The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 17/05/21

  • SPI200 (Jun) overnight futures up 48 pts to 7050
  • SP500 up 61.35 pts to 4173.85
  • NASDAQ Composite up 304.99 pts to 13429.98
  • Dow Jones up 360.68 pts to 34382.13
  • FTSE100 up 80.28 pts to 7043.61
  • DAX30 up 216.96 pts to 15416.64
  • GOLD futures US session (June) up $20.00 to $1844.00 an ounce
  • COPPER futures US session (Comex July) down $0.0255 to $4.6650 a pound
  • OIL futures US Session (Nymex Jun) up $1.55 to $65.37 a barrel
  • CRB Index up 0.34 pts to 203.29
  • AUDUSD trading at 0.7771
  • EURUSD trading at 1.2141
  • GBPUSD trading at 1.4097
  • USDJPY trading at 109.3500
  • USD Index US Session (ICE Jun) down 0.448 to 90.287

US indexes followed on from where they left off the previous session to end the week with a bang. Traders went back to ‘risk on’ mode as they set aside inflation concerns and bought up shares that were hammered during the volatile week. Data released on Friday showed that retail sales unexpectedly stalled in April as the boost from stimulus checks wore off and pointed to the argument that interest rate hikes are still far out on the horizon. Still, many analysts expect that the numbers will bounce back in next months release as there remains a lot of pent up savings. US 10-year bond yields fell and in turn flattened the yield curve between the 2 and 10 year bonds meaning that the bond market has taken its focus off a rate rise in the near future. The numbers are supporting the Feds argument for a spike in inflation as they focus on jobs before taking action on interest rates. The DOW closed up 1.06% while the broader SP500 ended up 1.49% and the Nasdaq closed up 2.32% for the session. In Europe, major Indexes also ended the week on a positive note as the DAX and FTSE both launched higher from the open. Bulls were led by gains in the energy and retail sectors after the US Federal Reserve said there would be no imminent move to tighten monetary policy and that they would not immediately reduce cash injections into the bond market. Europe remains an attractive pick for global investors as the pressure from rate rises is not so pronounced and valuations are weighted more for bulls.

The USD Index broke down below the 90.580 level as expected and came under pressure from the start of the Asian session until the close of the US. The lower high put in place around 90.900 re-confirms the downtrend into the USD so expect more dollar pain to come in the near term. Bears will be looking for selling pressure to build from inflationary bulls that realize they are on the wrong side of the action and are forced to close positions for a squeeze lower through 90.000. The EURUSD held the lower end of the rising channel and up off the 1.2060 level as expected once the USD moved lower. Bulls are well in control and will be looking to press their move higher. Today we are watching the minor support level at 1.2130 to support a move higher. If this level does not hold, expecting to see a flush of the zone and a deeper correction but for price to hold above 1.2103 for a run up. The GBPUSD also held up nicely and saw a well controlled rally from the bulls which suggests there will be another push higher today. Price did push up through the 1.4100 level before fading into the US close but we are watching for a minor flush lower today to squeeze out some buyers before price continues up to test the 1.4160 highs. The AUDUSD did well with the risk on mode into the share market as price held the 0.7709 level and buyers soaked up early selling pressure before the squeeze up. The Aussie may need to flush out some buyers today on a move lower to take some heat out of Fridays rally, before resuming the move up to clear out more sellers. The USDJPY was obviously weighed down by the weakness into the USD and continues to hold lower highs. The action is being held down at 109.440 and may look to extend on the move down today potentially through 109.000 even.

SPOT GOLD traded nicely as bulls were supported by the fall in US bond yields and the USD. Price traded straight up to the 1843 level where it held into the US close. If buyers can expend on the rally today as concerns of inflation have eased, then we see a move to 1860 is on the cards. New buyers may just want to see some bulls squeezed out of the action first on a flush lower. Crude Oil held the 63.00 support level with ease Friday even holding a higher low at 63.50 before rallying up into the US close. The risk on move back into shares supports the idea of further demand for oil and sets the stage for a test on the highs through 66.50. Bulls may need to support a pullback first to drag in more buyers to engineer the extension higher but the daily chart looks primed for a spike above 70. Copper edged its way lower in choppy trade as the daily chart backs off from highs through 4.6250. The pullback seems controlled but definitely by sellers at this stage. Expecting that bulls are waiting for further heat to come out of the action before looking to re-establish long positions.

Cryptocurrencies again saw some selling pressure across the board which we see as a major test of bulls commitment to the cause. Bitcoin was hit hard taking out some key support levels and is showing some real cracks on the daily charts. Bitcoin is currently trading at $45135.4 down 6.79% while Ethereum is at $3479.85 down 8.58% and Ripple is at $1.4117 down 8.48%.

The ASX200 ended the week on a positive note to reverse some of the previous sessions losses as the index closed up 31.5 points to 7014.2. Gains in Energy, Utilities and Consumer Discretionary sectors led the share market higher. The Metals and Mining, Materials and Resources stocks were the biggest drag on the action while we would expect the same sectors to fight back today. Rising stocks outnumbered declining ones by 776 to 574 and 368 ended unchanged.

The ASX200 is expected to open up 45/50 points after the SPI200 closed on session highs in a very positive US session.

ECONOMIC DATA OUT TODAY (AEDT)

JPY PPI 9:50am

CNY Industrial Production, Retail Sales, Fixed Asset Investment and Unemployment Rate 12pm

USD Empire State Manufacturing Index 10:30pm

USD FOMC Member Clarida Speaks 12:05am

GBP MPC Member Tenreyro Speaks 12:15am

USD FOMC Member Bostic Speaks 12:25am

GBP MPC Member Vlieghe Speaks 1:30am

GBP MPC Member Haldane Speaks 2:30am

SPI200 INTRADAY LEVELS TO WATCH