The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 12/07/21

  • SPI200 (Sept) overnight futures up 76 pts to 7262
  • SP500 up 48.73 pts to 4369.55
  • NASDAQ Composite up 142.13 pts to 14701.92
  • Dow Jones up 448.23 pts to 34870.16
  • FTSE100 up 91.22 pts to 7121.88
  • DAX30 up 267.29 pts to 15687.93
  • GOLD futures US session (Aug) up $8.40 to $1808.60 an ounce
  • COPPER futures US session (Comex Sept) up $0.0767 to $4.3412 a pound
  • OIL futures US Session (Nymex Aug) up $1.62 to $74.56 a barrel
  • CRB Index up 2.24 pts to 211.80
  • AUDUSD trading at 0.7488
  • EURUSD trading at 1.1876
  • GBPUSD trading at 1.3901
  • USDJPY trading at 110.1400
  • USD Index US Session (ICE Sep) down 0.304 to 92.102

US indexes came bouncing back with a vengeance Friday to end the week on a high as buyers lapped up some bargains. Bulls followed the lead set in the European session as the broader market SP500 set new all time highs. The fears for a major selloff seemed to change overnight as traders remained focused on the same macro picture of Fed support. Bond prices moved lower which gave bulls further support as yields search for a more comfortable level. We still believe that bond prices going down, not up, are the major concern as it will be signaling higher interest rates to pressure companies with high debt levels and potentially cap growth. In the near term, a continued rally in bond prices is more due to an unwind of short sellers than a major change in sentiment. Traders will be watching the 10-year bond auction tonight for a gauge on bond demand at the currently low yield levels. A lack of demand may be signalling expectations for higher interest rates down the track. The DOW closed up 1.30% while the broader SP500 ended up 1.13% and the Nasdaq closed up 0.98% for the session. In Europe, major Indexes also bounced back hard from the open and continued the push higher into the close. European bond prices also moved lower to take the steam out of the safe haven narrative from the previous session. Traders may still see some concern in new variants of the virus potentially shutting down global economies again although we would see that scenario leading to continued Fed support and lower rates for longer and stocks remaining the only place to be.

The USD Index continued the push lower as expected after a flush and hold of the 92.460 level. Price has now well and truly broken the recent uptrend so we expect to see more pressure to the downside in coming sessions back below the 92.000 level. The EURUSD squeezed higher once the USD moved down and price has now broken out of the downtrend which started on the 9th June. We expect that Euro bulls will want to extend on Fridays rally today and push price up to test and potentially break through 1.1895. If this level fails to provide any resistance, then we see the 1.1965 zone as next in line for a test. The GBPUSD did not play around Friday and rallied straight up off the 1.3750 zone at the start of the European session. Price action ran into highs around 1.3895 at the US close which will come under fire today. We will be watching the conviction of buyers today and expect that the level will not find much pressure from sellers as price makes its way higher. The AUDUSD like the Pound, was all one way action with the risk on sentiment into European indexes and shares. Price squeezed out the recent sellers and looks set to add to the rally today but we will be on guard for a minor pullback and flush on late buyers to build another leg up. The USDJPY held the 109.690 level as expected Friday and spent the European and US sessions squeezing out sellers from the recent selloff. Even if the USD edges lower, further YEN selling pressure could see price grind higher today off a higher low around 110.080.

SPOT GOLD played out as expected on the USD move lower. Price worked its way up off 1796 into the 1812 area before settling slightly lower into the US close. We will be watching for a higher low to build and drag in more bulls for a move up and through 1817 recent highs especially if the USD grinds its way lower. The more time price consolidates between 1796 and 1810, the more likely we are to see a rally on the cards. Crude Oil added to the previous sessions rally with another leg higher off 73.00 on Friday as concerns for an economic slowdown eased. Bulls took charge and pushed price higher which we expect to see continue today if the 74.26 level holds. We will be concerned if buyers can not hold a bid around the 75.00 zone as sellers may start to again defend major resistance. Copper held support at 4.2325 easily on Friday and bulls pressured price higher all session. The action has moved up into the 4.3625 area which may see some selling pressure today as bears try to squeeze out some buyers ahead of potentially another push higher up and through the level of a higher low.

Cryptocurrencies managed to fend off some selling pressure and are showing some bullish signs although they are not out of the woods yet. Buyers will need to push prices higher through recent lower highs in order to drag in new bulls for a leg up. Bitcoin is currently trading at $34391.7 up 2.90% while Ethereum is at $2154.34 up 1.87% and Ripple is at $0.63708 up 2.20%.

The ASX200 had a rough session to close out the week Friday ending down 68.1 points to 7273.3. Price started weak and kept the pressure on before buyers stepped in around midday to stem the selling pressure and make back some of the losses into the close lifting the ASX200 around 50 points off session lows. The IT sector was the biggest drag on the action followed by Consumer Discretionary and Industrials. Falling stocks outnumbered advancing ones by 862 to 451 and 417 ended unchanged.

The ASX200 is expected to open up 75 points after the US came roaring back pushing the SPI200 into highs and close on a positive note.

ECONOMIC DATA OUT TODAY (AEDT)

JPY PPI Data 9:50am

EUR German WPI 4pm

EUR Eurogroup Meetings All Day

USD FOMC Member Williams Speaks 11:30pm

USD 10-yr Bond Auction 3:01am

SPI200 INTRADAY LEVELS TO WATCH