The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 8/07/21 (as at 7:30am AEST)

  • SPI200 (Sept) overnight futures up 11 pts to 7256
  • SP500 up 14.59 pts to 4358.13
  • NASDAQ Composite up 1.42 pts to 14665.06
  • Dow Jones up 104.42 pts to 34681.79
  • FTSE100 up 50.14 pts to 7151.02
  • DAX30 up 181.33 pts to 15692.71
  • GOLD futures US session (Aug) up $9.70 to $1803.9 an ounce
  • COPPER futures US session (Comex Sept) up $0.0553 to $4.3063 a pound
  • OIL futures US Session (Nymex Aug) down $1.17 to $72.20 a barrel
  • CRB Index down 1.04 pts to 209.20
  • AUDUSD trading at 0.7484
  • EURUSD trading at 1.1794
  • GBPUSD trading at 1.3802
  • USDJPY trading at 110.6400
  • USD Index US Session (ICE Sep) up 0.167 to 92.710

US indexes end the session higher after traders were happy with what the US Fed Reserve had to say on the economic recovery. Minutes from the last Fed Reserve meeting indicated officials may not be ready yet to move on any tightening policy that would potentially send ripples through stock Indexes. Although they saw progress on the recovery has been made, they generally felt that it is not quite enough and has not hit their targets. They also mentioned that they should be poised to act if further inflation or other risks materialized. The Fed, as a consensus group, are still wrestling with inflation risks while seeing relatively high unemployment which is still their main concern. Bond yields edged lower pushing bond prices higher as traders digested the minutes and continued to push prices higher. European bonds are also on the move up which will be supportive of the stock markets. The move up in bond prices is showing that economic growth may have peaked and any pick up in inflation will in deed prove to be transitory. The move up may still be a short squeeze of traders who positioned themselves for higher inflationary pressures rather than a signal that inflation is going lower. Industrial and Materials stocks led the gains for the broader market SP500. The DOW closed up 0.30% while the broader SP500 ended up 0.34% and the Nasdaq closed up 0.01% for the session. In Europe, major Indexes went higher as commodity stocks recovered from sharp sell-offs in the previous session and lower bond yields also supported sentiment and tech stocks. Oil linked stocks came under pressure as oil prices fell while travel and leisure also moved lower on continued concerns over the delta variant of covid.

The USD Index took the opportunity to ramp up into the US open and flush the 92.700 previous highs ahead of the Fed minutes. Price did react lower after the flush to end just below the 92.700 level into the US close. We are watching closely to see if price moves lower off the zone today after the Feds message on economic growth potentially peaking. The level is important as it will indicate whether traders are willing to look ahead to the easing of stimulus and rate hikes, and price to rally, or expect more of the same and for price to move back down as traders focus on current data. The EURUSD did flush the lows around 1.1806 as expected but is yet to decide whether it will extend into daily support around 1.1750 or start to find a bid. The move will depend on the USD and whether it is happy to retrace the move up or not. At this stage, the Euro looks to be holding a higher low but is yet to confirm and move up. Looking for further contraction in price to build uncertainty in sellers for a squeeze higher. The GBPUSD was hit lower once the USD started the run higher. The Pound flushed the lows before settling back higher into the close. Price is in no mans land for us at the moment but we are seeing some strength potentially coming in the medium to longer term as price seems to want to hold up off 1.3750 so watching to see if 1.3775 holds today. The AUDUSD looks to be still struggling after taking another hit off 0.7530 down to 0.7462 on the dollar rally. Like the Pound, the Aussie did settle up off the lows into the US close but the recent dollar strength has traders on the back foot. Price is not showing the link to the risk on moves into the share markets as it had previously so watching to see if price can hold above 0.7478 today to fend off another move down. The USDJPY again did not show the respect for the USD rally and failed to kick higher. Any spike higher was easily soaked up be sellers although we see the longer term move down being extended and buyers holding minor higher lows which may signal that a short squeeze is on the cards.

SPOT GOLD continued to hold support and add to the recent move up as bulls start to get some momentum. Price has now tested the 1810 level and is on its way back up after confirming some higher levels as buyers soaked up some selling pressure. We will be watching to see if gold can push up and through 1810 this time around as bulls have more confidence. Crude Oil fell apart on the back of the USD rally and as traders are awaiting OPEC clarity on extended production cuts. Price action has now broken the trend up off 64.70 so we will be watching for the potential of further pressure down today although many longs will have been flushed out of the action and it is likely that we see some back and fill higher ahead of inventory data out tonight in the US session. Copper held up well under the dollar strength as spikes lower were happily soaked up by bulls. Price will need to hold above the 4.2910 level to have another shot at testing major highs.

Cryptocurrencies were well contained as many made early gains only to reverse and give it back into the US close. Bitcoin is currently trading at $34215.6 up 0.75% while Ethereum is at $2343.28 up 2.41% and Ripple is again lagging at $0.66032 up 0.14%.

The ASX200 fought back from the previous days weakness and rallied hard from the open yesterday to end the session up 65.1 points to 7326.9. The big moving stocks were in the IT, Consumer Staples and Telecom Services sectors while Energy was down 1.91%. The gold sector had a good session and we expect to see some follow on today. Rising stocks outnumbered declining by 731 to 602 and 393 ended unchanged. The Nikkei and the Hang Seng were both weaker to continue the trend lower from previous sessions as they may be finding negative sentiment on Chinas market regulator crackdown on internet companies.

The ASX200 is expected to open up 10 points after the SPI200 added to the day sessions gains to push up into resistance.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Current Account 9:50am

AUD RBA Gov Lowe Speaks 12:30pm

EUR German Trade Balance 4pm

EUR ECB Monetary Policy Meeting Accounts 9:30pm

USD Unemployment Claims 10:30pm

USD Crude Oil Inventories 1am

SPI200 INTRADAY LEVELS TO WATCH