market as it remains unclear as to whether a new round of tariffs will be implemented by the US in a few days time. Traders will be focused on news even more after a Wall Street Journal reported that the United States and China were planning to delay tariffs and that officials from both sides hinted at extending their trade talks. The trade war continues to squeeze investment and profits across the US which does not look like changing anytime soon. The FOMC meetings on interest rates kick off tonight with traders awaiting for updates on the Central Banks 2020 economic outlook and what the extended trade war may mean to future growth. The DOW closed up 1.22% while the broader SP500 was up 0.91% and the Nasdaq ended up 1.00%. In Europe, Indexes ended in the red but did reverse earlier losses on the back of positive news on trade. Investors remain concerned under the weight of UK elections, weaker than expected China PPI data and the potential for a phase 1 deal in the near future.

In impeachment news, the Democrats in the US House of Representatives announced formal impeachment charges against Trump. Two formal charges accuse Trump of ‘betraying’ the constitution by abusing power to pressure the Ukraine to probe a political rival. The Democratic-controlled House is almost certain to vote to impeach the president.

The USD has now pretty much given back all the gains from Friday nights employment data rally as sellers continue to pressure the dollar lower. The longer term uptrend is still intact and we expect to see further bullish action after the FOMC rate decision. The EURO continued the march higher as the dollar continued its weakness. With expectations that the US Fed will leave rates on hold and talk up a growing economy and solid jobs market, we expect to see some Euro bulls lock away gains from the run up off the 1.1050 zone. The GBP continues to find strength ahead of elections with polls at this stage not pointing to any clear outcome and certainty for Brexit. The AUD still can not find a solid footing as a trade deal remains uncertain. Sellers are edging price lower but are being met with buyers who are ready to ramp price higher on the back of any positive news potentially from the US or China. A pause in the Dec 15th tariffs may be enough to put the squeeze on recent sellers for a run up. The USDJPY has found some buyers to press price higher as safe haven YEN buyers edge out of the action.

Gold edged higher to make back some of the previous losses mainly due to dollar weakness as an unclear message on trade and the coming tariffs kept safe haven traders on the sidelines for now. It will be interesting to see how Gold fairs if the tariffs are put on hold as we expect that to be a positive for the potential of a phase 1 deal, and push gold lower, although a timeframe will remain elusive. Crude Oil has continued to be supported by proposed OPEC production cuts although the demand will be clouded by trade uncertainty. Copper continued higher from its big move up Friday night. The bulls continue to support higher levels but news can turn the price action quick as we can see in the recent action as buyers lack conviction.

Cryptocurrencies move lower across the board as general lack of buying sees sellers take charge. Bitcoin is currently trading at $7239.1 down 1.99% while Ethereum is at $145.12 down 1.92% and Ripple is at $0.22020 down 1.57%.

The ASX200 opened weaker yesterday and could not manage to claw back the losses into the close as the Index ended down 23.1 points to 6706.9. Traders were happy to lock away some gains after the recent move up off the 6600 lows as any intraday rally was quickly sold into and price pressed back down. China CPI and PPI data was slightly weaker than expected which suggests that they may need to make a deal more than we think. The Industrials and Energy sectors were the worst performers as falling stocks outnumbered advancing ones by 710 to 413 and 337 ended unchanged.

The ASX200 is expected to open flat after a choppy session overnight saw the SPI200 swing between gains and losses to end up where it opening the overnight session.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Westpac Consumer Sentiment 10:30am

JPY PPI 10:50am

USD CPI Data 12:30am

USD Crude Oil Inventories 2:30am

USD FOMC Statement and Fed Funds Rate 12:30am

USD FOMC Press Conference 6:30am

SPI200 INTRADAY LEVELS TO WATCH

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