The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 6/04/21 (as at 8am AEST)

  • SPI200 (Jun) overnight futures up 23 pts to 6826
  • SP500 up 58.04 pts to 4077.91
  • NASDAQ Composite up 225.49 pts to 13705.59
  • Dow Jones up 373.98 pts to 33527.19
  • FTSE100 up 23.67 pts to 6737.30
  • DAX30 up 98.83 pts to 15107.17
  • GOLD futures US session (June) up $0.40 to $1728.80 an ounce
  • COPPER futures US session (Comex May) up $0.1482 to $4.1387 a pound
  • OIL futures US Session (Nymex May) down $2.80 to $58.65 a barrel
  • CRB Index down 2.63 pts to 184.08
  • AUDUSD trading at 0.7652
  • EURUSD trading at 1.1814
  • GBPUSD trading at 1.3906
  • USDJPY trading at 110.1500
  • USD Index US Session (ICE Mar) down 0.456 to 92.595

US indexes were open for trade Monday and ended up strong adding to the gains from Thursday. Traders were buoyed by ISM data which showed the US services industry activity jumped to a record high which added to Fridays employment data that smashed analysts forecasts. Gains were led by sectors that have underperformed recently such as communication services, consumer discretionary and tech. Traders were happy to dive into the action as bond yields were well contained. Democrats are now focused on tax reforms from Trump in 2017 to eliminate what they say are incentives for companies to move operations overseas and shift profits to tax haven countries. Yellen called for G20 countries to agree on a global corporate minimum tax rate that she says will strengthen the global economy and advance US interests. The proposal is a key pillar in Bidens $2 trillion infrastructure plan which they will need to foot the spending bill. The DOW closed up 1.13% while the broader SP500 ended up 1.44% and the Nasdaq closed up 1.67% for the session. In Europe, major Indexes ended the session Thursday slightly higher into the Easter break. Concerns for further lockdowns were pushed aside by positive data on factory activity out of the euro zone. The German DAX index continued its push into new all time highs while the UK FTSE lagged and remains constrained below pre-pandemic levels.

The USD Index took a hit as sellers played catchup with the recent positive data releases although the move may have been exaggerated in the low volume market as much of the world was still closed for holidays. Price traded back down below the 93.000 level to squeeze out a lot of the bulls from the recent run higher. The 92.500 zone may provide some support and bring in buyers to soak up the selling pressure but if not, then we may be seeing the start of a bigger leg lower as the weight of massive stimulus weighs on demand. The EURUSD spiked higher off 1.1740 support once the USD started the move down. Bulls were helped by some positive data in the EU which triggered a change of sentiment back intro the Euro which has been weighed down by lagging vaccinations and new lockdowns. Bulls were also helped by the idea that US yields remained in check even after the bullish jobs data which suggests alot of the positive sentiment is already baked into price. The GBPUSD also ran hot with bulls continuing the push higher. Price is now set to push to the 1.4000 area which is a previous resistance level. The anchor to the move up is at 1.3810 which will need to hold in order for bulls to keep the ball rolling. We may see some weak buyers squeezed out of the action on a minor pullback below 1.3900 before a reset and push higher. The AUDUSD moved higher with the risk on sentiment into the share market in the US. Price held a key higher low around 0.7597 to drag in buyers for the march higher overnight. Price pushed up into previous highs around 0.7660 which may see some minor profit taking. The key will be whether bulls can continue the move in the Asian session as markets come back after the break with a lot more volume. The USDJPY fell apart as the USD dropped the ball and sellers pushed price down through 110.400. Again the move was in a low volume market and may be a stop hunt and engineering to take some heat out of the recent rally. The key for the pair remains the USD and whether the action has seen safe haven buyers exit the dollar with yields seemingly in check. We may expect to see a retest of 110.400 today before more buyers get squeezed on an extension lower.

SPOT GOLD consolidated the gains from the Thursday night session on the break back above the 1723 level. This may be the move the bulls have been waiting for as the USD safe haven trade takes a hit and supports gold. The way price reversed off 1679 after the retest failed, is proof that more buyers are willing to step up and soak up selling pressure at lower levels. We will be watching for more consolidation of the area and for any spike lower to be quickly soaked up. Any break up above 1734 that can stick will see a move to 1760. Crude Oil took a hit but remains range bound between the 57.20 support level and 62.00. Expect that selling into the support area will be met with buyers as the global economy continues to open up and soak up supply. Copper took the opportunity in a low volume environment to charge higher and take out some key resistance levels. Price is now back on track for a move up to test into new highs as price breaks up and out of the contraction down….meaning bulls are back in charge. Expect to see some heat to come out of the action to build a higher low for another leg up.

Cryptocurrencies had a mixed Easter with Bitcoin and Ethereum well contained below previous highs while Ripple rocketed higher. Ripple has been volatile of late after a lawsuit was filed by the SEC against two Ripple executives in late 2020. Expect that price will continue to show volatility although is heading in the right direction for the bulls. Bitcoin is currently trading at $58682.0 up 0.99% while Ethereum is at $2107.67 up 1.49% and Ripple is at $0.90815 up 47.31%.

The ASX200 ended the shortened week on a positive note Thursday to close up 38 points to 6828.7. Buyers were out supporting prices from the open with the Gold sector the best performer ending the day up 2.94% while IT was not far behind ending up 2.45%. Rising stocks outnumbered declining ones by 784 to 530 and 356 ended unchanged.

The ASX200 is expected to open up 20 points as the SPI200 rallied back up into resistance in the shortened session ahead of the Easter break.

ECONOMIC DATA OUT TODAY (AEDT)

AUD ANZ Job Adverts 11:30am

CNY Caixin Services PMI 11:45am

AUD RBA Rate Statement and Cash Rate 2:30pm

EUR Unemployment Rate 7pm

SPI200 INTRADAY LEVELS TO WATCH