The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 6/07/21 (as at 7:30am AEST)

  • SPI200 (Sept) overnight futures up 19 pts to 7248
  • SP500 closed
  • NASDAQ Composite closed
  • Dow Jones closed
  • FTSE100 up 41.64 pts to 7164.91
  • DAX30 up 11.88 pts to 15661.97
  • GOLD futures US session (Aug) up $8.70 to $1792 an ounce
  • COPPER futures US session (Comex Sept) up $0.0615 to $4.3375 a pound
  • OIL futures US Session (Nymex Aug) up $1.20 to $76.36 a barrel
  • CRB Index closed
  • AUDUSD trading at 0.7531
  • EURUSD trading at 1.1863
  • GBPUSD trading at 1.3844
  • USDJPY trading at 110.9700
  • USD Index US Session (ICE Sep) down 0.215 to 92.198

US indexes were closed for the Independence Day holiday leaving Europe to fend for themselves. The Biden administration is closely monitoring OPEC talks as stable oil prices are a crucial part of the global economic recovery. Talks were abandoned after a clash between interested parties when the UAE rejected a proposed eight-month extension to output curbs leaving any production increase for August in limbo. Higher Oil prices were the result which will in turn add to inflation concerns if there is no agreement reached in coming days. In Europe, major Indexes initially opened weaker before marching higher to brush aside the losses after data showed EU businesses expanded activity at the fastest rate in 15 years in June. The FTSE rallied as traders expected PM Johnson to announce an end to virus restrictions on July 19th even as concerns over the delta variant continue to cap the action.

The USD Index initially moved lower in early European trade before bouncing into the close before settling into a narrow range with the US closed. Price continues to look heavy on a daily basis and we expect that the rally has peaked around 92.700 and is making its way lower again. It may be a slow grind as inflation concerns linger but the fact that jobs remain a priority for the Fed will ease any bond tapering concerns and see recent buyers squeezed out on a move lower. The EURUSD had an initial rally on the dollar weakness before sellers capped the advance and pushed prices back down. The action was generally contained between 1.1850 and 1.1880 but we do expect to see further bullish action as sellers weigh on the USD. Watching for price to hold above 1.1850 today, aside from any flushes into the zone, and will be looking for a higher low to build. The GBPUSD edged lower in Asian trade before ramping higher at the start of the European session. Price then generally consolidated the gains in a range between 1.3837 and 1.3860. We expect to see the move up continue so will be watching to see how buyers react to any spike lower into 1.3835/40. The AUDUSD also continued the push higher to add to Fridays gains. Price was being capped around 0.7535 but has just spiked up through the level in a show of early strength. Expecting to see a further push up as higher lows hold and drag in more bulls. The USDJPY did kick higher on the open to squeeze out some sellers as expected but it did not take long before price started a new leg down. Price pushed through Fridays lows to extend on the losses as the USD came under pressure. If the 111.000 level holds then we are expecting to see a push down through 110.800.

SPOT GOLD added to recent gains as bulls managed to hold the 1785 area during the Asian session before buyers pushed price up into new minor highs. Price is now being supported at 1790 which may see further bulls triggered into action today and lift price up through the 1796 resistance area. Crude Oil found some buyers on the OPEC in-fighting and lack of any agreement on production increases. Price spiked up through resistance at 75.50 on the news, and into Thursday/Friday highs. We may see some a pullback to clear out some buyers but expect that the pressure up will continue on the absence of any OPEC agreement. Copper also took the opportunity in a thin US market to consolidate the gains from the earlier rally through 4.2905. Price spiked higher in Asian trade and pushed through resistance around 4.3385 and is showing a technical pattern that will get bulls excited. Watching now to see if 4.3215 can hold today and bulls add to the gains for another leg up into the 4.4375 area.

Cryptocurrencies had a rough day yesterday as prices were sold lower across the board and halted the bulls enthusiasm from the weekend. Bitcoin is currently trading at $33984.40 down 3.89% while Ethereum is at $2230.35 down 4.19% and Ripple is at $0.66247 down 4.69%.

The ASX200 started the session strong yesterday but was quick to give back the gains and flatline into the close to end up only 6.4 points to 7315. Shares in the Industrial sector charged higher ending up 4.93% while Energy was up 2.03% and Gold up 1.08%. Stocks in IT and Consumer discretionary were the biggest drag on the day. Rising stocks outnumbered declining ones by 692 to 688 and 369 ended unchanged. Japans Nikkei was lower on concerns over a surge in infections in Tokyo just weeks before the start of the Olympics.

The ASX200 is expected to open up 15/20 points after the SPI200 rallied to test the day session highs before drifting sideways with no lead from the US.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Average Cash Earnings and Household Spending 9:30am

AUD RBA Rate Statement and Cash Rate 2:30pm

AUD RBA Gov Lowe Speaks 4pm

EUR German Factory Orders 4pm

EUR German ZEW Economic Sentiment and Retail Sales 7pm

USD ISM Services PMI 12am

SPI200 INTRADAY LEVELS TO WATCH