The Morning Jumpstart Macro view

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

  • SPI200 (Jun) overnight futures down 86 pts to 6911
  • SP500 down 28.32 pts to 4163.26
  • NASDAQ Composite down 128.50 pts to 13786.27
  • Dow Jones down 256.33 pts to 33821.30
  • FTSE100 down 140.21 pts to 6859.87
  • DAX30 down 238.88 pts to 15129.51
  • GOLD futures US session (June) up $8.60 to $1779.20 an ounce
  • COPPER futures US session (Comex May) down $0.0330 to $4.2050 a pound
  • OIL futures US Session (Nymex May) down $0.94 to $62.44 a barrel
  • CRB Index down 0.20 pts to 193.78
  • AUDUSD trading at 0.7727
  • EURUSD trading at 1.2035
  • GBPUSD trading at 1.3937
  • USDJPY trading at 108.1100
  • USD Index US Session (ICE Jun) up 0.122 to 91.172

US indexes opened weaker and added to the previous sessions losses as traders locked in some more gains as they await earnings from key big tech companies. Powell, in a letter to Republican Senator Rick Scott, reiterated the Feds stance on inflation and interest rates saying that they are committed to maximum employment and stable prices. He mentioned that support will not be stopped until the objectives are reached and on the flip side, if inflation is stronger than expected, the Fed will have to review their stance and bond buying program. Bond prices rallied to make back previous session losses and take the pressure of Gold to continue higher so there seemed to be no fundamental reason for the selloff other than the view that share prices are extended and may struggle for further growth. The DOW closed down 0.75% while the broader SP500 ended down 0.68% and the Nasdaq closed down 0.92% for the session. In Europe, major Indexes opened weaker and were sold lower into the close as the risk off theme triggered investors. European bonds also rallied which should of supported prices but traders are concerned that stocks are over valued in the short term after major indexes traded into new all time highs. The VIX volatility Index pushed higher which would have triggered some VIX based algo selling into action.

The USD Index bounced back from the previous sessions weakness and may have seen a safe haven bid as shares were hit lower. The rally in Bond prices should cap further gains into the dollar as stimulus and supply will continue to weigh. The rally into European bonds may have also supported buyers as the yield differential is less of a factor. We expect to see the dollar find some selling into the 91.300 area and the selling pressure to resume. The EURUSD initially added to the gains before the rally into the USD triggered some profit taking from bulls. Price pushed back into a minor higher low around 1.2015 so sellers may target this area for a stop hunt. The trend up will remain in tact as long as the 1.1990 area can hold and if the USD resumes its move lower then the Euro will make a run for new highs. The GBPUSD backed away from the 1.4000 as expected with buyers happy to lock in some gains from the sharp spike up off 1.3838. The selling was relatively contained and momentum down is easing so we may see buyers start to flow back into the action for a push back up and potentially through the 1.4000 level if the USD takes a turn lower. The AUDUSD also gave up early gains as the European markets were hit on the open. Being a barometer for risk, the Aussie moved lower and pushed into the 0.7705 level of support. We expect to see buyers step in and dip their toes in the water off the level to provide some support and then will be watching the action for a potential lower high to come into play around 0.7750 which will bring in more selling down the track. The USDJPY moved against expectations as the dollar moved up off lows from the start of the European session while the USDJPY moved lower suggesting that their was a strong bid into the YEN to outweigh dollar buying. Price is now hovering back down near the lows which we expect will be broken in the Asian session as the same them continues.

SPOT GOLD found support around 1766 as the US bond market rallied to make back previous sessions losses and support Gold prices. We expect to see more flow into price from buyers and Spot Gold to hold above the 1775 area especially if weakness comes into the USD today. If price flushes below 1775, then we expect that the move will be a trap of sellers for a run higher later in the European or US sessions. Crude Oil took a hit and fell 1% on fears that surging coronavirus infections in India will bring restrictions and reduce the demand for oil in the near term. The flush lower pushed price down through support around 62.60 but price bounced back into the US close and is now hovering around just below the level. We expect to see buyers start to step back into the action and push price back above 62.60 ahead of inventory data which is expected to come in weak. Copper felt the pressure from a rally into the USD and saw some recent buyers lock in some gains and take out the minor higher low at 4.2225. The action looks like a repeat of previous action from Monday that lead to a rally so expect to see buyers step back in if the dollar resumes its move lower. The key anchor to the move up is held at 4.1535.

Cryptocurrencies managed to fight back off the lows with the majors all rallying off minor higher levels as the ‘bubble’ remains in tact. Bitcoin is currently trading at $56838.3 up 1.0% while Ethereum is at $2345.01 up 6.55% and Ripple is at $1.68954 up 1.29%.

The ASX200 saw bears control the action yesterday as they moved the index lower from the open to close down 47.8 points to 7017.8 around the lows of the day. The IT sector was the biggest drag on the action and that was followed by Energy then Financials which weighed from the open. Falling stocks outnumbered advancing ones by 837 to 517 and 367 ended unchanged. Seems that traders followed the US lead and were happy to lock in some gains as the ASX200 approaches all time highs giving pause to more conservative traders.

The ASX200 is expected to open down 80 points to follow on from the previous days weakness after the SPI200 followed major indexes lower in a risk off tone overnight.

ECONOMIC DATA OUT TODAY (AEDT)

NZD CPI Data 8:45am

AUD Retail Sales 11:30am

GBP CPI and PPI Data 4pm

GBP BOE Gov Bailey Speaks 8:30pm

CAD CPI Data 10:30pm

CAD BOC Rate Statement and Overnight Rate 12am

USD Crude oil Inventories 12:30am

CAD BOC Press Conference 1am

SPI200 INTRADAY LEVELS TO WATCH