The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 7/04/21 (as at 8am AEST)

  • SPI200 (Jun) overnight futures up 3 pts to 6863
  • SP500 down 3.97 pts to 4073.94
  • NASDAQ Composite down 7.21 pts to 13698.38
  • Dow Jones down 96.95 pts to 33430.24
  • FTSE100 up 86.25 pts to 6823.55
  • DAX30 up 105.51 pts to 15212.68
  • GOLD futures US session (June) up $14.20 to $1743.00 an ounce
  • COPPER futures US session (Comex May) up $0.0005 to $4.1080 a pound
  • OIL futures US Session (Nymex May) up $0.68 to $59.33 a barrel
  • CRB Index up 1.76 pts to 185.84
  • AUDUSD trading at 0.7663
  • EURUSD trading at 1.1874
  • GBPUSD trading at 1.3824
  • USDJPY trading at 109.7500
  • USD Index US Session (ICE Mar) down 0.298 to 92.297

US indexes took a breather overnight and edged lower off previous sessions highs. Bond prices moved higher as yields inched lower which supported buyers although many are now looking to the Fed Reserves economic outlook for any changes which is out later tonight. Bulls will be watching for any change to the outlook and expect a continued supportive and accommodative Fed that sees little risk from inflation and an improved outlook on economic growth…but really why would they say anything else which could derail the rally and trigger a run into bonds. Traders were also happy to take a break from hitting the buy button as they gear up for coming earnings. On the labour market front, data showed that job openings jumped to a two year high as vaccine rollouts and stimulus boosts companies need for more workers. The DOW closed down 0.29% while the broader SP500 ended down 0.10% and the Nasdaq closed down 0.05% for the session. In Europe, major Indexes returned from the Easter break to follow in the US footsteps and rally from the open to play catchup. Higher weighted values stocks are leading the charge up as bumper stimulus spending supports the market. The DAX index again pushed into new all time highs while the FTSE took out some previous highs and looks set for its own run up to pre-pandemic highs.

The proposed increase in US tax rates has some higher earners and companies looking to move residences to lower taxing areas. The pandemic has shown how easily work from home can be done and may encourage many to move from New York to lower taxing areas such as Florida, Utah or Texas. Many smaller Hedge Funds are already making the move along with some bigger companies who are moving part of their staff to other areas. This may be a ‘protest’ from the rich but will have a flow on affect to tax revenues which the US will desperately need.

The USD Index continued the push lower with some initial bullish action brushed aside with a move down below support around 92.500. With inflation concerns seemingly on the sidelines for now and safe haven trades unwinding into the dollar, the move down will drag in more sellers as traders focus on stimulus and a massive supply of USD. Price action remains extended but bulls will need to put in some support otherwise we are looking lower to 91.500. The EURUSD took the opportunity to again spike hard to squeeze alot of recent sellers back out of the action. In the short term the price is extended and may need to consolidate before another leg up. If price holds minor support around 1.1795 then we expect to see more buyers ramp up to 1.1945 and then potentially 1.1980. This will of course depend on the USD. The GBPUSD came under fire from sellers in the Asian session and continued to be pressured lower into the US close. Bulls found no support from the USD weakness and price was pushed down into 1.3812 in search of support. Price did flush the level and ended back above so we will be watching to see if buyers can hold a higher low for a squeeze up. If the action holds below 1.3865, then expect and extension lower to 1.3780. The AUDUSD saw a big flush of recent buyers on a spike down to 0.7606 in the Asian and European session which was when the dollar was edging higher. The move was not correlated to a risk off move in shares so buyers were quick to ramp price back into resistance at 0.7660 into the US close. If price can consolidate above the level, then we will look for a b move up to test 0.7705. The USDJPY retested the 110.400 level before a spike lower as the USD fell apart. Price is now well and truly in corrective mode and may look to squeeze out more buyers from the recent run up off the 103.000 level. On the daily basis, price is still holding the trend up with the anchor held at 108.400 so we could see some chop as bulls support an push lower above the level and eye a longer term move up to 112.000.

SPOT GOLD gave more for bulls to cheer about as the dollar fall supported bullish action into the precious metal. Price held nicely above the 1734 area and is on track for a continued move up to 1760. Bulls will need to hold the 1739 level to drag in more buyers today. Crude Oil gave back earlier gains in the US session but managed to hold up off lows around 57.40. Price action remains range bound between the 57.20 support level and 62.00 so we are watching for price to find a bid off 59.12 today to push up through 59.50 and retest into the highs. If the 59.12 level gets broken, then a deeper flush lower is on the cards but we expect that the range will hold. Copper was under pressure off the highs as the USD grinded higher but managed to pressure sellers as the dollar turned lower. If the 4.0725 level can hold, then expect to see a higher low confirm and buyers to ramp price up through 4.1710.

Cryptocurrencies had a mixed session as Bitcoin came under pressure while Ethereum held its ground and Ripple added to recent gains. Bitcoin is currently trading at $57800.6 down 1.46% while Ethereum is at $2103.04 down 0.21% and Ripple continues to hold higher levels and is at $0.98540 up 9.28%.

The ASX200 started the session well yesterday and rallied up through 6900 but could not hold above the level and faded into the close to end up 57.2 points to 6885.9. The IT sector was by far the biggest winner on the day ending up 5.14% while Gold was not far behind up 3.08% as gold bugs see a bull run on the horizon. Rising stocks outnumbered declining ones by 852 to 529 and 372 ended unchanged. The RBA was happy to leave rates unchanged while China released some positive services data showing activity in the sector is accelerating.

The ASX200 is expected to open down 5 points as the SPI200 was dragged lower by a negative US session.

ECONOMIC DATA OUT TODAY (AEDT)

EUR German Final Services PMI 5:55pm

EUR Final Services PMI 6pm

GBP Final Services PMI 6:30pm

USD Trade Balance 10:30pm

USD FOMC Member Evans Speaks 11pm

USD Crude Oil Inventories 12:30am

USD FOMC Meeting Minutes 4am

SPI200 INTRADAY LEVELS TO WATCH