The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 19/07/21

  • SPI200 (Sept) overnight futures down 37 pts to 7232
  • SP500 down 32.87 pts to 4327.16
  • NASDAQ Composite down 115.89 pts to 14427.24
  • Dow Jones down 299.17 pts to 34687.85
  • FTSE100 down 3.93 pts to 7008.09
  • DAX30 down 89.35 pts to 15540.31
  • GOLD futures US session (Aug) down $16.50 to $1812.50 an ounce
  • COPPER futures US session (Comex Sept) down $0.0173 to $4.3057 a pound
  • OIL futures US Session (Nymex Aug) up $0.16 to $71.81 a barrel
  • CRB Index up 0.34 pts to 212.58
  • AUDUSD trading at 0.7401
  • EURUSD trading at 1.1806
  • GBPUSD trading at 1.3767
  • USDJPY trading at 110.0700
  • USD Index US Session (ICE Sep) up 0.089 to 92.720

US indexes moved lower Friday as bulls again show that they are struggling at current high levels. US retail sales data came out a lot better than expected to trigger a negative open on inflation concerns as big tech was again sent lower. The data adds weight to the view that inflation will run harder than expected and the Fed will be forced to raise rates earlier than they projected. Bond yields on the other hand, gained into the US close to say the opposite with regards to inflation as traders remain torn between inflationary data and the Feds view of transitory. Increasing cases of the delta variant may be getting investors rattled and seeing some safe haven support into the bond market and profit taking into the share markets especially with the lingering inflation concerns. It seems that bulls are having a harder time brushing aside covid concerns as looking to lock away some gains on expectations of stretched earnings. The DOW closed down 0.86% while the broader SP500 ended down 0.75% and the Nasdaq closed down 0.80% for the session. In Europe, major Indexes eased with defensive stocks rallying as real estate, utilities and healthcare up between 0.5% and 1%. The British governments chief medical advisor said that Englands coronavirus crisis could return again ‘surprisingly quickly’ as they look to lift all pandemic restrictions despite rising covid cases. Germany’s bond yields also came under pressure to fall to a new three month low ahead of Thursdays ECB statement.

The USD Index continued to pressure into highs and resistance around 92.800. The dollar saw a generally choppy session but managed to rally into the close which may suggest that there is a safe haven bid on the back of rising covid cases and less focus on inflation for now with the backdrop of bond yield movements. The dollar has minor support at 92.533 and then up at 92.623 which we expect will hold today and price chop between support and the 92.800 area. There is the potential for a negative Asian session to kick off some momentum to the upside in the Dollar today. The EURUSD had a very choppy session as bulls were reluctant to see the price push down into 1.1780 support under the weight of the USD. Price also absorbed spikes into 1.1820 as sellers defended the level so we expect to see this level hold today barring any drop in the USD. Price could easily see a spike lower if momentum continues to rollover and sellers look to test into support. Any move down could gain some steam for a stop loss hunt lower through 1.1770. The GBPUSD initially defended the 1.3800 level before spiking back down through the level on the US open. We expect that the initial pop off the level was to trap buyers before the ramp lower which we expect to target 1.3740 support today. Price is extended and running out of momentum but until the minor anchor to the move lower at 1.3794 is broken, the move down is in tact. The AUDUSD initially held lows at 0.7410 in the Asian session before the risk off tone into the European and US sessions weighed on the Aussie for a clean break back below 0.7410. Price looks set to extend on the move down if buyers can not defend 0.7380. The USDJPY pushed higher as the dollar rallied but price did give up some of the gains into the US close. Price action may be setting to hold a lower high and test back into support at 109.660 so we will be watching for further selling pressure if the 110.320 levels holds today.

SPOT GOLD took a hit Friday with buyers being squeezed on a move back down into the 1810 area. Bulls will need to hold the level today and attack 1816 otherwise a break down below will lead to further selling into the 1798 area. Gold is reacting to the movements in the USD rather than any inflation or safe haven narrative for now. Crude Oil is being weighed down by expectations of increasing supply at a time when a rise in coronavirus cases could lead to lockdown restrictions and depress demand. Price did defend a flush into lows around 70.80 but price is still being weighed down by lower highs anchored for now at 72.00…so as long as this level holds, the selling remains in tact. Copper saw sellers come into the action to cap the previous sessions rally and work price lower into the US close. We expect to see continued range bound action between 4.2325 and 4.3550 with price potentially working lower into support today.

Cryptocurrencies were generally range bound over the weekend after a rough end to the week. Prices on the major pairs tentatively hold up off major lows as sellers continue to absorb rallies. Bitcoin is currently trading at $31561.1 down 0.26% while Ethereum is at $1889.91 down 0.96% and Ripple is at $0.58350 down 0.22%.

The ASX200 reversed some of the previous sessions gains Friday to grind higher into the close from a weak open. Buyers edged their way back into the action to close the index up 12.2 points to 7348.1. The action was supported by stocks in the Consumer Discretionary and Healthcare sectors while Gold stocks were the biggest drag on the index. Rising stocks outnumbered declining ones by 737 to 569 and 414 ended unchanged.

The ASX200 is expected to open down 35 points after the SPI200 moved lower in the US session Friday. If the ASX200 can not hold above the 7320 zone then we expect to see price again work its way lower to the bottom end of the recent range around 7225.

ECONOMIC DATA OUT TODAY (AEDT)

GBP MPC Member Haslel Speaks 8pm

EUR German Buba Monthly Report Tentative

SPI200 INTRADAY LEVELS TO WATCH