The Morning Jumpstart Macro View

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

  • SPI200 (Sept) overnight futures down 11 pts to 7162
  • SP500 down 8.80 pts to 4343.54
  • NASDAQ Composite up 24.31 pts to 14663.64
  • Dow Jones down 208.98 pts to 34577.37
  • FTSE100 down 64.03 pts to 7100.88
  • DAX30 down 150.59 pts to 15511.38
  • GOLD futures US session (Aug) up $13.70 to $1797 an ounce
  • COPPER futures US session (Comex Sept) down $0.0260 to $4.2500 a pound
  • OIL futures US Session (Nymex Aug) down $1.79 to $73.37 a barrel
  • CRB Index down 4.71 pts to 210.24
  • AUDUSD trading at 0.7493
  • EURUSD trading at 1.1821
  • GBPUSD trading at 1.3803
  • USDJPY trading at 110.6300
  • USD Index US Session (ICE Sep) up 0.124 to 92.537

US indexes had a strange night as prices headed south from the open and then bounced back to minimise the losses into the close. The selloff into shares was attributed to a rise in bond prices in Europe and the US on safe haven buying but we expect traders just took the opportunity to lock in some gains from a stella quarter. US bond prices broke up through a key resistance level which triggered a risk off into cyclical stocks as many attributed the move to safe haven buying. We expect that it is more due to bond short sellers closing positions, ahead of FOMC tonight, who had factored in higher inflation hanging around for longer. Services data out in Europe weighed on European indexes late in their session which in turn weighed on the US open. Once Europe closed, US indexes bounced straight back to minimise the losses. The DOW closed down 0.60% while the broader SP500 ended down 0.20% and the Nasdaq closed up 0.17% for the session. In Europe, major Indexes took as sentiment weighed on the action after the release of ZEW Economic Sentiment data which failed to hit the mark triggering concern for the global recovery. The bigger picture of Central Bank stimulus and lower rates has not changed so we expect to see markets bounce back from trigger happy bears.

The USD Index moved higher being ramped up at the start of the European session. Price ended on its highs just below previous highs from Friday. We expect that the rally is retesting highs but do not see a break up through 92.800 happening yet. The dollar is extended so we expect to see price either hold the highs or grind lower in the Asian session as traders set themselves for the FOMC statement to assess inflation which we expect the Fed to re-iterate as transient which should cap buying into the USD. The EURUSD flushed lower into previous lows as the USD rallied. Price remains in a longer term uptrend so we do not expect major continuation lower today. Watching for price to flush the lows around 1.1806 but ultimately hold the lows into the FOMC statement. The GBPUSD also took a hit lower on the dollar rally as price fell away from the 1.3900 zone. Like the Euro, price pushed into support and previous lows. Price is extended and we see the move as a retest rather than the start of a major move down. The AUDUSD nosedived at the start of the European session and held the move into the US close. Price is now down around the 0.7480 zone of support which we see as holding the bears at bay today. The USDJPY continued the move lower against the flow of the Dollar rally. Price action may have seen some Yen buying which offset the USD buying to pressure the currency pair. If not then we expect that the move down is a heads up that the USD is extended and may see a move down.

SPOT GOLD rallied early but then found some selling once the USD headed higher. This goes against any safe haven stock buying narrative and supports the view that traders are squaring up positions and risk exposure ahead of FOMC. If the 1790 area holds, then expect to see buyers step back up to the plate. Crude Oil initially rallied in the Asian session before taking a hit from the open of the European session. Still, price was held up around 73.00 which is support for the uptrend so we see the recent move as a bit clean out on the OPEC disagreements. Watching for price to hold above the 73.00 zone today, if not then a bigger move down is on the cards. Copper also took a hit on the dollar rally as recent buyers were squeezed out of the action. Price action is extended lower so we are watching for buyers to start to provide some support off 4.2245.

Cryptocurrencies were a bit choppy overnight with an initial rally being capped and prices generally edging back down into the US close. Ethereum still looks bullish and set for higher prices while Bitcoin looks to be under more pressure. Bitcoin is currently trading at $34102.8 up 0.36% while Ethereum is at $2313.3.8 up 3.77% and Ripple is at $0.66219 up 0.02%.

The ASX200 had a rough session yesterday as it seemed that buyers were lost running around in circles with no lead from the US, leaving sellers to pile on the pressure from the open until the close. The index ended the day down 53.2 points to 7261.8 with shares in Telecom Services, IT and Consumer Discretionary taking the biggest hits while the Energy sector was all alone up 1.54%. Falling stocks outnumbered advancing ones by 819 to 516 and 407 ended unchanged.

The ASX200 is expected to open down 10 points as the SPI200 added to the day sessions gains overnight.

ECONOMIC DATA OUT TODAY (AEDT)

EUR German Industrial Production 4pm

EUR EU Economic Forecasts 7pm

ALL OPEC Meetings All Day

USD JOLTS Job Openings 12am

USD FOMC Meeting Minutes 4am

SPI200 INTRADAY LEVELS TO WATCH