The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 16/06/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 12 pts to 7377
  • SP500 down 8.56 pts to 4246.59
  • NASDAQ Composite down 101.28 points to 14072.86
  • Dow Jones down 94.42 pts to 34299.33
  • FTSE100 up 25.80 pts to 7172.48
  • DAX30 up 55.88 pts to 15729.52
  • GOLD futures US session (Aug) down $5.60 to $1860.30 an ounce
  • COPPER futures US session (Comex July) down $0.1915 to $4.3355 a pound
  • OIL futures US Session (Nymex July) up $1.24 to $72.12 a barrel
  • CRB Index down 0.85 pts to 210.18
  • AUDUSD trading at 0.7684
  • EURUSD trading at 1.2126
  • GBPUSD trading at 1.4082
  • USDJPY trading at 110.0800
  • USD Index US Session (ICE Sep) up 0.002 to 90.490

US indexes moved lower on the open and then were range bound into the close to end the session with minor losses. Retail sales came in less then expected as consumer spending focus turned to services as vaccinations allow people to travel and engage in other activities that had been restricted by the pandemic shutdown. On the flip side, PPI data showed higher price increases as producers scramble to keep up with growing demand although circumstances are unique with supply issues. Traders took a step back and refrained from adding more risk to the market as they await fresh guidance from the Fed Reserve. Recent data points to the potential for the Fed to pull the pin on stimulus earlier than expected although most analysts expect no change which makes the number statement important throwing uncertainty into the mix. A Reuters poll shows that the Fed is expected to announce in August or September a strategy for reducing its massive bond buying program although will not start to cut the monthly purchases until early next year. US 10-yr Bond Yields edged lower but were generally contained ahead of the FOMC statement. The DOW closed down 0.27% while the broader SP500 ended down 0.20% and the Nasdaq closed down 0.71% for the session. In Europe, major Indexes moved higher as investors were optimistic that the US will stay the same course after the ECB remained unchanged on their view for support leaving the near-term outlook positive for risk assets.

The USD Index saw another engineered rally at the start of the European session as more sellers went to the sidelines and were squeezed out of the action. Price pushed through the previous highs before the weaker than expected retail sales data saw price grind its way back down into the US close. We would expect to see the USD contained below the 90.600 resistance level and even look to flush lower ahead of the FOMC release. With nothing expected to change from the Fed, price maybe trapping bulls for another push into the lows below 90.000. The EURUSD spiked lower on the USD rally at the start of the European session and cleared out some buyers before flat-lining into the US close. Price is holding above lows around 1.2100 which we expect to see hold today but for price to be contained below 1.2140. Expect that price will remain choppy and directionless today. The GBPUSD continued to be weighed down by sellers as price spiked down through 1.4070 lows and held a lower high around 1.4124. If the USD is trapping some buyers for a squeeze lower, then we expect that the Pound is setup nicely for a ramp higher. There is major support at the 1.4008 zone which may see some action and provide a nice buying opportunity soon. The AUDUSD moved lower giving us a nice short opportunity through 0.7703. Price is still holding lower highs but has found some buyers off major support around 0.7672. Expecting to see some back and fill to squeeze out some sellers today. The USDJPY was relatively range bound overnight to consolidate the previous sessions gains. Price held between 110.000 and 110.150 as traders were happy to sit on their hands and await the FOMC release. We may see a flush lower today on Japan Trade Balance data just to clear out some buyers before the European session kicks off later.

SPOT GOLD continued to find some selling pressure on the USD rally but did hold up off support into 1850. Any buying was capped into 1868 which we would expect to see hold prices down today. If price can later break up through 1868, then we expect a short term run back up to the highs around 1900. If there is further upside pressure into the USD, price will look to test or break the lows. Crude Oil continued to chug its way higher as expectations for continued demand increase helped to drag in bulls and support price at higher levels. The trend up remains in tact although we expect that some buyers will need to be put back on the sidelines before continuation to higher levels as price is extended in the short term. Copper took a hit right from the open of the Asian session yesterday as longer term bears weighed on the action. The strength into the USD is also weighing on the sentiment although price has extended down into a level around 4.3200 where we expect buyers will tempted to jump into the action and provide some support. Remember that the daily trend up has been very strong so it is natural to see some pullbacks along the way as price needs to reset.

Cryptocurrencies generally held their ground as Bitcoin consolidated into resistance and above the 39500 area. Bitcoin is currently trading at $4085.5 down 0.49% while Ethereum is at $2540.34 down 0.63% and Ripple is a touch weaker at $0.87088 down 1.67%.

The ASX200 started the shortened week with a bang as the index rallied right from the open and ended the day up 67.2 points to 7379.5. The IT sector led the charge being followed by Consumer Staples and Consumer Discretionary stocks while the Gold sector was the biggest drag on the action. Bulls were not deterred as the Hang Seng was hit lower from the open as falling stocks outnumbered advancing ones by 828 to 601 and 373 ended unchanged. RBA minutes were released and showed that the ‘Board agreed it would be premature to consider ceasing the bond-buying program’ and remained cautious.

The ASX200 is expected to open down 5 points as the SPI200 edged lower off the days highs in a relatively range bound session overnight.

ECONOMIC DATA OUT TODAY (AEDT)

NZD Current Account 8:45am

JPY Trade Balance 9:50am

AUD MI Leading Index 10:30am

GBP CPI and PPI Data 4pm

CNY Industrial Production, Retail Sales and Unemployment Rate 5pm

CAD CPI and Wholesales Inventories 10:30pm

USD Building Permits and Housing Starts 10:30pm

USD Crude Oil Inventories 12:30am

USD FOMC Statement and Economic Projections 4am

USD FOMC Press Conference 4:30am

SPI200 INTRADAY LEVELS TO WATCH