The Morning Jumpstart Macro view

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 10/05/21

  • SPI200 (Jun) overnight futures down 4 pts to 7055
  • SP500 up 30.98 pts to 4232.60
  • NASDAQ Composite up 119.40 pts to 13752.24
  • Dow Jones up 229.23 pts to 34777.76
  • FTSE100 up 53.54 pts to 7129.71
  • DAX30 up 202.91 pts to 15399.65
  • GOLD futures US session (June) up $16.30 to $1832.00 an ounce
  • COPPER futures US session (Comex July) up $0.1463 to $4.7488 a pound
  • OIL futures US Session (Nymex Jun) up $0.19 to $64.90 a barrel
  • CRB Index up 1.71 pts to 206.96
  • AUDUSD trading at 0.7844
  • EURUSD trading at 1.2166
  • GBPUSD trading at 1.3984
  • USDJPY trading at 108.6000
  • USD Index US Session (ICE Jun) down 0.733 to 90.203

US indexes ended the week with a bang to drag in more reluctant bears after a disappointing jobs number took the pressure off rates rises. US payrolls came in a lot less than expected at 266K and the Unemployment rate went up from 6% to 6.1%. The release triggered buying from the open in the Indexes with the Nasdaq making up some previously lost ground. The move was on the back of expectations that the Fed will not be tapering the Bond buying stimulus anytime soon as it is obvious now that the labour market is still lagging the economy. US Bond yields went lower and bond prices higher as the dollar fell. Any bet that bonds may suck out some funds in anticipation that interest rates go higher, is now off the cards for the near term after the data release leaves the share markets the place to be for yield. The DOW closed up 0.66% while the broader SP500 ended up 0.74% and the Nasdaq closed up 0.88% for the session. In Europe, major Indexes had a strong night to end the week as the German DAX approached new all time highs and the FTSE adds to recent bullish pressure as they too are looking to previous highs on the back of the recovery. The tech sector benefitted the most after the US data release took pressure off rate rises. Basic Resource stocks did well to cap off a stella week as recovering global demand pushed up base metal and iron ore prices.

The USD Index nosedived on the back of the employment data release and we expect the theme to continue as traders who bet on USD strength due to higher inflation, will be repositioning portfolios. Expectations now that the Fed will continue to add liquidity to the bond market to support super low interest rates for longer will continue to pressure the USD. The next stop for the dollar is below 90 to 89.940 and then 89.660 and 89.210. The EURUSD launched higher after the US data release to add to previous gains as expected. The 1.2070 area was just a resting spot for bulls before the USD led rally after squeezing out sellers. Price may now be looking to make its way up to highs from early Jan around 1.2345. Initial resistance may come in prior to 1.2345 around 1.2222. The GBPUSD also spiked after the date release surprised bears. Price did grind below the 1.3900 level earlier before sellers squared up short positions ahead of the number to lift price into 1.3930 which was later blown away. Price is now trading at resistance around 1.4000 whole number that may see some profit taking from buyers today although we expect that to be short lived and see more strength to come in on a weakening USD and for stops above the 1.4000 level to be the target. The AUDUSD also made its way higher after spending a short time consolidating below the 0.7780 area into the US payroll release. Price action is strong and bulls have the wind at their backs so we expect to see an extension to the rally in coming days although some weak buyers may need to be squeezed out prior to another leg up. The USDJPY eventually smashed down through the 109.000 level on the USD selloff. Price found a bid into 108.450 to settle just above the level. We expect that there may be more consolidation above the level today to drag in more buyers before a lower high confirms and sellers continue the move down to lows around 107.630.

SPOT GOLD backed up the previous strong session with another solid move higher after the jobs data release. With the Dollar set to continue its slide, gold will drag in more bulls for a move up to the 1870 zone where we expect there may be a reaction from sellers. This will of course depend on the USD and how much pressure it comes under as to whether Gold can accelerate up and through before taking a breather. Crude Oil was choppy as both bulls and bears have reasons to get active. The COVID-19 crisis in India continues to worsen and weigh on the market while price found support from the weakening USD which we expect to continue. The flush lower and rejection of new lows may be a good sign in the near term that oil will start to find a base so we will be watching for a break up through 65.25 to bring in some buyers. Copper had the wind in its sails all session as the continued weakness into the USD supported bulls. The move up has now extended through highs from Feb 2011 and may see some profit taking although the trend up remains strong so until minor higher lows are broken (potentially 4.6815), price could keep punching higher.

Cryptocurrencies were relatively contained over the weekend although a selloff in Dogecoin gave traders reason to pause. Ethereum saw some minor profit taking and spike lower before recovering the losses while Litecoin and Binance Coin look set for a run higher. Bitcoin is currently trading at $58049.7 down 1.29% while Ethereum is at $3901.29 up 0.14% and Ripple is at $1.52612 down 2.16%.

The ASX200 rallied from the open Friday but then faded early to grind lower into the close. The index ended the day up 19.1 points to 7080.8 with the Gold sector well and truly the favorite for the session while Metals and Mining and Resources also ended with solid gains. Weighing on the action was the IT sector and Utilities. Rising stocks outnumbered declining ones by 699 to 672 and 394 ended unchanged. Expect to see the Gold and commodities sector do well today and find a strong bid from the open.

The ASX200 is expected to open flat after the SPI200 could not close above the days highs in the overnight session. Expect to see a buoyant open and prices in commodity and Gold stocks rally while Banks may come under some strain.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Retail Sales and NAB Business Confidence 11:30am

EUR Investor Confidence 6:30pm

USD FOMC Member Evans Speaks 4am

SPI200 INTRADAY LEVELS TO WATCH