The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 5/07/21

  • SPI200 (Sept) overnight futures Flat to 7230
  • SP500 up 32.40 pts to 4352.34
  • NASDAQ Composite up 116.95 points to 14639.33
  • Dow Jones up 152.82 pts to 34786.35
  • FTSE100 down 1.89 pts to 7123.27
  • DAX30 up 46.28 pts to 15650.09
  • GOLD futures US session (Aug) up $10.90 to $1787.70 an ounce
  • COPPER futures US session (Comex Sept) up $0.0430 to $4.2790 a pound
  • OIL futures US Session (Nymex Aug) down $0.07 to $75.16 a barrel
  • CRB Index up 0.38 pts to 214.95
  • AUDUSD trading at 0.7526
  • EURUSD trading at 1.1865
  • GBPUSD trading at 1.3824
  • USDJPY trading at 111.0500
  • USD Index US Session (ICE Sep) down 0.346 to 92.248

US indexes ended the week with a rally after US employment data beat expectations. The payroll data came out to beat expectations increasing by 850K jobs after rising 583K the previous month although the details showed some cracks appeared in the inflation narrative. The unemployment rate rose to 5.9% from 5.8% and the average earnings rose 0.3% to miss consensus expectations for an increase of 0.4%. The Bond market initially spiked lower, as yields kicked higher, but soon reversed the move to push higher into the close which suggest that the bears may not be getting the inflationary data they expect to force the US Fed to raise rates sooner rather than later. The market has been in a relative holding pattern as they become more concerned with rate rises and the Fed tapering bond support. The data may show that the Fed may be correct in assuming that the recent spike in inflation is transitory as many workers are still reluctant to get back to work. The DOW closed up 0.44% while the broader SP500 ended up 0.75% and the Nasdaq closed up 0.81% for the session. In Europe, major Indexes started the session stronger but faded into the close as US employment data and the new delta variant of the virus weighed on sentiment into the weekend. Bank stocks were weak as investors feared the new variant will slow the recovery while major indexes managed to find some support from chip makers.

The USD Index took a hit after the employment data was released as many bulls were quick to lock in some gains from the previous rally. The move showed that there were many traders relying on a strong number to continue to push the inflation story although some weak spots in the data release had them question their positions. We may expect that more heat will come out of the recent dollar rally today as Asian markets plays catchup and force the dollar to grind lower. The EURUSD also reversed the recent move on the payroll number as buyers started the squeeze on recent sellers. Price spiked higher to move up through 1.1860 and break the recent downtrend. Price is extended and may edge lower before another leg higher although we expect that price will continue the squeeze higher in the medium term to force out more sellers. The GBPUSD also broke the back of the bears with a move up through 1.3833 into the US close. Like the Euro, the leg up is extended and may need a pullback to bring in further buyers to continue the move up. Price has held up well under the recent pressure of the USD rally which may suggest that, although traders remain concerned over the sharp rise in Delta variant cases in the UK, they do not expect it to derail the local recovery. The AUDUSD also had a good session being supported by the USD and the risk on move into the share market as employment data may show that inflation is transitory which dragged in buyers from the sidelines. Watching to see if buyers are happy to support a pullback and have higher levels in mind potentially back up to the 0.7600 area in the short term. The USDJPY obviously came under pressure on the back of the payroll release. Price pushed below 11.400 over the number and held a lower high into the close. Like the other major pairs, price is extended and may need to squeeze out some sellers prior to continuation lower.

SPOT GOLD had a bit of a choppy session but did end with gains. Price did hold a higher low after the employment data release as buyers continue to look to highs off major support into 1760. We expect for price to continue to grind higher as buyers support pullbacks and look to the inflation narrative to push price back above 1800 as price is holding the daily uptrend. Crude Oil was supported off 74.70 as the USD came under pressure. Price was still contained as sellers capped rallies into 75.50 potentially happy to take some gains and hold on the sidelines as they look ahead to any news to come out of the OPEC meetings later today. We expect oil to be range bound during the Asian session between 75.50 and 74.70. Copper fought back from the previous sessions selloff to move up through US trade although bulls ran into selling pressure around the 4.2905 zone. Momentum up is easing so we expect the session highs around 4.2905 will hold today and price may creep lower.

Cryptocurrencies were higher over the weekend as bulls came out to play lifting prices off solid short term bases. Ethereum again led the way and is currently trading at $2366.63 up 6.38% while Bitcoin is trading at $35604.10 up 2.48% and Ripple is at $0.70215 up 3.80%.

The ASX200 opened up higher Friday and managed to hold the gains into the close to end the week on a positive note. The index ended up 43 points to 7308.6 with gains in Energy, Consumer Discretionary and Industrial stocks leading the way while the Gold sector ended down nearly 1%. Rising stocks outnumbered declining ones by 852 to 513 and 361 ended unchanged.

The ASX200 is expected to open flat after the SPI200 gave up earlier gains into the US close.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Retail Sales and Building Approvals 11:30am

CNY Caixin Services PMI 11:45am

EUR German Final Services PMI 5:55pm

EUR Final Services PMI 6pm

GBP Final Services PMI 6:30pm

ALL OPEC Meetings All Day

USD Bank Holdiday

SPI200 INTRADAY LEVELS TO WATCH