The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 11/06/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 1 pts to 7307
  • SP500 up 19.63 pts to 4239.18
  • NASDAQ Composite up 108.58 points to 14020.33
  • Dow Jones up 19.10 pts to 34466.24
  • FTSE100 up 7.17 pts to 7088.18
  • DAX30 down 9.92 pts to 15571.22
  • GOLD futures US session (Aug) up $5.80 to $1901.30 an ounce
  • COPPER futures US session (Comex July) down $0.0410 to $4.4900 a pound
  • OIL futures US Session (Nymex July) up $0.33 to $70.29 a barrel
  • CRB Index up 1.02 pts to 212.19
  • AUDUSD trading at 0.7754
  • EURUSD trading at 1.2175
  • GBPUSD trading at 1.4172
  • USDJPY trading at 109.3200
  • USD Index US Session (ICE Jun) down 0.078 to 90.043

US indexes were up from the open and held the gains into the close with the broader market being supported by tech stocks. The SP500 managed to close the session at new all time highs as bond yields fell on signs bond bears are caving in on their bets against the Federal Reserve. The CPI reading came in slightly stronger than expected but lower than previously leaving bears realising that the Fed may not be too off the mark with inflation being ‘transitory’. The economy is opening up and consumers are spending money but wages are not rising yet. Bond prices initially flushed lower before rallying into the close to the top end of a recent range and look set to put further upside pressure on prices in the near future. Megacap tech stocks did well on the back of potentially easing inflation concerns and lower interest rates for longer. The DOW closed up 0.06% while the broader SP500 ended up 0.47% and the Nasdaq closed up 0.78% for the session. In Europe, major Indexes were flat as traders digested the ECB comments on the current state of play. ECB raised its growth and inflation views but promised to keep stimulus flowing freely as they fear a rise in borrowing costs will choke off the recovery. The DAX and FTSE got a lift on the US CPI release before fading back down into the close to end the session flat. The DAX may be building for a squeeze lower as price struggles around highs while the FTSE also has problems breaking up through resistance levels and may need a flush lower first.

The USD Index tried hard, after the CPI release, to push higher but it seemed to continually run into a wall of sellers who were adamant on lower prices. It didn’t help that bonds rallied but the dollar was also generally contained to the downside and held above the 90 level into the close. Expect that many traders will now be waiting to here the comments from the FOMC statement next week. With price capped at a minor lower level around 90.300, we may see sellers push lower into 89.600 in coming sessions. The EURUSD also saw some chop to take out both longs and shorts as price looks more like a ‘heart beat’ reading than a currency. The Euro managed to end roughly where it started the European session and we see the potential for price to creep higher today after ECB comments on growth expectations. If price breaks up through 1.2180 then expect to see a run higher….but a break below 1.2160 may see a run to test into 1.2130…in other words…no direction yet. The GBPUSD did flush lower as expected before ramping higher back to resistance around 1.4187. The Pound remains stuck in a range between 1.4090 and 1.4213 but we see that bias may be turning south as lower levels hold. For now, expect more chop and for flushes into support to hold. The AUDUSD was supported by the risk on move into US shares and USD weakness as price initially flushed the 0.7725 support zone before heading up to test resistance around 0.760 into the close. If buyers can soak up any selling pressure and hold a higher low around 0.7740, then we would expect to see a break up through resistance and a run higher. The USDJPY was looking good for buyers into the US CPI release as prices were holding higher lows. After the number, price flushed into new highs only to find a wave of selling to push price back down and take out minor support at 109.453. Expecting to see further weakness as more buyers re-assess positions and get squeezed out of the action.

SPOT GOLD was setup early in the European session to trap sellers as price was pushed lower to take out stop losses and clear out some bulls. Once the number was released, price was ramped higher to close up around $28 off the lows. With a higher low now put in place around 1870, we expect to see more buyers dragged into the action on a push through 1902. Crude Oil fended off a big spike lower to end back near highs on expectations that Iranian nuclear deal talks could resume after the US lifted sanctions on several former Iranian officials and energy firms. Price dropped over $1.50 before recovering just as quickly but shows the markets focus on Iran news up at highs. Expect to see more volatility and clean out of longs on any news headlines. For now, price may grind lower today to retest the 70 area. Copper was pushed lower early in European trade to retest the major support level around 4.4400. Price did hold up off the zone but is showing some clear longer term weakness now after a lower high at 4.5360 held. If price action holds below 4.4985 today, then expect to see another test and potentially break of support on the cards.

Cryptocurrencies showed more weakness overnight as Bitcoin struggles to run higher and Ethereum looks heavy. At this stage, bitcoin is getting spiked high but ramps are getting sold into which is not a great sign for bulls. Bitcoin is currently trading at $36902.2 up 0.7% while Ethereum is at $2489.38 down 4.21% and Ripple is at $0.87594 down 2.58%.

The ASX200 managed to make back some of the previous sessions losses yesterday as bulls went bargain hunting to push the index up 32.3 points into the close. The Index ended the day at 7302.5 with the IT sector leading the gains with Utilities not far behind. Energy weighed most on the action while Miners and Resource stocks also ended in the red. Rising stocks outnumbered declining ones by 718 to 628 and 406 ended unchanged.

The ASX200 is expected to open up 5 points after the SPI200 continued the bullish momentum up into previous highs in overnight trade.

ECONOMIC DATA OUT TODAY (AEDT)

GBP GDP, Goods Trade Balance, Industrial and Manufacturing Production 4pm

GBP BOE Gov Bailey Speaks 6:30pm

USD Consumer Sentiment and Inflation Expectations 12am

SPI200 INTRADAY LEVELS TO WATCH