The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 25/06/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 51 pts to 7228
  • SP500 up 24.65 pts to 4266.49
  • NASDAQ Composite up 97.98 points to 14369.71
  • Dow Jones up 322.58 pts to 34196.82
  • FTSE100 up 35.91 pts to 7109.97
  • DAX30 up 132.84 pts to 15589.23
  • GOLD futures US session (Aug) down $8.30 to $1775.10 an ounce
  • COPPER futures US session (Comex July) down $0.0200 to $4.3105 a pound
  • OIL futures US Session (Nymex July) up $0.22 to $73.30 a barrel
  • CRB Index up 0.27 pts to 209.51
  • AUDUSD trading at 0.7587
  • EURUSD trading at 1.1932
  • GBPUSD trading at 1.3920
  • USDJPY trading at 110.8700
  • USD Index US Session (ICE Sep) up 0.025 to 91.810

US indexes gapped up from the open and held the gains into the close as the DOW fought back from previous sessions weakness with its sights now set on new all time highs to play catchup with the SP500 and Nasdaq. Markets were supported by a breakthrough in infrastructure spending talks after Biden embraced a bipartisan deal to spend hundreds of billions of dollars on infrastructure projects. Many see this as a trigger for the next leg higher in the US stock markets as the DOW reacted accordingly. US jobless claims came in higher than analysts expected but slightly better than previous which shows that the Fed continues to have an issue with reaching its employment mandate. The US 10-yr bond traded in a narrow range and held above support which inflation bulls would have expected to break therefore showing expectations of the Fed having no reason to deviate from its game plan. The DOW closed up 0.95% while the broader SP500 ended up 0.58% and the Nasdaq closed up 0.69% for the session. In Europe, major Indexes also ended the session with gains after some positive data out of Germany showed surging corporate optimism about the second half of the year. Shares in banks and retail helped to support the action and drive the markets higher with prices also being boosted by the Biden news.

The USD Index went sideways and was well contained below the 91.900 level. Price again was moving lower in European trade before being ramped back up on the open of the US session. Price looks like it may break higher but we suspect that the infrastructure bill will beep a cap on the action for now as the upward pressure from ‘earlier than expected rate rises’ wanes. The EURUSD was also contained and held above the 1.1917 level but bulls were capped as European bond yields edged lower. Price is contracting into the support area and potentially looking to break below but the recent action is essentially sideways and could go either way. We would expect to see a move below 1.1917 to trap some sellers before a move back up in the absence of any trigger. The GBPUSD took a hit directly after news that the BOE kept its stimulus program unchanged and left its benchmark interest rate at an all-time low saying the spike in inflation will only be fleeting. Seems that many bulls were tentatively looking for a change in tone but were caught on the wrong side of the action. Price is set to hold a lower high and move back down to the lower end of the broad range between 1.4000 and 1.3835 key support. The AUDUSD got stuck in a tight range yesterday from the start of the Asian session through to the US close. Buyers supported the 0.7568 level but could not press up through 0.7590 convincingly. We suspect that this level will become key for both bulls and bears as a push back down off the zone opens the door for a bigger move down through 0.7500 and below. A push up suggests it was a typical flush to trap sellers before a run higher. The USDJPY did push down off the 111.000 area but lacked conviction from sellers. The mood of the US obviously weighed on the currency pair and kept it buoyant. We will be watching the action for a higher low to hold above the 110.690 level as price edges lower off 110.900 potentially setting for a spike through 111.100.

SPOT GOLD continues to hold above the 1772 area but can not get a decent move up going which will disappoint gold bulls for now. Price reacted lower on the open on the US session as the USD was ramped higher. We may see a flush of the support zone but do expect it to hold today with no clear catalyst for a move either way. Crude Oil was bullied around by traders as price spiked through 72.50 in a clear stop loss hunt before ramping straight back up to the 73.30 zone. If we see price hold above the 72.50 area, then watch for a higher low and push higher with the 75.00 level being the target for the medium term. Copper moved lower in the Asian session before finding buyers to support price and engineer a move up from the start of European trade. The anchor for the move up is held at 4.2685 and price looks set to test into 4.3375 and potentially break through the level for an extension on the bullish move and run on 4.4000.

Cryptocurrencies turned higher during the ASX session yesterday and managed to grind out some gains into the US close. Bitcoin looks to be running out of steam and the moves up do not have the same enthusiasm as the recent bull market action suggesting that the buying is getting tired. Bitcoin is currently trading at $34612.40 up 3.82% while Ethereum is at $1984.65 up 2.12% and Ripple is at $0.6717 up 5.69%.

The ASX200 opened weaker yesterday and held in negative territory all session until the close where it ended down 23.2 points to 7275.3. It was a very lackluster session with both bulls and bears lacking commitment. Gold and Energy shares were the biggest drag on the index while IT and Consumer Staples did their best to offset the selling pressure. Rising stocks outnumbered declining ones by 683 to 668 and 427 ended unchanged.

The ASX200 is expected to open up 55 points after the SPI200 followed the US higher in overnight trade.

ECONOMIC DATA OUT TODAY (AEDT)

EUR German Consumer Climate 4pm

EUR M3 Money Supply ad Private Loans 6pm

GBP ODE Quarterly Bulletin 9pm

USD Core PCE Price Index and Personal Income and Spending 10:30pm

USD Consumer Sentiment and Inflation Expectations 12am

SPI200 INTRADAY LEVELS TO WATCH