TRADESETUP

February 14, 2020

The Morning Jumpstart

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OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 14/02/20 (as at 8:15am AEDT)

  • SPI200 (Mar) overnight futures flat to 7029
  • SP500 down 3.59 pts to 3375.86
  • NASDAQ down 13.99 pts to 9711.97
  • Dow Jones down 128.11 pts to 29,423.31
  • FTSE100 down 82.34 pts to 7452.03
  • DAX30 down 4.35 pts to 13,745.43
  • GOLD futures (April Contract) up $8.00 to $1579.60 an ounce
  • COPPER futures (Comex Mar) up $0.013 to $2.613 a pound
  • OIL futures US Session (Nymex Mar) up $0.42 to $51.59 a barrel
  • CRB Index up 0.51 pts to 172.28
  • AUDUSD trading at 0.6718
  • EURUSD trading at 1.0839
  • GBPUSD trading at 1.3044
  • USDJPY trading at 109.8000
  • USD Index US Session (ICE March) up 0.068 to 98.990

US Indexes can not be stopped as they bounce from a weak open on coronavirus fears to end on session highs. Traders expect that the US is well placed to weather the economic impact of the virus as funds have to flow somewhere and the US continues to be the place to be for risk. The DOW closed down 0.43% while the broader SP500 was down 0.11% and the Nasdaq ended down 0.14% for the session. In Europe, Indexes were hit hard on the open as traders bailing out of long positions but then markets bounced sharply to erase the losses as the World Health Organization (WHO) said cases of coronavirus infections are not rising dramatically outside China. The news gave some calm to the market along with data that suggests the number of virus recoveries is on the rise giving hope that the situation is still heading in the right direction.

Expectations are that the Coronavirus will dent global growth meaning that Global Central Banks will leave interest rates lower for longer to continue to provide accommodation and support for growth. This will in turn support risk appetite as money flows into US equities to cushion downside moves as the FX market continues to favour the carry trade into the USD (ie borrowing in low yielding currencies like Euro and invest in higher yielding currencies such as the dollar).

The USD Index was sold lower into the start of the European session but then proceeded to repeat the process from the previous few sessions and rally hard through to the US session close to end with gains. The EURUSD was hit hard to continue the push lower as traders were concerned about European trade links to China and Germany in particular. At the beginning of the year, analysts were expecting a moderate growth rebound but are now re-assessing as disruptions are going to delay those expectations. The GBPUSD went against the flow of the USD and gained sharply on expectations that the appointment of a new British finance minister will pave the way for a more expansionary budget. Price spiked up into the 1.3070 level where buyers were quick to lock away some gains. The AUDUSD initially spiked lower on the news in the Asian session but then rallied back up towards the 0.6750 zone into the US open. Price then moved back down to the days lows into the US close as price continues to look heavy on China concern. The USDJPY found a safe haven YEN bid to move the pair lower off the highs in the Asian session. We expect that further virus concern will keep the currency pair capped and bears pushing price lower.

SPOT GOLD rallied as expected on a safe haven bid into the precious metal and price held onto the gains into the US close. Traders remain concerned on China and seem happy to continue to edge into the action. Aussie gold had a big session to march higher being supported by late weakness into the Aussie dollar. This should bode well for the Gold sector today. Crude Oil shrugged off initial weakness during the European session to end on its highs after some positive news on the rate of recovery for the virus. Copper also continued its move higher as buyers supported higher lows off key support.

Cryptocurrencies were generally lower for the session although Ripple continued to gain against the generally flow of the market. Bitcoin is currently at $10259.3 down 0.53% while Ethereum is at $269.36 up 1.50% and Ripple is trading at $0.32977 up 8.71%.

The ASX200 was doing well yesterday right up until some random news regarding the adoption of new methodology for diagnosis of infected cases in China, hit the market and sent traders running for cover. Funny that the Index had just pushed into new all time highs only to suddenly drop 40 points. At the close the ASX200 ended up only 15 points (with 10 of those done in the match) to 7103.2. The Utilities sector was the biggest gainer followed by Emerging Companies and Consumer Discretionary. Falling stocks outnumbered advancing ones by 613 to 553 and 345 ended unchanged.

The ASX200 is expected to open flat as the SPI200 erased the losses during the European session into the US close.

ECONOMIC DATA OUT TODAY (AEDT)

USD FOMC Member Williams Speaks 9:30am

EUR German Prelim GDP 6pm

EUR Italian Trade Balance 8pm

EUR Flash Employment Change, GDP and Trade Balance 9pm

USD Retail Sales Data 12:30am

USD Industrial Production 1:15am

USD Prelim Consumer Sentiment 2am

SPI200 INTRADAY LEVELS TO WATCH

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