The Morning Jumpstart Macro View

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

  • SPI200 (Sept) overnight futures down 10 pts to 7260
  • SP500 up 5.09 pts to 4374.30
  • NASDAQ Composite down 32.70 pts to 14644.95
  • Dow Jones up 44.44 pts to 34933.23
  • FTSE100 down 33.53 pts to 7091.19
  • DAX30 down 0.66 pts to 15788.98
  • GOLD futures US session (Aug) up $18.70 to $1828.60 an ounce
  • COPPER futures US session (Comex Sept) down $0.0398 to $4.2672 a pound
  • OIL futures US Session (Nymex Aug) down $2.12 to $73.13 a barrel
  • CRB Index down 0.74 pts to 213.38
  • AUDUSD trading at 0.7482
  • EURUSD trading at 1.1838
  • GBPUSD trading at 1.3860
  • USDJPY trading at 109.9700
  • USD Index US Session (ICE Sep) down 0.394 to 92.365

US indexes started the session higher but faded into the close to give back some of the opening gains as traders were uncertain into new highs with quarterly earnings season kicking off. The action was choppy and relatively range bound as price was supported by Fed Chair Powell comments mid session. In his testimony to Congress, Powell said that ‘US monetary policy will offer powerful support to the economy until the recovery is complete’ leaving traders with no questions as to the Feds intent. He saw the recent jump in inflation as temporary and will remain focused on full employment before the Fed changes tact with bond market support. Banks were mixed with Bank Of America falling after its positive quarterly results while Citigroup was another ‘buy the rumour, sell the fact’ after results although Wells Fargo rallied after smashing wall streets expectations and swinging to a profit in the second quarter. Banks may have come under pressure after earnings as they highlight their sensitivity to low interest rates although many traders have already factored in good results and simply see it as an opportune time to lock in some gains. We will be watching to see if the theme continues with strong results being sold into as traders re-assess the near term outlook. The DOW closed up 0.13% while the broader SP500 ended up 0.12% and the Nasdaq closed down 0.22% for the session. In Europe, major Indexes opened weaker but managed to push up off opening lows ahead of Powells testimony as they look to the supportive landscape to continue. A stronger Pound weighed on the FTSE after stronger than expected inflationary data for June. Concerns continue for inflation although Producer Price data may be cooling which would support the transitory narrative.

The USD Index was all one way action yesterday as sellers moved the dollar lower off highs around 92.800. The dollar came under pressure from the start of the Asian session and the selling continued into the US close after long bets were closed ahead of Powell comments. Price continues to be capped into highs and supported for now above the 92.000 area. Any move below 92.000 will see deeper corrective action lower. The EURUSD rallied all session after holding up off the 1.1780 area on the Asian market open. We are now watching to see if price is starting to build a broad base between 1.1780 and 1.1880 which will drag in some buyers for a squeeze higher. Expect that there is still some more work to do and we will want to see a key higher low stick before hunting for long positions. The GBPUSD also held up nicely off lows and was supported by some stronger than expected CPI (Consumer Price Index) data. Price action has held a key higher low around 1.3800 that we see providing the support for a move up and through 1.3900 resistance. Like the Euro, bulls still have some work to do and will need to hold a higher low to convince new buyers to come in off the sidelines. The AUDUSD managed to end on session highs after a choppy Asian market session with price flushing lows before finding a bid at the start of European trade. If buyers can hold the 0.7466 level on the open then we see the potential for a test above 0.7500. The USDJPY fell away from highs at the start of the Asian session to end well down on session lows. Price is extended so we expect to see some profit taking from sellers for a corrective move up.

SPOT GOLD had a strong session after breaking up and through the 1812 area and seeing buyers support and pullback and easily soak up selling pressure. We expect to see price continue to work its way higher after the good length of time spent consolidating between 1790 and 1810. Over the near term, Gold has the potential to extend on the gains into the 1850 area before some selling pressure comes into the action. Crude Oil saw some selling pressure after some worse than expected inventory data as the buying was already done the previous session. Price fell away hard on a long squeeze from the 75.00 level as traders were again focused on the OPEC production standoff between UAE and Saudi Arabia. Price lower is extended so we expect to see some bargain hunting support the action in the Asian session. Copper remains choppy as the daily trend up remains in question after backing away from major resistance. Sellers are continuing to cap and rallies so we see the potential today for price to test down to the 4.2325 support zone.

Cryptocurrencies managed to fight back after being knocked down lower in the Asian session. Prices across the board generally recovered from and early selloff to squeeze out some sellers from the recent move lower so we will be watching to see if the bullish action can continue today. Bitcoin is currently trading at $32925.6 up 1.06% while Ethereum is at $2000.3 up 2.84% and Ripple is at $0.62202 up 0.59%.

The ASX200 had a bit of a seesaw session yesterday as price swung between gains and losses and back again. Price ended up 22.6 points to 7354.7 thanks to a rally into the close. Shares in Utilities, Gold and the Consumer Staples sectors were the best performers while IT took a bit of a hit. Rising stocks outnumbered declining ones by 680 to 647 and 402 ended unchanged. The ASX200 may squeeze lower ahead of the employment data at 11:30am as some recent bulls lock in some gains.

The ASX200 is expected to open down 10 points as the SPI200 moved lower in the US session after failing from previous highs.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Employment Change and Unemployment Rate 11:30am

CNY GDP and Industrial Production 12pm

GBP Unemployment Rate and Claimant Count 4pm

GBP MPC Member Saunders Speaks 8pm

USD Philly Fed Manufacturing Index and Unemployment Claims 10:30pm

USD Industrial Production 11:15pm

USD Fed Chair Powell Testifies 11:30pm

SPI200 INTRADAY LEVELS TO WATCH