The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 13/07/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 20 pts to 7272
  • SP500 up 15.08 pts to 4384.63
  • NASDAQ Composite up 31.32 pts to 14733.24
  • Dow Jones up 126.02 pts to 34996.18
  • FTSE100 up 3.54 pts to 7125.42
  • DAX30 up 102.58 pts to 15790.51
  • GOLD futures US session (Aug) down $3.90 to $1806.70 an ounce
  • COPPER futures US session (Comex Sept) down $0.0170 to $4.3285 a pound
  • OIL futures US Session (Nymex Aug) down $0.46 to $74.10 a barrel
  • CRB Index up 0.91 pts to 212.71
  • AUDUSD trading at 0.7479
  • EURUSD trading at 1.1861
  • GBPUSD trading at 1.3887
  • USDJPY trading at 110.3800
  • USD Index US Session (ICE Sep) up 0.119 to 92.235

US indexes moved higher to add to Fridays gains with the DOW ending at new record closing highs. Traders are awaiting inflationary data out tonight and Fed Chair Powells testimony to Congress later in the week to gauge what may be the next step for the Reserve Bank in regards timing of tapering. Traders are also looking ahead to earnings which are expected to be strong with the market priced accordingly. Banks did well overnight and were up ahead of earnings starting tonight. Bond prices edged lower into the 10-year bond auction before recovering some of the losses into the close. Bond yields remain suppressed as many traders are looking to dividend paying stocks for yields as they expect that the Fed will leave rates on hold for longer. Also, there may be a trend from growth related stocks to income ie/ dividend paying, stocks which we expect has already started as major funds re-allocate which may make earnings interesting. The DOW closed up 0.36% while the broader SP500 ended up 0.35% and the Nasdaq closed up 0.21% for the session. In Europe, major Indexes also added to Fridays gains as they brush aside concerns over economic growth. Travel related stocks were pressured lower as the delta variant rises leaving London lagging Europe as England remain set to lift covid curbs next week being unconcerned for a potential rise in covid cases. The FTSE was also pressured by a slide in energy and materials shares as weaker oil and copper prices weighed.

The USD Index had a relatively uncertain and choppy session as price initially rallied around the start of the European session only to give back the gains into the US open. Price continues to look heavy so the US inflationary data out tonight will be telling. We will be watching for a push below 92.000 ahead of the number to flush out some buyers. The dollar was being caught between some safe haven buying over covid concerns and the potential for the data to show that inflation has peaked. The EURUSD flushed lower on the USD spike before regaining the lost ground into the US close. We expect that the spike lower is set to be confirmed as a higher low to drag in more buyers for a push up through recent highs. We are watching to see if 1.1851 can hold to support a push into 1.1880. The GBPUSD initially fell away from Fridays highs before being ramped straight back up to the zone from the start of the US session. We will be watching for bulls to look to extend on the gains if they can hold above a minor level at 1.3870 although we would expect the action to be tame ahead of the US CPI release tonight. The AUDUSD was under pressure during the European session as Copper and Oil were being pushed lower. Price recovered once the USD fell away and took some heat out of the selling. Price held a higher low at 0.7449 which we expect to see hold today and potentially lead to a break above 0.7492. The USDJPY edged its way higher holding a higher low at 110.000 before moving up into the US close. Price action is now retesting previous support from the below so we see the potential for price to be capped into this level today around 110.440.

SPOT GOLD was a mixed bag with neither the bulls or bears trading with any conviction. Price flushed the support area around 1796 before bouncing back and closely slightly below session highs made early in Asian trade. We expect to see more of a range bound market with buyers edging price back up to 1810 today. Crude Oil moved lower right from the days open around 8am AEST. Price was pushed lower off key resistance which signals that buyers are running out of steam. Price could not hold a bid into 75.00 which suggests that a lower high may come into play today below 74.50 and look to pressure prices lower. Copper also came under pressure as the USD rallied early before making back a lot of the losses into the US close. Price is at a bit of a crossroads as we see the potential for a move back into the highs around 4.3555 which is bullish as a higher low will hold; or there is the potential for price to hold a lower high off current levels and have a decent leg down through 4.2320. We expect that the economic growth narrative will provide some support.

Cryptocurrencies took a hit around the start of the European session as with Ethereum looking wobbly at current levels. Bitcoin is also is heavy as price failed off a key lower high. Bitcoin is currently trading at $32966.5 down 4.37% while Ethereum is at $2035.25 down 5.95% and Ripple is at $0.62647 down 2.29%.

The ASX200 managed to reverse Fridays move with a rally from the open and then price held onto the gains into the close. The index ended the day up 60.2 points to 7333.5 although we saw range bound action dominate intraday. Shares in the Metals and Mining, Materials and Resources sectors did the best while Consumer Discretionary and Utilities ended lower. Rising stocks outnumbered declining ones by 676 to 651 and 422 ended unchanged.

The ASX200 is expected to open up 20 points as the SPI200 pushed higher along with overnight markets in Europe and the US.

ECONOMIC DATA OUT TODAY (AEDT)

AUD NAB Business Confidence 11:30am

CNY Trade Balance and Foreign Direct Investment Tentative

EUR German Final CPI 4pm

GBP BOE Financial Stability Report 4pm

USD CPI Data 10:30pm

USD FOMC Member Bostic Speaks 2am

USD 30-yr Bond Auction 3:01am

SPI200 INTRADAY LEVELS TO WATCH