The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 17/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 7 pts to 7297
  • SP500 down 22.89 pts to 4223.70
  • NASDAQ Composite down 33.18 points to 14039.68
  • Dow Jones down 265.66 pts to 34033.67
  • FTSE100 up 12.47 pts to 7184.95
  • DAX30 down 18.95 pts to 15710.57
  • GOLD futures US session (Aug) down $43.80 to $1812.60 an ounce
  • COPPER futures US session (Comex July) up $0.0005 to $4.2690 a pound
  • OIL futures US Session (Nymex July) up $0.03 to $72.15 a barrel
  • CRB Index down 0.01 pts to 210.17
  • AUDUSD trading at 0.7609
  • EURUSD trading at 1.1994
  • GBPUSD trading at 1.3989
  • USDJPY trading at 110.6600
  • USD Index US Session (ICE Sep) up 0.871 to 91.373

US indexes ended the session lower after the release of the FOMC statement and interest rate outlook from the Fed. There were some jittery bulls around as the Fed kept interest rates and monthly bond buying steady, though they signaled that they may hike rates sooner than previously expected. The markets saw a knee-jerk reaction lower especially in the bond market which took a hit after the release but Powell later down played the outlook for rising rates saying “discussing liftoff now would be highly premature”. For now, the bond buying program remains in place and jobs are still a concern for the Fed but the new view on interest rate rises has triggered the market into a risk off mode. The Fed has reiterated its promise to await “substantial further progress” before beginning to taper but have changed their tone and are expected to start to discuss tapering in the upcoming meetings. Interesting to see that interest rate sensitive tech stocks bounced back into the close to minimise the losses. The DOW closed down 0.77% while the broader SP500 ended down 0.54% and the Nasdaq closed down 0.24% for the session. In Europe, major Indexes ended mixed as they were generally in a holding pattern ahead of the US FOMC release. Expect to see a weak open later today as traders take some risk off the table in response to the release.

The USD Index spiked hard up through resistance at 90.610 to push into previous highs at 91.400. The earlier than expected rate hike projection caught some sellers off guard although the way the market has traded the last few days suggest that it was ‘anticipated’ by some…with friends in highs places. Watching to see how price reacts around the 91.400 area to see of there may be a squeeze on buyers as nothing has really changed for the short term. The EURUSD dropped over 100 pips on the back of the FOMC release and dollar spike. Like the dollar, price has pushed into a previous level where buyers may step in to provide support. It is still early yet to look for a buying opportunity and there will need to be some higher lows build prior to a potential squeeze higher. The GBPUSD also took one on the chin with a bit of over 100 pips. Price moved down into a clear support area and will look to tag some stop losses before attempting a move up. There may be some follow through momentum lower today in the Asian session open although the next level down is a long way off. The AUDUSD was also dropped like a stone and was smashed lower but fell a little short of pushing into support around 0.7590. Expect to see a flush lower from the open and some ‘dip’ buyers or bargain hunters get squeezed out on a push into support. The USDJPY spiked hard on the surprise change in tone from the Fed on interest rates. Price extended straight up through recent highs to trade into highs fro the 5th April. We expect to see some form of resistance from sellers or recent buyers take the opportunity to lock in some gains.

With all the currencies being pushed into key levels, it will be interesting to see if there is follow through on the USD buying or whether there will be a lot of ‘traps’ set for breakout traders at the levels for later reversals.

SPOT GOLD took a beating showing that it is having problems being a hedge against inflation as bonds sold off on expectations for rate rises. The move lower looks to have been engineered days ago as the USD started to find support. The move down off the highs is contractive which does suggest that bulls will be looking to buy the dip….but where. We will be watching to see if buyers can hold the 1810 zone for a squeeze on shorts. Crude Oil edged lower but generally held up well in the risk off tone of the market and under the pressure of the USD rally. Prices were supported by weaker than expecting US inventory data. The longer term trend up is well and truly in tact so we will be looking for price to find a bid to build a higher low as expectations for rising demand continue to provide support. Copper took a hit on the open of the US session to give up the gains from European trade. Price ended on the lows of the day and may see further downside today on the overflow of the negative sentiment into commodities.

Cryptocurrencies moved lower through the European session as Bitcoin was pushed lower off highs and Ethereum also took a hit. Bulls will be closely watching Bitcoin to see if another higher low can be supported. Bitcoin is currently trading at $38762.3 down 3.01% while Ethereum is at $2405.41 down 5.84% and Ripple is at $0.84208 down 3.22%.

The ASX200 had a relatively range bound session yesterday as traders were happy to remain on the sidelines into the FOMC announcement. The index ended the session up only 6.7 points to 7386.2 as the Metals and Mining, Materials and Resources sectors weighed on the action on news that China wants to cool commodity prices. China is ramping up its campaign to control commodities which saw prices of iron ore and copper fall while mining stocks took a hit. Falling stocks outnumbered advancing ones by 900 to 485 and 396 ended unchanged.

The ASX200 is expected to open up 15/20 points as the SPI200 held above the days close into the US close. The ASX will have an extended open today due to the SPI200 futures contract rollover from June to Sept.

ECONOMIC DATA OUT TODAY (AEDT)

NZD GDP 8:45am

AUD RBA Gov Lowe Speaks 10:10am

AUD Employment Change and Unemployment Rate 11:30am

EUR Final CPI Data 7pm

USD Philly Fed Manufacturing Index and Unemployment Claims 10:30pm

SPI200 INTRADAY LEVELS TO WATCH