TRADESETUP

May 7, 2020

The Morning Jumpstart

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OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 7/05/20 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 48 pts to 5348
  • SP500 down 20.02 pts to 2848.42
  • NASDAQ up 45.27 pts to 8854.39
  • Dow Jones down 218.45 pts to 23,664.64
  • FTSE100 up 4.34 pts to 5853.76
  • DAX30 down 123.26 pts to 10,606.20
  • GOLD futures (June Contract) down $24.50 to $1686.10 an ounce
  • COPPER futures (Comex July) up $0.009 to $2.342 a pound
  • OIL futures US Session (Nymex June) down $0.47 to $24.09 a barrel
  • CRB Index down 2.10 pts to 121.54
  • AUDUSD trading at 0.6405
  • EURUSD trading at 1.0793
  • GBPUSD trading at 1.2339
  • USDJPY trading at 106.0500
  • USD Index US Session (ICE June) up 0.438 to 100.200

The US broader market Index was lower being pressured by woeful jobs data ahead of Fridays payroll release. The consensus for Fridays payroll numbers are for 22 Million losses and the unemployment rate to lift to 16% from 4.4%. The selling into the close will have traders thinking twice about any further risk on moves into shares. Traders will be focused on increased activity as States and countries slowly re-open. The fact that restrictions are easing is not the big thing, it is whether people are happy to venture out and spend and also what will happen with the virus numbers. Also adding to the pressure for bulls is trade between the US and China after Trump said he will be able to report in a week as to whether China is fulfilling its obligations under a Phase 1 trade deal. The comments come at a time when tensions between the two countries are increasing. The DOW finished down 0.91% and the broader SP500 was also down 0.70% while the Nasdaq ended up 0.51% for the session. In Europe, major Indexes were weaker as the FTSE just managed to end with minor gains while the DAX ended in the red as both were sold into the close. Sellers jumped into the action after data showed orders for German industrial goods collapsed and euro zone business activity plummeted. Adding salt to the wound was a forecast record GDP contraction of 7.7% this year. This adds to pressure after the ECBs ability to fight the economic crisis comes under fire on the back of Germany’s high court stimulus ruling.

The USD Index moved higher as a safe haven buyers moved into the action after the US employment data showed extreme job losses. Traders will be bracing for the Friday payroll release which could see volatility spike if safe haven buying increases. The EURUSD was hit twofold, firstly by the strength into the USD and also by worse than expected manufacturing data in the Eurozone. The Euro is moving into a support zone around 1.0760 where we may see a reaction from sellers to lock in some gains from the move lower which is held down at 1.0826. The GBPUSD came under fire as expected right from the European open as price spiked down through 1.2418. The selling opens the door to a move lower to the 1.2220 zone. The AUDUSD is under pressure as the share market rally stalls and jobs data puts pressure on bulls. Price moved down through 0.6415 and triggered recent buyers to lock in some gains. The move is set to continue and may test down to the 0.6267 area. The USDJPY continues to be pressured as safe haven YEN buying well outweighs dollar gains. Price continues to hold lower highs and we do not see the trend changing anytime soon as US employment data looms.

SPOT GOLD came under fire as the USD rallied leaving safe haven buyers scratching their heads again. Price continues to look weak and we expect a further squeeze lower as buyers will be pressured out of long positions through 1680. Crude Oil gave up some gains on a sudden move lower during the European session and the price action looks set to repeat the move down to put another squeeze on buyers. We expect that the move was due to early sellers ahead of rollover but there is still a lot of fuel build up to come out of the market if sellers really apply the pressure. Copper moved higher as expected after the break up through 2.3400 during the Asian session only to run into some selling pressure as the USD rallied and share markets came under selling pressure. The trend up is still in tact and will depend on whether the run up in equities is about to take a breather or not.

Cryptocurrencies were relatively flat except for Bitcoin which ramped back up through 9000 in a solid move from the Bulls. Bitcoin is currently trading at $9255.9 up 3.41% while Ethereum is relatively unchanged at $205.92 up 0.57% and Ripple is at $0.21711 up 0.33%.

The ASX200 moved lower from the open yesterday only for the bulls to fend off sellers into the close and move price back up. The index ended the session down 22.5 points to 5384.6 as sectors were mixed across the board. The IT and Gold sectors performed the best while Financials were down 1.13%. Retail Sales data was out lightly better than expected at +8.5% from last of +8.2%. Rising stocks outnumbered declining ones by 643 to 551 and 352 ended unchanged.

The ASX200 is expected to open down 50 points as the SPI200 comes under pressure during the US session.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Trade Balance 11:30am

CNY Caixin Services PMI 11:45am

NZD Inflation Expectations 1pm

CNY Trade Balance and USD Denominated Trade Balance Tentative

EUR German Industrial Production 4pm

GBP BOE Monetary Policy Report and Official Bank Rate 4pm

EUR German Buba President Weidmann Speaks 6pm

USD Unemployment Claims 10:30pm

EUR ECB President Lagarde Speaks 12am

SPI200 INTRADAY LEVELS TO WATCH

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