The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 16/07/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures down 6 pts to 7237
  • SP500 down 14.27 pts to 4360.03
  • NASDAQ Composite down 101.82 pts to 14543.13
  • Dow Jones up 53.79 pts to 34987.02
  • FTSE100 down 79.17 pts to 7012.02
  • DAX30 down 159.32 pts to 15629.66
  • GOLD futures US session (Aug) up $5.30 to $1830.3 an ounce
  • COPPER futures US session (Comex Sept) up $0.0445 to $4.3120 a pound
  • OIL futures US Session (Nymex Aug) down $1.48 to $71.65 a barrel
  • CRB Index down 1.13 pts to 212.25
  • AUDUSD trading at 0.7420
  • EURUSD trading at 1.1810
  • GBPUSD trading at 1.3826
  • USDJPY trading at 109.8400
  • USD Index US Session (ICE Sep) up 0.173 to 92.578

US indexes were mixed with the DOW ending higher while tech selling saw the Nasdaq and SP500 lower. News services were rehashing old stories as growth stocks ran out of steam and traders again turned to value names. Big tech names were sold lower which weighed on the broader market SP500 as unemployment again eased from the previous month. If recent history is anything to go by, bargain hunters will again step in to support tech to continue the trend higher. Powell again testified in front of the Senate Banking Committee as he defended his stance on the Feds course of action as both sides fired questions at him and played politics. The Democrats were interested in the current Banking regulations while Republicans honed in on inflation concerns particularly with housing prices. Powell stuck with his stance on temporary inflation as he mentioned that overall, rising prices have a story (as with used cars) and are ‘more idiosyncratic than broad’. The DOW closed up 0.15% while the broader SP500 ended down 0.33% and the Nasdaq closed down 0.70% for the session. In Europe, major Indexes were hit on the back of some dismal earnings and as bond yields fell both in Europe and the US. The oil and gas sector took a hit falling 2.7% as oil continued its move lower. The selloff was broad based as traders became impatient with a weary market and the recent range bound action as the number of covid cases rise and pressure sentiment.

The USD Index rallied through European trade as price pushed back up towards recent highs. Price remains relatively range bound below highs around 92.800 as it seems that traders are awaiting the next catalyst to breath some life into markets. We expect to see the USD remain in the range with spikes into resistance soaked up by sellers and any push lower held up by buyers above 92.000 today. The EURUSD moved lower in European trade as bond yields fell to pressure the currency along with the rise in the USD. Price held up off key support around 1.1780 which we expect to see hold today lacking any clear catalyst into the USD ahead of retail sales in the US tonight which may bring in some volatility. The GBPUSD was choppy and caught between the 1.3800 higher low and 1.3900 highs. Neither bulls nor bears committed to a push out of the range so we expect to see the levels hold today ahead of European trade. The AUDUSD took a hit yesterday as buyers were weak and failed to provide support for continuation higher. The risk off tone was dictated by an uncertain share market as the Aussie pushed down into recent lows around 0.7410. Watching to see if the level can hold today and buyers provide some support as the bearish momentum is easing. The USDJPY hovered around and consolidated the previous sessions lows as price held up off 109.660 support. Bulls remain tentative as we see some safe haven Yen buying capping higher prices.

SPOT GOLD retested into the breakout area before finding buyers willing to lift price back up into the US close. The move is a good sign that buyers are willing to consolidate the gains above 1816 and look to new highs and continuation into 1850. If the USD pushes to the lower end of the range today then expect to see Gold hold a bid for a move up. Crude Oil fell as traders expect increased supplies after a compromise agreement between leading OPEC producers. Price moved lower into the US close and is now testing into the 71.00 zone. The level will need to hold if bulls have a shot for a move back into highs but we expect that the bias will be down in the near term. Copper was once again choppy with buyers moving prices higher from the start of Asian trade. Price continues to show range bound action being caught between 4.2325 and 4.3550. A higher low was confirmed at 4.2545 which may lead to a test of the highs which we would expect to see hold.

Cryptocurrencies made their way back down in the European session as buyers again struggled to hold onto any gains. Bitcoin is testing a major support zone while Ethereum is also making its way to a key support area. Bitcoin is currently trading at $31742.9 down 3.24% while Ethereum is at $1925.36 down 3.48% and Ripple is at $0.60283 down 2.43%.

The ASX200 was range bound early yesterday before drifting lower into the close to end down 18.8 points to 7335.9. The IT and Financial sectors were the biggest drags on the action while Gold, Metals and Mining and Materials were well bid for the session. The index continues the range bound trading it has been stuck in for the last month being contained between 7200 and 7400. Local employment data came out stronger than expected with the unemployment rate falling from 5.1% to 4.9% while Chinas weakening GDP points to a slowing recovery.

The ASX200 is expected to open down 5 points after the SPI200 had a range bound session holding around the days lows.

ECONOMIC DATA OUT TODAY (AEDT)

JPY BOJ Outlook Report and Monetary Policy Statement Tentative

EUR Final CPI and Trade Balance 7pm

USD Retail Sales Data 10:30pm

USD Consumer Sentiment Data 12am

SPI200 INTRADAY LEVELS TO WATCH