The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 6/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 5 pts to 7072
  • SP500 up 2.93 pts to 4167.59
  • NASDAQ Composite down 51.07 pts to 13582.43
  • Dow Jones up 97.31 pts to 34230.34
  • FTSE100 up 116.13 pts to 7039.30
  • DAX30 up 314.30 pts to 15170.78
  • GOLD futures US session (June) up $10.60 to $1786.60 an ounce
  • COPPER futures US session (Comex July) down $0.0032 to $4.5183 a pound
  • OIL futures US Session (Nymex Jun) down $0.06 to $65.63 a barrel
  • CRB Index up 1.69 pts to 204.14
  • AUDUSD trading at 0.7746
  • EURUSD trading at 1.2004
  • GBPUSD trading at 1.3904
  • USDJPY trading at 109.2000
  • USD Index US Session (ICE Jun) up 0.313 to 91.240

US indexes continue to be defensive and contained ahead of US employment data out Friday which is expected to be very positive with the unemployment rate dropping. The DOW pushed into new all time highs but faded to give up some gains into the close while the NASDAQ remained rattled and was under pressure right from the open to move back down towards the previous sessions lows. An early reading, and less broad, of the April employment data showed that private payrolls increased as companies rushed to boost production amid a surge in demand. Rising inflation and potential increases to interest rates keep traders on edge and cautious up at highs and with extended valuations even though the Fed has been adamant on leaving rates as is into the near future. Employment data will be key to watch as continued strong data numbers will be what the Fed Reserve wants to see before toying with the idea of easing their bond purchases and even thinking about a rate rise. This will take a few months so we expect that there will be continued support for US shares but with the added pressure of bigger swings and volatility. The DOW closed up 0.29% while the broader SP500 ended up 0.07% and the Nasdaq closed down 0.37% for the session. In Europe, major Indexes saw a big fight back off the previous close as traders were happy to jump back into the action after having time to digest the news and Yellens comments. The DAX ended up over 2% while the FTSE was also up strong around 1.7%. Commodity stocks led the charge which we would expect to flow over into our local market.

The USD Index traded in a relatively tight range between 91.175 and 91.400 as traders await US employment data out Friday. There is still a case for further downside pressure and also a rally which is keeping price relatively contained lately as bulls and bears work out their differences. Price rallies have been contained at 91.400 the last few sessions and we expect to see the level hold while there is pressure building for a squeeze lower. The EURUSD is playing out as expected with a minor flush below the 1.2000 level while buyers were happy to soak up any selling pressure. We expect that there will be continued flushes below the level until the USD decides to work its way lower. If so we are watching for a higher low off 1.2000 for a buy entry although will want to see the 1.2020 level cleared first. The GBPUSD remains in a broad based bearish channel ahead of BOE statement tonight. Price found sellers to hold resistance at 1.3930 while the pressure for the session was to the upside. Tonight may see the action heat up if there is any change to the BOEs QE program…or even just a mention of something to come, which we expect to trigger some bulls into action. In saying that, we would not be surprised to see a flush lower into the release just to clean out a few buyers before a move kicks off. The AUDUSD held a retest into 0.7700 support before making its way higher as the European session was risk on and all green. We expect that the Aussie may extend on the gains with a move up to the 0.7760 area before seeing a reaction lower as buyers lock in some gains. For that to happen, buyers will need to hold the anchor to the leg up at 0.7728. The USDJPY is now looking top heavy as 109.475 held as resistance and it seems that the recent up trend off 107.488 is failing. If the USD comes under pressure…which is what the USDJPY is pointing to…expect to see a break back down below the 109.000 even number.

SPOT GOLD had a good session for bulls to hold a retest of the 1772 level before pushing higher. Expect that price is ranging for now until the US payroll data release with buyers being contained on a push into the 1800 area. If US bond prices continue to rally, we expect that Gold will continue to follow its lead and pressure higher. Crude Oil saw a bit of a ‘buy the rumor, sell the fact’ trade as prices headed lower on the Oil Inventory release which came in weaker than expected. Bulls may have also been disappointed by slightly weaker than expected jobs numbers and may want to hold off re-establishing long positions into Fridays payrolls. Price moved down to flush out some recent buyers but we expect that support will continue as the US opens up. Copper edged its way lower off major resistance but continues to hold the anchor to the trend up at 4.5005. If buyers can not support price around current levels and above the anchor, we expect to see a bigger unwinding of bullish bets and a move lower. For now, bias continues to be up.

Cryptocurrencies continue to find support, even the infamous Dogecoin, as buyers continue to look to highs. Prices are not showing cracks just yet but we expect that it will happen and holders will want to lock in gains. For now, Bitcoin is trading at $56818.2 up 5.07% while Ethereum is at $3432.97 up 2.13% and Ripple is at $1.58920 up 12.47%.

The ASX200 surprised many bears yesterday to open stronger than expected and rally through 7100 to end the day up 27.9 points to 7095.8. The Materials, Financials and Resource sectors did the bulk of the heavy lifting while Gold and IT were pressured lower. We expect that Gold will bounce back today while IT will again come under some pressure. Falling stocks outnumbered advancing ones by 868 to 521 and 339 ended unchanged.

The ASX200 is expected to open up 5/10 points after the SPI200 managed to hold onto the day sessions gains in overnight trade.

ECONOMIC DATA OUT TODAY (AEDT)

NZD Prelim Business Confidence 11am

EUR German Factory Orders 4pm

GBP Final Services PMI 6:30pm

AUD RBA Gov Debelle Speaks 7pm

EUR Retail Sales 7pm

GBP BOE Asset Purchase Facility Votes, Monetary Policy Report and Official Bank Rate 9pm

USD Unemployment Claims 10:30pm

SPI200 INTRADAY LEVELS TO WATCH