The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 20/07/21

  • SPI200 (Sept) overnight futures down 68 pts to 7129
  • SP500 down 68.67 pts to 4258.49
  • NASDAQ Composite down 152.26 pts to 14274.98
  • Dow Jones down 725.81 pts to 33962.04
  • FTSE100 down 163.70 pts to 6844.39
  • DAX30 down 407.11 pts to 15133.20
  • GOLD futures US session (Aug) down $1.70 to $1813.30 an ounce
  • COPPER futures US session (Comex Sept) down $0.1203 to $4.2027 a pound
  • OIL futures US Session (Nymex Aug) down $5.39 to $66.42 a barrel
  • CRB Index down 6.99 pts to 205.59
  • AUDUSD trading at 0.7343
  • EURUSD trading at 1.1801
  • GBPUSD trading at 1.3675
  • USDJPY trading at 109.4700
  • USD Index US Session (ICE Sep) up 0.143 to 92.830

US indexes followed on from where they left off Friday and took a hit on Covid fears. Markets were hammered from the open on concern that the increasing number of delta variant cases will spark new lockdowns and derail the recovery. The Delta variant is now the dominant strain across the globe and has triggered a surge in new cases and deaths nearly exclusively among unvaccinated people. Traders went into risk off mode as they locked away gains and battened down the hatches for what they expect to be a rough few weeks ahead. There may be a sense that Indexes have overshot the mark if the recovery slows and we will not see the boom that many expect. Bond yields fell as the 10-year bond found a safe haven bid on expectations that any new lockdown will just prolong the Feds bond stimulus program and definitely cap any inflation concerns. The DOW closed down 2.09% while the broader SP500 ended down 1.59% and the Nasdaq closed down 1.06% for the session. In Europe, major Indexes were also hit on the open with Commodity-linked stocks, banks and travel shares talking the brunt of the selling. The BOE said that monetary stimulus would not be curbed for the foreseeable future so traders are now awaiting to hear more of the same from the ECB later this week.

The USD Index spiked up through resistance at the start of the European session and held its ground until the start of the US session when it was knocked straight back down again. Price closed around the 92.80 area so we see this as an important zone for the dollar. A break back below may trigger a long squeeze and decent move back down as safe haven buyers get caught on the wrong side of the action. If buyers continue to press higher, then we may see a good bullish leg higher. The EURUSD held pretty well considering the pop in the USD. Price traded as expected with sellers pushing below the 1.1770 area to trap some sellers before ramping back up into the 1.1820 area. Buyers are still defending support which will rely on the USD movements in coming sessions, but for now, we are watching for the range between 1.1770 and 1.1820 to continue today. The GBPUSD was all one way action right from the start of the Asian session and into the US close. Sellers cut straight through support at 1.3740 and pushed into lows around 1.3672. Price was weighed down as the UK health minister announced over the weekend that he tested positive which forced the PM and Finance minister into quarantine. We will be watching the 1.3672 area to see if the Pound can find a bid and squeeze out some sellers. The AUDUSD was also all one way action as the risk and commodity currency took a hit from the open after breaking below the 0.7410 level. Sellers extended on the move lower to push below a key level and confirm the downtrend. Price is extended so may see some bargain hunters but we will be watching for a lower high as share markets are expected to continue to see pressure. The USDJPY was dumped through support at 109.660 as the safe haven YEN found a strong bid across the board. Price did bounce but is holding below the level so any consolidation will drag in more sellers today for continuation lower.

SPOT GOLD spiked lower at the start of the European session as the dollar rallied and put pressure on the precious metal. Price pushed into 1796 before bouncing straight back to end relatively unchanged on the day. We will be watching to see if gold can finally hold a safe haven bid and work its way back up through 1830. The flush lower may be the trigger bulls need to start the squeeze on sellers. Crude Oil was hit hard as the risk off tone had already set in when the market found out that they are to expect more supply. The timing could not be worse as OPEC+ ministers agreed to increase supply from August which weighed heavily on the market leaving bulls racing for the door. Price dropped like a stone in search of support and extended into a potential level at 66.50 where we may see some sellers lock in some gains. Either way, the supply and covid narrative will not change anytime soon so the pressure on Oil is expected to continue. Copper was also knocked down into a previous buy level around 4.1725 where price bounced into the US close. If the stock market selling continues, expect to see copper continue lower after holding a lower high.

Cryptocurrencies took a hit across the board as markets went into sell mode through European and US trade. We would expect to see the fear based selling pressure to continue today as the Asian market plays catchup. Bitcoin is currently trading at $30915.7 down 2.05% while Ethereum is at $1826.53 down 4.54% and Ripple is at $0.56148 down 3.64%.

The ASX200 got off to a really bad start to the session yesterday being down around 100pts at one stage before managing to fight back off the lows to remain in the range it has been in for the last month. At the close the index was down 62.1 points to 7286 with Gold, Metals and Mining and Resources stocks (but they were not alone) being the main drag on the action while Healthcare was a lonely shining light for bulls. Falling stocks outnumbered advancing ones by 999 to 387 and 371 ended unchanged.

The ASX200 is expected to open down 70 points as the SPI200 fell over along with overnight markets.

ECONOMIC DATA OUT TODAY (AEDT)

JPY National Core CPI 9:30am

AUD Monetary Policy Meeting Minutes 11:30am

EUR German PPI 4pm

EUR Current Account 6pm

USD Building Permits and Housing Starts 10:30pm

SPI200 INTRADAY LEVELS TO WATCH