The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 23/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures down 5 pts to 7248
  • SP500 up 21.65 pts to 4246.44
  • NASDAQ Composite up 111.79 points to 14253.27
  • Dow Jones up 68.61 pts to 33945.58
  • FTSE100 up 27.72 pts to 7090.01
  • DAX30 up 33.09 pts to 15636.33
  • GOLD futures US session (Aug) down $4.0 to $1778.90 an ounce
  • COPPER futures US session (Comex July) up $0.0455 to $4.2295 a pound
  • OIL futures US Session (Nymex July) down $0.60 to $73.06 a barrel
  • CRB Index up 0.01 pts to 207.88
  • AUDUSD trading at 0.7551
  • EURUSD trading at 1.1940
  • GBPUSD trading at 1.3951
  • USDJPY trading at 110.6400
  • USD Index US Session (ICE Sep) down 0.154 to 91.727

US indexes added to the gains from the previous session with the Nasdaq pushing into new all time highs as the trading landscape remains the same. Powell in his testimony to Congress, stuck to the plan and the Feds transient inflation scenario which managed to further soothe investors to continue to be risk on into shares and especially to stay the course with tech. He mentioned that the Feds aim is to continue to encourage a ‘broad and inclusive’ recovery of the job market and not get caught up in the inflation narrative and raise rates too quickly out of fear. The focus was back on big tech which saw the Nasdaq close at new all time highs and lift the broader market SP500 a whisker from new highs itself while the DOW lagged the action. The DOW closed up 0.20% while the broader SP500 ended up 0.51% and the Nasdaq closed up 0.79% for the session. In Europe, major Indexes were supported by commodity prices as mining and energy stocks supported the rally ahead of US Fed Chair Powells speech on inflation. Both the DAX and the FTSE continue to grind their way back up off the lows from the recent selloff as buyers hold minor higher levels with the backdrop of a strengthening global economy and Central Bank support.

The USD Index again moved lower to give up further gains from the spike higher. More buyers are realizing that the Fed will stick to their guns and will not be bullied into raising rates until the jobs market is in much better shape. If the recent move up was truly a clean out and unwinding of a crowded trade, we should expect the dollar to continue the grind lower. The EURUSD played out nicely as price flushed lower before taking out the 1.1920 area for a move higher being supported by the USD fall. We expect that there will further upside and squeeze on the recent sellers so will want to see another higher low hold potentially around 1.1920 on a retest of the level. The GBPUSD also played out as expected with a squeeze lower through the Asian session before buyers stepped back into the action to lift price up through 1.3945. We expect that there may be more upside to come from bulls and a continued push into the 1.4000 area. The AUDUSD benefited from the risk on tone in the share markets to extend on the gains into 0.7555. The move up looks less convincing than other major pairs but the pressure remains up for now and may see an extension into the 0.7590 area today. The USDJPY was stronger than would be expected with the recent dollar weakness which again points to some Yen selling pressure. Price pushed back to recent highs around 110.778 before sellers stepped in to trigger some profit taking from buyers. Price may extend up through this level today and spike into the 111.000 level before we would expect to see a fade lower.

SPOT GOLD could not move up off the 1760 level with conviction and was held down by bears. With the inflation narrative taking a back seat for now, we may see Gold only grind higher on the back of expected USD weakness. If bulls can hold above the 1772 area today, we may see a grind up and through 1790 later in the European or US sessions. Crude Oil again managed to consolidate the recent gains and hold nicely above the 72.80 area after being supported by bulls on any dip into 72.50. We would expect to see price contained today in the Asian session between 72.50 and 73.40 ahead of the oil inventory data out later in the US session. Copper edged its way higher up off 4.1700 to end near session highs. We still feel that copper needs to flush lower before re-establishing the longer term daily trend higher so will be watching for signs of weakness into this leg up.

Cryptocurrencies were hit hard in the European session as Bitcoin flushed down through 30,000 before recovering some of the losses in the US session. Cryprocurrencies continue to look shaky so Bitcoin bulls will need to make a stand above 30K before the market can think of new highs. Bitcoin is currently trading at $32706.6 up 3.77% while Ethereum is at $1899.01 up 1.23% and Ripple took a big hit and could not recovery as well, now trading at $0.56398 down 9.81%.

The ASX200 fought back yesterday from the previous sessions smackdown to erase most of the losses and end up 106.9 points to 7342.2. All sectors ended with gains as Energy, Resources and Metals and Mining stocks led the charge. A lot of the heavy lifting for the ASX200 was also done in the Financial sector which ended up 2.01%. Rising stocks outnumbered declining ones by 804 to 569 and 395 ended unchanged.

The ASX200 is expected to open flat as the SPI200 was well contained in the European and US sessions.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Monetary Policy Meeting Minutes 9:50am

AUD Goods Trade Balance 11:30am

AUD RBA Assist Gov Ellis Speaks 1:15am

EUR French Flash Manufacturing and Services PMI 5:15pm

EUR German Flash Manufacturing and Services PMI 5:30pm

EUR Flash Manufacturing and Services PMI 6pm

GBP Flash Manufacturing and Services PMI 6pm

USD Current Account 10:30pm

USD Flash Manufacturing and Services PMI 11:45pm

USD Crude Oil Inventories 12:30am

EUR ECB President Lagarde Speaks 2am

SPI200 INTRADAY LEVELS TO WATCH