The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 22/07/21 (as at 7:15am AEST)

  • SPI200 (Sept) overnight futures up 64 pts to 7290
  • SP500 up 35.63 pts to 4358.69
  • NASDAQ Composite up 133.07 pts to 14631.95
  • Dow Jones up 286.01 pts to 34798.00
  • FTSE100 up 117.15 pts to 6998.28
  • DAX30 up 206.23 pts to 15422.50
  • GOLD futures US session (Aug) down $7.60 to $1803.8 an ounce
  • COPPER futures US session (Comex Sept) up $0.0167 to $4.2797 a pound
  • OIL futures US Session (Nymex Aug) up $3.10 to $70.30 a barrel
  • CRB Index up 4.00 pts to 212.98
  • AUDUSD trading at 0.7354
  • EURUSD trading at 1.1793
  • GBPUSD trading at 1.3711
  • USDJPY trading at 110.3000
  • USD Index US Session (ICE Sep) down 0.182 to 92.797

US indexes added to the previous sessions gains to completely brush aside Mondays selloff leaving bears scratching their heads. US 10-year Bonds moved lower as traders went risk on into shares and killed and safe haven bid and again pointed to inflation pressures. Investors were reminded of the massive amount of cash floating around in corporates which is expected to be the fuel to pump up share prices further by way of share buybacks, boosting dividends or pouring money back into their businesses. Bulls were also supported by more positive earnings and guidance and the belief that the Delta variant will be managed. Traders have memories and know that Governments and Federal Reserves will step in to fend off any selloff that could derailed the recovery so remain committed to buying any dip. The DOW closed up 0.83% while the broader SP500 ended up 0.82% and the Nasdaq closed up 0.92% for the session. In Europe, major Indexes played catchup with the US to also brush aside previous weakness and fears to ramp higher into the close. Travel stocks came roaring back along with some positive updates from some Blue-chip shares which helped to support the major Indexes. The ECB is expected to remain upbeat…read as accommodative…and keep the taps of support flowing freely as they too look to tolerate higher inflationary levels.

The US government continues to grapple with its Debt and will soon need to raise its debt limit again to avoid a government shutdown. With spending well out pacing revenues and the printing presses on the verge of breakdown due to ‘overwork’, the Treasury department may soon not be able to pay salaries, tax refunds or Social Security benefits or interest payments on the Debt. https://www.reuters.com/article/us-usa-congress-debt/partisan-fight-brews-as-forecaster-warns-u-s-could-hit-debt-limit-by-fall-idUSKBN2ER0WU

The USD Index was edging higher during the European session before being sent lower from the start of US trade. Price ran into a wall of selling around 93.150 which triggered a squeeze lower. Still, the trend up remains in tact and we will be watching to see if buyers can defend current levels and hold a higher low for a continuation move back up. If bulls remain on the sidelines, then expect to see a deeper corrective move lower and a much bigger unwind of buyers. The EURUSD continued to be held up off support as traders await the ECB statement later tonight. Price again fended off a push into lows and held up off 1.1758 and flushed out some late sellers on a push higher into the US close. Watching now to see if any minor flush lower can be contained and bulls to push up through 1.1802. The GBPUSD played out nicely as the bulls stepped back into the action for a squeeze high off the previous sessions stop hunt lows. Price is extended in the short term and we see the potential for a minor pullback to clear out some weak buyers before price is again supported to extend on the move up. The AUDUSD started the march higher right from the kick off of European trade as it was clear the bulls were out to play and the ‘risk on’ trade was in force. The rally took out the anchor to the downtrend at 0.7340 so we expect to see continued enthusiasm from bulls to extend on the rally today. The USDJPY managed to add to the recent gains as price initially consolidated below a minor level at 110.020 before ramping up to test 110.340. Expecting to see price flush out some late bulls before continuing the march higher up and through 110.400.

SPOT GOLD was again knocked over and sold into the 1797 zone before buyers stepped up to defend the level. Price action is holding minor lower highs in a contractive mode with the key minor level at 1812 for now. If bulls want to see higher prices, they will need to press up through 1812 to encourage other buyers to step into the action off the sidelines. For now, we expect to see more chop before Gold ultimately moves higher. Crude Oil moved higher despite the unexpected rise in US inventories. Bulls brushed aside the recent selloff on the back of expected production increases and found support in the risk on tone into the share markets. Many still view that there is an under-supply of oil even with the production increase. Copper continued to edge higher but only after a flush lower in Asian trade to hold a higher low. Price is contracting over the longer term so we continue to expect to see an uncertain market for now and more swings in price before the market is happy to pick a direction.

Cryptocurrencies made a comeback in aggressive fashion as Bitcoin was ramped up off lows and spiked straight up and through 32K. Price is well and truly extended in the short term so we will not be surprised to see some profit taking. Bitcoin is currently trading at $32077.6 up 8.32% while Ethereum is at $1972.26 up 11.44% and Ripple is at $0.56617 up 7.60%.

The ASX200 continued the choppy action yesterday with an early ramp straight back to the top end of the recent range before fading back down into the close. The index ended the session up 56.5 points to 7308.7 with Materials, Resource and Financial stocks leading the charge. Hang Seng and Nikkei traders sent local Indexes lower as bulls came under pressure. Rising stocks outnumbered declining ones by 789 to 555 and 384 ended unchanged.

The ASX200 is expected to open up 65 points after the SPI200 was ramped higher right from the start of the overnight session.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Goods Trade Balance 11:30am

GBP MPC Member Broadbent Speaks 6:30pm

EUR Main Refinancing Rate and Monetary Policy Statement 9:45pm

EUR ECB Press Conference 10:30pm

USD Unemployment Claims 10:30pm

USD Existing Home Sales 12am

SPI200 INTRADAY LEVELS TO WATCH