The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 13/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 28 pts to 6993
  • SP500 down 89.06 pts to 4063.04
  • NASDAQ Composite down 357.75 pts to 13031.68
  • Dow Jones down 681.50 pts to 33587.66
  • FTSE100 up 56.64 pts to 7004.63
  • DAX30 up 30.47 pts to 15150.22
  • GOLD futures US session (June) down $20.2 to $1815.90 an ounce
  • COPPER futures US session (Comex July) down $0.0448 to $4.7172 a pound
  • OIL futures US Session (Nymex Jun) up $0.80 to $66.08 a barrel
  • CRB Index up 0.41 pts to 207.96
  • AUDUSD trading at 0.7728
  • EURUSD trading at 1.2071
  • GBPUSD trading at 1.4058
  • USDJPY trading at 109.6600
  • USD Index US Session (ICE Jun) up 0.663 to 90.787

US indexes again took a hit around the head to drive lower from the open and add to the previous sessions losses. The Inflationary CPI numbers came out higher than expected and weighed on the markets sentiment for inflation. Many now believe that the Fed Reserve will be forced into rate hikes sooner rather than later even though they have warned of a spike in inflation and reiterated that they will still hold the bond buying program in place as issues remain with employment shown in the latest payroll data. The Nasdaq has moved down into a key level that bulls will need to hold in coming sessions in order to fend off a bigger corrective move lower and really fuel bulls fears. The SP500 and DOW are also into some key support levels that could see bargain hunting if the Fed can now placate the market. Biden may have problems with the Republicans and getting his tax hikes through as they have drawn a line in the sand with negotiations. The DOW closed down 1.99% while the broader SP500 ended down 2.14% and the Nasdaq closed down 2.67% for the session. In Europe, major Indexes held up well during the US open when US indexes were heading south. Prices were supported by a rally in energy shares as oil prices hit two-year highs. Strong regional earnings and signs of a speedy recovery also offset concerns for US inflation. European may play catchup with the US on the open though as traders re-assess holdings and potentially take some risk off the table.

The USD Index chopped around after the CPI number to spike up and then down before settling into a rally for the rest of the session. Traders will be watching for any serious follow through in buying but we do see some resistance up around the 90.900 level where buyers will be forced to close positions for a squeeze lower. Prices are extended and the rally is a natural reaction to the CPI numbers but the big question is now if inflation is transitory like the Fed suggests, or whether it may be here to stay. The EURUSD took a hit below 1.2120 after the US CPI release as the USD rally pressured the currency pair. We expect to see another flush lower to clear out more buyers below the 1.2060 area before buyers hold and build support for a rally or at least a bounce. Of course this will depend on the USD and how committed the bulls are. The GBPUSD moved lower on the surprise CPI number to take some heat out of the recent rally. Price may now look to test the 1.4000 area before re-establishing an uptrend. Either way the Pound is in a longer term uptrend which does not look like ending anytime soon. The AUDUSD took a big hit in comparison as the risk off move in US shares and USD rally saw sellers pile into the action. The move started early in the Asian session and continued to charge lower into the US close. The key level that bulls will need to defend is now around 0.7716 area which is the rising support from the start of April. The USDJPY was supported by the CPI number and rally into the USD. Price was looking bearish into the data release before turning and spiking higher straight up through 109.000 and extended into resistance at 109.660. This level may prove to be key if the USD turns south so watching now for any signs of weakness that may come into the action.

SPOT GOLD moved lower after the number triggered a fall into US bond prices. The precious metal move looks more like a correction of the recent trend up but we will need to see how the theme into the USD and 10-yr Bonds play out and if there is any legs to last nights moves. If Gold bugs can find some support above 1800 then we remain convinced of a rally to 1860. Crude Oil continued to be supported on supply concerns with price holding above 65.00 even under the weight of the USD rally. Watching now the 65.60 area for buying support to fend off a deeper correction. Interesting to note that Oil did not have a safe haven (ie selloff) reaction to the CPI number which suggests that bulls do not expect to see a big risk off move…yet. Copper came under pressure after the date release but was well contained considering. The selling was more a reaction to the USD move than expectations that a major top is in place. There was not a sudden shock lower but rather a controlled selloff into recent lows. Price remains in a longer term uptrend and is holding above the 4.6710 level and as long as bulls hold above this level, the uptrend will remain in tact.

Cryptocurrencies took a hit on the back of the risk off tone across markets. Ethereum moved down off highs after the CPI release to take some heat out of the rally but remain above keys levels and in an uptrend. Bitcoin is not looking as pretty and will need to hold current levels to fend off a potentially big move lower. Bitcoin is currently trading at $52465 down 7.19% while Ethereum is at $3981.87 down 3.39% and Ripple is at $1.35649 down 7.24%. Traders favorite and meme Dogecoin took the biggest hit down 12% which shows the precariousness of the asset to weakness.

The ASX200 came under the pump again yesterday as the index closed the session down 52.1 points to 7044.9. The selling pressure followed on from the overnight session with the US coming under fire on inflation concerns. The biggest hit was in the Utilities and Energy sectors while IT managed to end in the green being supported by the intraday rally into the US Nasdaq off its lows. Falling stocks outnumbered advancing ones by 825 to 504 and 414 ended unchanged.

The ASX200 is expected to open down 30 points and test support around the 7000 level today after the SPI200 was dragged down into yesterdays lows.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Bank Lending and Current Account 9:50am

AUD MI Inflation Expectations 11am

EUR German Bank Holiday

USD Unemployment Claims and PPI Data 10:30pm

CAD BOC Gov Macklem Speaks 1am

GBP BOE Gov Bailey Speaks 2am

USD 30-yr Bond Auction 3:01am

SPI200 INTRADAY LEVELS TO WATCH