The Morning Jumpstart Macro view

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

  • SPI200 (Jun) overnight futures up 20 pts to 7043
  • SP500 up 34.03 pts to 4201.62
  • NASDAQ Composite up 50.42 pts to 13632.84
  • Dow Jones up 318.19 pts to 34548.53
  • FTSE100 up 36.87 pts to 7076.17
  • DAX30 up 25.96 pts to 15196.74
  • GOLD futures US session (June) up $31.20 to $1815.50 an ounce
  • COPPER futures US session (Comex July) up $0.0858 to $4.6098 a pound
  • OIL futures US Session (Nymex Jun) down $0.92 to $64.71 a barrel
  • CRB Index up 1.12 pts to 205.25
  • AUDUSD trading at 0.7783
  • EURUSD trading at 1.2063
  • GBPUSD trading at 1.3894
  • USDJPY trading at 109.0900
  • USD Index US Session (ICE Jun) down 0.416 to 90.877

US indexes closed stronger with the DOW powering into new all time highs while the SP500 also has new highs in sight. Bulls were supported by news that Biden is willing to accept a lower corporate tax rate than what he has originally proposed and is willing to settle around 25% if it will be supported by Republicans. The news lifted shares bringing new buyers into the action along with better than expected unemployment claims which came in lower than analysts predicted. The data highlights the strengthening jobs market so traders will be closely watching the US Payrolls data tonight for a more in depth and detailed breakdown of the labour market which the Fed will also be watching closely. The DOW closed up 0.93% while the broader SP500 ended up 0.82% and the Nasdaq closed up 0.37% for the session. In Europe, major Indexes edged higher to add to the previous sessions gains with a rally into the close being led higher by a positive start to the US session. The BOE offered a fairly vague signal regarding its bond purchasing program taking its queue from the US Fed Reserve. They mentioned that tightening will not come until the recovery has made significant progress although the lack of enthusiasm into shares shows traders may be factoring in some tightening soon.

The USD Index squeezed lower as expected off the 91.400 level and move straight down into previous lows around 90.870. Expect that there will be more pressure to come as traders assess Bidens tax rate compromise and where that leaves the Dollar. Watching to see if price can move down to test the 90.500 area but this will depend on coming employment data tonight. The EURUSD also played out nicely as price ramped straight up through the 1.2020 level after a minor flush below 1.2000 to kick things off for bulls. Price was supported by the drop into the USD so if sellers keep the pressure on the dollar into payrolls, expect the rally to continue into the Euro for a further squeeze on recent sellers. Price did find some resistance around 1.2070 so we may see this level cap gains today in Asian trade before bulls look to kick off again at the European open. The GBPUSD was choppy after the BOE release on QE and price held the 1.3930 area after an initial flush up through the level. Seems that many traders were starting to factor in easing from the BOE and the vague statement had them hit the sell button to square up some positions. The downside move was limited thanks to the drop into the USD but we expect that there may be a grind lower today below 1.3900. The AUDUSD initially spiked down into support off 0.7758 to clean out buyers before rallying straight back up and through the level. Price extended on the gains into the US close and we expect that bulls will try to continue the move today into highs at 0.7815. The USDJPY continues to look heavy and edge its way lower but continued to hold up above the 109.000 level even under the weight of the USD selloff. Expect that bulls are waiting to see the US payrolls before a good move down may get underway. If price does hold above the 109.000 level then there will be a lot of sellers built up that will get squeezed out of the action on a ramp higher.

SPOT GOLD had a big session to smash its way higher up and through the 1800 level to drag in some break out traders. Expect that the move up may see continuation up to 1850 in coming sessions although it is extended and may need to flush out some buyers to take some heat out of the move and reset at a higher level above 1800. Price was again supported by the USD move lower and Bonds higher which we expect may continue tonight. Crude Oil again edged its way lower to add to the previous sessions move down. The price action looks like a technical pullback off the highs which suggests that bulls will provide support soon as the fundamental outlook for economic growth will provide support. Expect to see the lows at 64.60 hold today and buyers come in off the sidelines. Copper initially saw a flush lower to trigger some buyers to lock in some gains but price was quick to reverse and smash higher as the USD pressured lower. The short term move up is anchored at 4.5450 with the longer term anchor down around 4.4435. Expect that the move up may run into sellers soon as price is extended into long term resistance.

Cryptocurrencies were again mixed with Ethereum holding its trend up and continues to find interest while Bitcoin continues to take hits from sellers looking to offload some risk. Bitcoin is currently trading at $56369.1 down 0.870% while Ethereum is at $3521.18 up 2.75% and Ripple is at $1.62996 up 3.85%. Just to add to the mix for interested traders, Dogecoin is at 0.581116 down 6.46%…good to watch for the power of a herd mentality.

The ASX200 surprised again yesterday but this time with a move lower from the open. It feels like the US is a reverse indicator at the moment for our local market as we are moving up when the US is done and visa versa…shows a lot of tentative traders at the moment. The Index ended the session down 34.1 points to 7061.7 with the IT sector taking the biggest hit down 3.6% while Telecom Services was not far behind down 1.57%. Falling stocks outnumbered advancing ones by 805 to 564 and 388 ended unchanged.

The ASX200 is expected to open up 25 points after the DOW powered into new all time highs lifted the SPI200 along with it. Expect that a lot of the losses from the previous session will be regained by bulls.

ECONOMIC DATA OUT TODAY (AEDT)

AUD RBA Monetary Policy Statement 11:30am

CNY Caixin Services PMI 11:45am

EUR German Industrial Production 4pm

EUR ECB President Lagarde Speaks 8pm

GBP MPC Member Broadbent Speaks 9:15pm

CAD Employment Change and Unemployment Rate 10:30am

USD Non-Farm Employment Change and Unemployment Rate 10:30pm

SPI200 INTRADAY LEVELS TO WATCH