The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 8/06/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 5 pts to 7286
  • SP500 down 3.37 pts to 4226.52
  • NASDAQ Composite up 67.23 points to 13881.72
  • Dow Jones down 126.15 pts to 34630.24
  • FTSE100 up 8.18 pts to 7077.22
  • DAX30 down 15.75 pts to 15677.15
  • GOLD futures US session (Aug) up $10.10 to $1902.10 an ounce
  • COPPER futures US session (Comex July) down $0.0073 to $4.5217 a pound
  • OIL futures US Session (Nymex July) down $0.39 to $69.23 a barrel
  • CRB Index down 0.76 pts to 209.53
  • AUDUSD trading at 0.7755
  • EURUSD trading at 1.2192
  • GBPUSD trading at 1.4179
  • USDJPY trading at 109.2600
  • USD Index US Session (ICE Jun) down 0.153 to 89.980

US indexes were mixed in a relatively benign session with the lack of any catalyst to get investors excited. The DOW ended the session lower while the SP500 was buoyed by gains in the Nasdaq to end flat. Traders will be looking towards the CPI number on Thursday for the next installment of inflation concerns and whether it is truly transitory or here to stay. Traders were also assessing news of a global minimum corporate tax rate of at least 15% which has been backed by the G7. US pollies are still trying to hammer out a bipartisan infrastructure spending package with Democrats expected to bring a bill to vote as early as Wednesday. The social media driven frenzy into smallcaps continued with AMC added 15% to the previous weeks 85% gains. The DOW closed down 0.36% while the broader SP500 ended down 0.08% and the Nasdaq closed up 0.49% for the session. In Europe, major Indexes were also unenthusiastic and happy to be contained within a range to end off the session highs thanks to early weakness in the US session. Banks stocks ended higher as bond yields were steady while commodity linked shares came under pressure on downbeat China export data.

The USD Index came under more pressure overnight to move back down below the 90.000 level. Sellers may look to extend on the move lower and push below support around the 89.900 area. Longer term, traders will be looking ahead to the CPI number on Thursday for an indication on inflation. If inflation remains high then money supply ie/ banks, which are loaded with cash, will start to be drained taking the heat off the dollar but for now the pressure remains down. The EURUSD bounced on the back of the dollar fall and may look to extend on the gains today if the USD does not find support. The anchor to the move up is held around 1.2150 which will need to hold for the extension higher. If 1.2200 breaks then expect to see a push to test 1.2220 then 1.2240. The GBPUSD flushed lower as expected and then rallied into the US close. Price is now expected to extend on the gains today and test the 1.4200 area as long as the 1.4162 area holds. The AUDUSD added to Fridays gains and pushed up into highs and resistance around 0.7763. The anchor to the move up is at 0.7728 and we expect to see some minor contraction off resistance as some buyers lock away some gains today. The USDJPY broke down through 109.370 as expected and looks to be on its way to test into 109.100 today. The momentum lower is slowing so we may see some tentative buyers step into the action to provide some support.

SPOT GOLD fought back in the European and US sessions as buyers ended the session on highs. The move up confirms the higher low around 1882 so we expect that the move will continue and extend up to the 1910 area. If bulls can not extend the leg higher, we expect that they will need to do some more work and hold minor higher lows. We remain of the view that the move lower was a flush on buyers rather than the start of longer term weakness. Crude Oil failed to continue higher and came under some selling pressure on concern that supply may increase if Iran and world powers can come to some agreement and clinch a nuclear deal. Price held up off 69.00 as recent buyers were happy to sit on the positions for now and new buyers held on the sidelines. If the 69.00 level breaks then expect to see a squeeze on recent buyers and move lower initially to test 68.22. Copper tested back into the major support zone around 4.4415 but held a higher low off the area as buyers soaked up the selling pressure and move price back up into the US close. We will be watching to see if price can push up through the 4.5385 highs to further pressure sellers for a squeeze back up.

Cryptocurrencies took a hit just after the US close as bitcoin was smashed down through support. The fall could open up a move a lot lower if bulls shy away from the action. Bitcoin is currently trading at $34189.9 down 4.89% while Ethereum is at $2637.58 down 2.18% and Ripple is at $0.87786 down 6.65%.

The ASX200 bulls were asleep at the wheel yesterday and could not get any rally going as the index ended the session down 13.5 points to 7281.9. IT shares were the only real area that showed some love as the sector ended up 2.80% while the next best was Utilities up 0.79%. Materials and Resources were flat while Financials took the brunt of the selling. Falling stocks outnumbered advancing ones by 734 to 607 and 418 ended unchanged.

The ASX200 is expected to open up 5 points as the SPI200 had a relatively range bound session lacking any conviction from either the bulls or the bears.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Current Account and GDP Data 9:50am

AUD NAB Business Confidence 11:30am

EUR German Industrial Production 4pm

EUR Final Employment Change and ZEW Economic Sentiment 7pm

USD Trade Balance 10:30pm

GBP MPC Member Haldane Speaks 11pm

SPI200 INTRADAY LEVELS TO WATCH