The Morning Jumpstart Macro View

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

  • SPI200 (Jun) overnight futures up 27 pts to 7042
  • SP500 up 43.44 pts to 4159.12
  • NASDAQ Composite up 236.00 pts to 13535.74
  • Dow Jones up 188.11 pts to 34084.15
  • FTSE100 up 69.59 pts to 7019.79
  • DAX30 up 256.70 pts to 15370.26
  • GOLD futures US session (June) down $4.10 to $1877.40 an ounce
  • COPPER futures US session (Comex July) down $0.0472 to $4.5293 a pound
  • OIL futures US Session (Nymex Jun) down $1.31 to $62.05 a barrel
  • CRB Index down 1.86 pts to 200.00
  • AUDUSD trading at 0.7773
  • EURUSD trading at 1.2227
  • GBPUSD trading at 1.4192
  • USDJPY trading at 108.7700
  • USD Index US Session (ICE Jun) down 0.446 to 89.745

US indexes moved higher from the open to add to the previous sessions intraday rally. US jobless claims showed a slightly higher number than expected which adds support to the Feds reasoning to hold off on tapering their bond buying as the number tempers expectations for an acceleration in employment growth. The numbers remain well above the 200-250K range that is viewed as consistent with healthy labor market conditions. There is expectations that the numbers will drop further next month as Republican Governors from 21 states said that they will withdraw from unemployment programs funded by the federal government in an attempt to get people back to work. This is turn will help labour shortages and production that could potentially take the pressure off inflation….maybe. US Bond prices moved up after a flush lower into support in the previous session. The tech sector once again led the move up as the Nasdaq price action technically looks set to pressure higher. The rally sent yields lower on the 10-year note to take the wind out of the sails of the inflation narrative. The DOW closed up 0.56% while the broader SP500 ended up 1.06% and the Nasdaq closed up 1.77% for the session. In Europe, major Indexes had a fun session for traders as prices were initially hit lower from the open to then turn on a dime and rally hard into the close. Traders brushed aside concern for inflation again and refocused on the strength of the local economies out of the pandemic. German PPI numbers helped to support the bulls as they posted their biggest increase in close to a decade although there is no expectation for the ECB to ease stimulus just yet.

The USD Index started yesterdays session with selling pressure that never let up and resumed the move lower. As we expected, bulls are again being disappointed and the USD weakness continues as price is tested the lows around 89.700. Expecting to see a flush of the support at 89.700 and further pressure lower as inflation concerns get pushed aside for now. The EURUSD rallied thanks again to the fall in the USD. Price reacted off the 1.2180 area after an initial flush lower to trap some sellers before the squeeze higher. Price has again extended up into a resistance zone around 1.2230 where we expect may see some sellers trickle into the action but if the USD fall continues today, then we expect that the pressure up will continue through the 1.2230 level on the Euro. The GBPUSD did manage to find support as expected and rally off the previous sessions lows. Buyers remain in control but we expect that it may be a tough ask for bulls to ramp price up and through highs at 1.4120 today. We expect to see some chop around the resistance and some heat to come out of the action before another leg higher as long as the 1.4100 low holds. The AUDUSD did find some buyers off the 0.7700 area with a failed push into the zone. Buyers continue to hold higher lows while sellers are holding lower highs showing some uncertainty for now in relation to the stock market. We expect to see buyers capped today into the 0.7790 area unless the ASX rallies hard. The USDJPY did move its way lower under pressure from the USD selloff but held above the previous session low. For further weakness through the low, we would expect to see a failed lower high to build the momentum and drag in sellers into the action although this will depend on the dollar…so for now we may just see another choppy session.

SPOT GOLD continues to pressure higher in what we feel is the start of a squeeze on sellers. if the USD continues to gather steam to the downside, gold bulls will continue to soak up any selling pressure. The minor anchor holding the trend in tact for now is at 1852. The longer price holds above the 1872 level the greater the potential for a move to 1950. Crude Oil does not seem so happy at the moment with price action again coming under pressure. Bears again hit price lower at the start of the European session and kept the pressure on into the US close. For now, it seems that the price action may extend on the current weakness and test down to the 60.70 support zone. Copper continues the corrective action lower but we suspect that it is running out of steam in the near term as traders again go risk on into shares. We expect to see a flush lower to washout some buyers through 4.5200 but then expect for a move back above the level and rally to put the squeeze on sellers.

Cryptocurrencies were bid up to find some support across the board after the previous sessions spike lower but they are far from out of the woods yet. We expect that prices will need to build a decent base to bring back the buyer confidence as a lot of traders were squeezed out from excessive margin positions. Bitcoin is currently trading at $40380.7 up 4.19% while Ethereum is at $2803.99 up 8.57% and Ripple is at $1.18655 up 3.91%.

The ASX200 rallied right from the open yesterday as bulls came back out to play. Price action took a breather around 11:30am when employment data came out with mixed results but are generally positive for the economy. The index ended the session up 87.9 points at 7019.6 with new all time highs back in the sights. The IT sector ended the day up 4.31% while Financials were up 1.92% and Mining, Resources and Materials stocks ended in the red.

The ASX200 is expected to open up 30 points to add to the previous sessions gains as the SPI200 rallied in an upbeat US session.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Retail Sales 11:30am

GBP Retail Sales 4pm

EUR French Flash Manufacturing and Services PMI 5:15pm

EUR German Flash Manufacturing and Services PMI 5:30pm

EUR Flash Manufacturing and Services PMI 6pm

GBP Flash Manufacturing and Services PMI 6:30pm

EUR ECB President Lagarde Speaks 9pm

CAD Retail Sales 10:30pm

USD Flash Manufacturing PMI 11:45pm

USD Existing Home Sales 12am

EUR Consumer Confidence 12am

SPI200 INTRADAY LEVELS TO WATCH