The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 1/07/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures down 6 pts to 7217
  • SP500 up 5.70 pts to 4297.50
  • NASDAQ Composite down 24.38 points to 14503.95
  • Dow Jones up 210.22 pts to 345002.51
  • FTSE100 down 50.08 pts to 7037.47
  • DAX30 down 159.55 pts to 15531.04
  • GOLD futures US session (Aug) up $7.0 to $1770.60 an ounce
  • COPPER futures US session (Comex July) up $0.0273 to $4.2918 a pound
  • OIL futures US Session (Nymex Aug) up $0.49 to $73.47 a barrel
  • CRB Index up 2.06 pts to 213.39
  • AUDUSD trading at 0.7498
  • EURUSD trading at 1.1857
  • GBPUSD trading at 1.3829
  • USDJPY trading at 111.1000
  • USD Index US Session (ICE Sep) up 0.314 to 92.355

US indexes were mixed with the DOW taking charge to move higher from the open while the Nasdaq took a breather and held in a tight range. Early data out on US payrolls showed a stronger than expected number as companies rushed to boost production and services although a worker shortage continues to hang over the labour market. The number had a muted effect on the market ahead of the key government released employment data Friday. Pending home sales bounced back highlighting the demand and shortage of homes for sale which is driving up prices. US 10-year bond prices rallied but gave back some gains into the close as prices remain range bound with inflation pressures capping rallies while the continued Fed bond buying program puts the floor in price. Expect to see the trend continue until there is a significant change in tone for the Fed or higher inflation readings pressure prices lower which will bring in the stock market bears. The DOW closed up 0.61% while the broader SP500 ended up 0.13% and the Nasdaq closed down 0.17% for the session. In Europe, major Indexes were hit from the open as the end of quarter tax loss selling hit the European markets. German unemployment data came in weaker than expected showing strength in the labour market and the economy which weighed heavily on the DAX. Concerns over inflation and the new delta variant also had traders looking to lock away some gains during the session.

The USD Index found a bid to move up through recent highs around 92.380 and pressure dollar denominated currencies lower. The rally started around the employment data release as traders anticipated a stronger than expected number on Friday although the ADP data has had a bad track record of overestimating the actual figures. That said, the dollar may look to consolidate around current levels or extend on the gains into 92.650 ahead of the release Friday as bulls remain in charge. The EURUSD extended on the losses as the USD rallied and continued the move into the recent lows around 1.1847. The bias remains lower so a move through the lows will depend on what the USD does between now and Friday. If bears can push below 1.1847 convincingly then that opens up for a move into the 1.1800 zone. If the level holds then expect to see a grind higher on dollar weakness. The GBPUSD also extended on the losses with a push below recent lows at 1.3414 and into 1.3800 before bouncing back into the close. We expect that there is a lot of repositioning ahead of the US payroll release but would expect to see the 1.3800 level hold in coming trading sessions into Friday. The AUDUSD moved lower at start of the European session but managed to hold the 0.7493 level under the weight of the USD rally. Price may still look to extend on the move down with a push into 0.7480 lows although we expect that buyers may be starting to defend the support levels. A break up through 0.7505 will put the squeeze on sellers and trigger some buyers into action for a move up. The USDJPY did grind lower in Asian trade but managed to hold a rough support zone around 110.440 before ramping higher after the US employment data. Price pushed straight up into recent highs around 111.110 where some sellers managed to halt the advance. Bulls may look to add to the gains today into 111.300 but with price extended, we will not be surprised to see some profit taking so waiting for clearer price action.

SPOT GOLD again flushed into support but did manage to hold a higher low above the 1750 zone from the previous session. Buyers stepped in to push prices higher and clear out some recent sellers so we may see some more excitement from gold bugs today and expect to see some local gold stocks benefit. Price action may grind lower but we will be looking for a higher low and another squeeze up. Crude Oil had some choppy action although the bias remained higher with bulls defending spikes lower. Oil inventories came in weaker than expected which supported the action and helped price settle up near session highs. For now, bulls remain tentative above 74.00 so watching for further choppy action. Copper wanted to go higher and did during European trade although price was capped into 4.3440 resistance and weighed down by the USD rally. In the short term, the minor rally remains in tact until the 4.2730 area is broken.

Cryptocurrencies were generally weaker through Asian and European trade before an about face around 2am AEST which saw a rally and squeeze higher across the board. Bitcoin was not as enthusiastic with the rally and lagged others such as Ethereum, EOS and Ripple so may weigh on the market today. Bitcoin is currently trading at $348605 down 3.05%, Ethereum is at $2252.84 up 3.73% and Ripple is at $0.68781 down 1.54%.

The ASX200 had another mixed up session yesterday with the market opening strong and then getting sold off into the close. It was a mirror of the previous session for the last day of the quarter as the index retraced nearly 60 points from the highs (previous session saw a 60 point rally off the lows) with the index ending up 11.8 points to 7313. The Utilities and Gold sectors were the biggest drag on the action while Telecom Services offset the weakness along with Metals and Mining. Rising stocks outnumbered declining ones by 821 to 597 and 388 ended unchanged.

The ASX200 is expected to open down 5 points as the SPI200 had a choppy night being sold off at the start of European trade before bouncing back into the US close.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Tankan Manufacturing and Non-Manufacturing Index 9:50am

AUD Trade Balance 11:30am

CNY Caixin Manufacturing PMI 11:45am

EUR German Retail Sales 4pm

EUR ECB President Lagarde Speaks 5pm

EUR German Final Manufacturing PMI 5:55pm

GBP BOE Gov Bailey Speaks 6pm

EUR Unemployment Rate 7pm

ALL OPEC Meetings All Day

USD Unemployment Claims 10:30pm

USD ISM Manufacturing PMI 12am

SPI200 INTRADAY LEVELS TO WATCH