TRADESETUP

August 27, 2020

The Morning Jumpstart

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OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 27/08/20 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 15 pts to 6095
  • SP500 up 35.11 pts to 3478.73
  • NASDAQ up 198.59 pts to 11,665.06
  • Dow Jones up 83.48 pts to 28,331.92
  • FTSE100 up 8.59 pts to 6045.60
  • DAX30 up 128.53 pts to 13,190.15
  • GOLD futures US session (Oct) up $38.40 to $1954.00 an ounce
  • COPPER futures (Comex Dec) up $0.0405 to $2.9940 a pound
  • OIL futures US Session (Nymex Oct) up $0.06 to $43.41 a barrel
  • CRB Index down 0.19 pts to 152.46
  • AUDUSD trading at 0.7233
  • EURUSD trading at 1.1832
  • GBPUSD trading at 1.3208
  • USDJPY trading at 105.9900
  • USD Index US Session (ICE Sept) down 0.119 to 92.900

US indexes were again ramped up by the tech heavy Nasdaq as the bubble continues and drags the broader market SP500 along with it to new all time highs. Salesforce Inc, up 26%, raised its annual revenue forecast after surging demand for the company’s online business software drove up tech stocks. Facebook was also up 8.2% giving the SP500 its biggest boost and Netflix gained 11.6% as the Megacap tech stock rally was the sessions theme. We suspect that there is a lot of ETF buying support that is lifting the tech stocks also to create the inflated scenario and add fuel to the fire. Bulls were also supported into the US session with better than expected durable goods orders data. The DOW closed up 0.30% while the broader SP500 ended up 1.02% and the Nasdaq ramped up 1.73% for the session. In Europe, major Indexes were also buoyed by tech stocks which were the risk on sector for the session. Traders were supported by news that Germany agreed to extend stimulus measures to cushion the economy at a cost of up to 10 billion euros. France is also set to present its economic recovery plan in early Sept. Both helped to alleviate the concern for the stalling euro zone recovery.

The USD Index was hit on the durable goods data release which is strange as the positive number would traditionally be a positive for the dollar. It seems that traders are factoring in Powells inflation news and shift to an average target rather than the 2% level. Again, our expectations are that this may be initially bearish but support may hold as price has already factored in this scenario and inflation means eventual rate rises and longer term strength into the dollar. The EURUSD whipped around as expected on the back of the dollar moves to end the session back up at a resistance zone around 1.1845 which is where price was trading at the start of the Asian session yesterday. The GBPUSD did extend to the 1.3240 area thanks to the weakness into the dollar ahead of Powells speech. Still, price is happy to hold within a wide range as the USD index holds above the 92.50 area. The AUDUSD lifted as bulls continue to hold price off higher lows. The general theme for the currency continues, of US dollar weakness and equity market strength, and keep the Aussie in a wide range and edging higher. The USDJPY obviously came under pressure from the move into the USD and pushed lower back down to support around current levels. If price can not hold the zone around 105.920, then expect a further extension lower to squeeze out recent buyers off major lows.

SPOT GOLD ramped higher once the USD fell after the data release. Price was under pressure early but turned on a dime to take out recent sellers and trigger a spike in price. Still, resistance at the 1950 area is capping further price gains but maybe not for long. Crude Oil remained well contained being capped by virus fueled demand concerns but supported by production cuts. Price was supported by the weakness into the USD but could not get any traction to keep the rally going. Again it is the 43.50 zone which is holding down bulls. Copper was determined to move higher as price action brushed aside earlier strength in the dollar and then spiked once the dollar selling got underway. Price is finding support from both the dollar weakness and expectations for increased demand unlike with Oil which at this stage is being capped.

Cryptocurrencies gained back some lost ground being help by the USD weakness and general bullish sentiment in markets. Bitcoin is currently trading at $11485.5 up 1.95% while Ethereum is at $389.96 up 2.89% and Ripple is at $0.27815 up 1.65%.

The ASX200 followed on from Tuesdays selling momentum as bears pushed price down from the open yesterday. Price did recover some of the losses into the close to end down 45 points to 6116.4. Most sectors ended in the red with Telecom Services and Gold stocks leading the way. Falling stocks outnumbered advancing ones by 766 to 535 and 347 ended unchanged.

The ASX200 is expected to open up 20 points as the SPI200 was lifted off lows from another good performance from the Nasdaq.

ECONOMIC DATA OUT TODAY (AEST)

AUD Private Capital Expenditure 11:30am

CAD Current Account 10:30pm

USD Prelim GDP and Unemployment Claims 10:30pm

USD Fed Chair Powell Speaks 11:10pm

USD Pending Home Sales 12am

CAD BOC Gov Macklem Speaks 1:15am

ALL Day 1 Jackson Hole Symposium

SPI200 INTRADAY LEVELS TO WATCH

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