TRADESETUP

February 12, 2020

The Morning Jumpstart

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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 12/02/20 (as at 8:15am AEDT)

  • SPI200 (Mar) overnight futures up 10 pts to 7000
  • SP500 up 5.65 pts to 3357.74
  • NASDAQ up 10.55 pts to 9638.94
  • Dow Jones down 0.48 pts to 29,276.34
  • FTSE100 up 52.56 pts to 7499.44
  • DAX30 up 133.81 pts to 13,627.84
  • GOLD futures (April Contract) down $8.20 to $1571.30 an ounce
  • COPPER futures (Comex Mar) up $0.031 to $2.582 a pound
  • OIL futures US Session (Nymex Mar) up $0.42 to $49.99 a barrel
  • CRB Index up 0.74 pts to 169.61
  • AUDUSD trading at 0.6714
  • EURUSD trading at 1.0919
  • GBPUSD trading at 1.2954
  • USDJPY trading at 109.7800
  • USD Index US Session (ICE March) down 0.091 to 98.623

US Indexes started the session on a positive note as prices gapped up into new all time highs before fading into the close. Powell said that the economy is on a good footing but highlighted concerns to growth. Data out showed that household debt levels hit new records topping $14 trillion and new job openings hit two year low dropping for a second straight month suggesting a slowdown in job growth which would be expected considering the economy is technically at ‘full employment levels’. The DOW closed up 0.60% while the broader SP500 was up 0.73% and the Nasdaq led the charge up 1.13% for the session. In Europe, Indexes rally from the open as traders concerns over coronavirus are easing as expectations are now that the virus is plateauing as news broke that the number of new cases fell. Conspiracy theorists still believe that we are not getting the full story out of China and the numbers are worse but the news does suit the bullish sentiment which the US is happy to promote. It seems that the positive sentiment has been more led by the US consistently trading into new highs and showing a resilient economy than any data out from China on the impact to the economy.

US Federal Reserve Chair said that the US economy is in a good place although cited concern for the coronavirus threat and fallout and also highlighted concerns for the economies long term health. Powell said that the outbreak of the new virus will impact China and its close neighbors and trading partners and will very likely effect the US but the question is whether these effects will lead to a material ‘reassessment’ of the outlook for the economy and inflation.

The USD Index paused for a breather to its recent run higher as price fell away from the highs at the start of the US trading session. Focus for the dollar was on Powells speech with traders happy to lock away some gains going into the comments. The FX market may also be playing catchup to the share markets as traders risk appetite improved. With the US share market continuing to be strong, expect that the ‘carry trade’ (when traders borrow in low yielding currencies such as the Euro and invest into higher yielding as with the Dollar) will continue to support price. The EURUSD bounced on the dollar weakness but the bulls could not push price significantly higher showing strength to the move lower. Expect that for the Euro to see higher prices, the Dollar needs to correct lower which will trigger a short squeeze into the currency pair. The GBPUSD faired better and was already finding some buying into the US open when the dollar rallied. The AUDUSD put in a big effort to rally through Asian trade as China pumped further liquidity into their market to ease virus concerns. The move up continued into the US open but faded into the close. There are a lot of retail buyers stacked up that may get squeezed out on a push lower. The USDJPY chopped around within a range bound market although did seem to find a YEN safe haven bid.

SPOT GOLD was also choppy spiking lower as US share markets opened stronger in a risk on tone. Prices then bounced back from mid session into the close to end relatively flat. Crude Oil managed to pop up back above the $50 mark although the buying pressure did not last long and sellers came back in to close price below $50. Copper continues to look more positive as buyers hold higher levels.

Cryptocurrencies bounced back from the previous sessions weakness as Bitcoin pushed back above the 10000 level. Prices charged higher at the start of the US trading session and held gains until the close. Bulls will be looking for the pressure to build and a run to key highs around 13800 on Bitcoin which is currently trading at $10235.6 up 3.92%. Ethereum is at $237.69 up 7.04% and Ripple is at 0.28057 up 2.73%.

The ASX200 managed to open strong yesterday as expected, and hold the gains into the close. The IT sector led the charge followed closely by Telecom Services while the Gold sector was the only sector to end in the red. At the close the ASX200 ended up 42.8 points to 7055.3. Rising stocks outnumbered declining ones by 665 to 491 and 365 ended unchanged.

The ASX200 is expected to open up 10 points as the SPI200 pushed up into the US close just below the days session highs.

ECONOMIC DATA OUT TODAY (AEDT)

NZD Official Cash Rate and Rate Statement 12pm

EUR Industrial Production 9pm

USD Fed Chair Powell Testifies 2am

USD Crude Oil Inventories 2:30am

SPI200 INTRADAY LEVELS TO WATCH

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