The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 24/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures down 29 pts to 7170
  • SP500 down 4.60 pts to 4241.84
  • NASDAQ Composite up 18.46 points to 14271.73
  • Dow Jones down 71.34 pts to 33874.24
  • FTSE100 down 15.95 pts to 7074.06
  • DAX30 down 179.94 pts to 15456.39
  • GOLD futures US session (Aug) up $1.30 to $1778.30 an ounce
  • COPPER futures US session (Comex July) up $0.0875 to $4.3175 a pound
  • OIL futures US Session (Nymex July) up $0.23 to $73.08 a barrel
  • CRB Index up 1.36 pts to 209.24
  • AUDUSD trading at 0.7575
  • EURUSD trading at 1.1926
  • GBPUSD trading at 1.3964
  • USDJPY trading at 110.9800
  • USD Index US Session (ICE Sep) up 0.052 to 91.803

US indexes were range bound all session until a minor bout of selling into the close drove the broader market into negative territory. Fed Reserve official and Atlanta Fed president Bostic, who was among the 7 policymakers to target rate rises next year, said that the ‘transient’ inflation may not be so transient than anticipated. He mentioned that the change was due to vaccines halting the spread of the coronavirus and re-opening the economy faster that initially projected pushing ‘temporary’ out from 3 months to 9 months. The comments only add to trader confusion as prices hover around highs after Powells comments the previous session helped to ease concern over rate rises and inflation pressures leaving traders adverse to adding further risk to their portfolios. US 10-yr Bonds edged lower through the US session being helped by Bostic comments although price is now down on support which should tempt some buyers as prices chop around looking for direction. The DOW closed down 0.21% while the broader SP500 ended down 0.11% and the Nasdaq closed up 0.13% for the session. In Europe, major Indexes moved lower into the close as stronger than expected manufacturing data stoked inflationary fears and concern for rate rises. The German DAX index was hit the hardest but does continue to hold the longer term uptrend while the FTSE may be starting to show some cracks. Europe is having the same issues as the US with economies opening faster than expected and pent up consumer demand putting upward pressure on prices.

The USD Index was initially moving down in the European session before better than expected US manufacturing and services data saw sellers reverse positions and pressure price higher. Still the trend off the highs around 92.400 remains down and anchored at 91.880. If price can hold the level then expect another push lower from current levels. Traders remain focused on the inflation narrative and market action is ebbing and flowing around data releases which may hint at inflation pressures holding for the longer term. The EURUSD again mirrored the USD move to give up earlier gains and move down on the US data release and subsequent USD rally. Price held above the 1.1917 level which may drag in some buyers today ahead of the European session. If the level can hold then expect a grind up ahead of US data out at 10:30pm AEST. The GBPUSD pushed up as expected into the 1.4000 almost to the tick before grinding lower on dollar strength. Like the Euro, price is holding the recent uptrend so bulls will be looking for price to hold above 1.3950 for another minor leg higher. If the level breaks, then a squeeze lower is on the cards. The AUDUSD also played out as expected as price extended the run up into 0.7590 before edging lower into the US close. The Aussie is benefiting from the continued risk on tone into shares so we will be watching for price to hold a higher low somewhere around the 0.7560 area. The USDJPY, like the Aussie, extended on the recent gains and pushed into the 111.000 area before coming under some pressure. The way price rejected the level may suggest sellers will be looking to defend the zone and start to squeeze out some recent buyers for a move down.

SPOT GOLD was grinding its way higher into the US open and the data release when it flushed the highs and then worked its way back down to where it started. Price did move back into support around the 1772 level which held into the US close. Bulls still look hesitant so we may expect that price will be range bound today and hold between 1772 and 1796…with the action centered around support for now. Crude Oil bulls were at it again pushing price higher up through 73.40 minor resistance before spiking higher on the US open. Price then gave up some of the gains into the US close but remains firmly in an uptrend for now. Price is being supported by increasing demand and we expect that bulls are targeting highs from Oct 2018 through $75. Copper is not seeing any weakness just yet which suggests that traders are expecting weakness into the USD to support higher prices. The current trend up off 4.1700 support is being anchored at 4.2535 for now. The longer term daily chart, in our opinion, still needs to do some work around support at 4.1700 to convince longer term bulls that we will see a move into new highs above 4.7500.

Cryptocurrencies were a mixed bag with some doing better than others but all supported by Bitcoin holding grinding up off major support. We would expect to see the short term move up into Bitcoin continue to provide support but the downtrend being far from over as price still has some work to do to convince longer term buyers to jump back into the action. Bitcoin is currently trading at $33.423.3 up 2.90% while Ethereum is at $1948.75 up 3.88% and Ripple fought back currently at $0.63325 up 13.30%.

The ASX200 saw sellers pressure prices down from the open yesterday to catch many bulls off guard. The index started lower and continued to add to the losses into the close to end down 43.7 points to 7298.5. Energy, Utilities and Financial shares weighed most on the action while IT and the Materials sectors helped to offset some of the losses. Falling stocks outnumbered advancing ones by 755 to 609 and 392 ended unchanged.

The ASX200 is expected to open down 30 points after the SPI200 continued lower in the European and US sessions.

ECONOMIC DATA OUT TODAY (AEDT)

EUR German Business Climate 6pm

GBP Official Bank Rate, Asset Purchase Facility and Monetary Policy Summary 9pm

USD Unemployment Claims, Durable Goods and Wholesale Inventories 10:30pm

USD Bank Stress Test Results 6:30am

SPI200 INTRADAY LEVELS TO WATCH