The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR MONDAY 24/05/21

  • SPI200 (Jun) overnight futures down 5 pts to 7026
  • SP500 down 3.26 pts to 4155.86
  • NASDAQ Composite down 64.75 pts to 13470.99
  • Dow Jones up 123.69 pts to 34207.84
  • FTSE100 down 1.74 pts to 7018.05
  • DAX30 up 67.25 pts to 15437.51
  • GOLD futures US session (June) up $0.10 to $1881.80 an ounce
  • COPPER futures US session (Comex July) down $0.0588 to $4.5092 a pound
  • OIL futures US Session (Nymex Jul) up $1.64 to $63.58 a barrel
  • CRB Index up 0.87 pts to 200.87
  • AUDUSD trading at 0.7732
  • EURUSD trading at 1.2182
  • GBPUSD trading at 1.4150
  • USDJPY trading at 108.9600
  • USD Index US Session (ICE Jun) up 0.220 to 90.015

US indexes were mixed with the DOW being the one bright spot for the session. Inflation concerns again weighed on the action as all three major Indexes faded lower from a stronger open. The DOW was supported by industrial heavy hitters Boeing and Caterpillar along with banks namely Goldman Sachs and JP Morgan. The SP500 was again dragged into negative territory by the tech sector as the rotation trade out of growth continues. Expect to see more of the same into the year end as stocks that are more likely to be impacted by interest rate hikes get pressured lower. US Bond prices saw some minor selling on the US open but did then find a bid to edge back up into the close. Price action in the near term looks ready to test back into highs which will take some pressure off inflationary fears. The DOW closed up 0.36% while the broader SP500 ended down 0.08% and the Nasdaq closed down 0.48% for the session. In Europe, major Indexes were generally higher with the FTSE ending flat for the session. Some positive manufacturing and Services data out in Germany helped to support the DAX index and keep investors quietly optimistic for the Eurozone out of the pandemic. The data prompted traders to stick with equities and remain risk on as prices hover around recent highs while ECB President Lagarde said that it was still too early to discuss winding down its 1.85 trillion euro emergency bond purchase scheme.

The USD Index did flush the 89.700 support zone late in the European session before rallying to squeeze out some recent short sellers. The bounce came on the back of some positive US data showing factory activity gathered speed in early May thanks to strong domestic demand. Price held below the recent lower high and faded into the US close as the dollar generally remains heavy while bond yields are contained. Expecting price to hold below the 90.270 area today. The EURUSD was contained by the USD rallied and did fade off the 1.2230 level as buyers locked in recent gains from the previous session. Price found some support and buying off previous lows around the 1.2160 area which may be tested again today. We will be watching to see if buyers again creep into the action today off 1.2160 and edge price higher which would mean the USD is coming under pressure. The GBPUSD initially spiked up and into the 1.4220 resistance zone before finding some sellers to push price back down into the close. We expect that price will hold around current levels and above 1.4133 to build for another push higher….as long as the USD does not do anything crazy. The AUDUSD also fell away from highs around the same time as the USD rallied and tested into previous lows. Price remains in a longer term contractive pattern as both higher lows and lower highs hold. As long as share markets remain risk on we would expect to see the Aussie find support. Today, we expect that bulls will support price off the 0.7720 zone. The USDJPY found some buyers early in the European session ahead of the USD rally to squeeze out some recent sellers. We expect that price may add to the rally today with a push up into the 109.100 zone but do expect price to remain heavy thanks to the USD.

SPOT GOLD remained choppy but generally with an upward bias above 1875. Price action remains bullish and will continue to catch short sellers on the wrong side of the action as long as it continues to consolidate above the 1865 level. Expecting to see any spikes lower soaked up by bulls and price to grind higher towards the 1900 level in the near term. Crude Oil managed to hold up off the previous session lows during Asian trade Friday before the ramp higher in the European session. Price tested the previous session highs and then faded so may need to clean out some more buyers before another leg up can play out. Watching for price to grind lower today but to hold above the the 63.00 level. Copper again felt the weight of the USD rally and also as major Indexes were well contained into the weekend. The move down extended Friday but we remain of the view that price is contractive so may find a bid soon as buyers look to provide support.

Cryptocurrencies were lower over the weekend as bulls start to get concerned that the bubble may have burst. Bitcoin took a hit after China’s Vice Premier Liu He said his government will crack down on the virtual currency’s mining and trading activities. Margin positions again are taking a hit as traders face a dose of reality into price action. Bitcoin is currently trading at $34415.0 down 9.84% while Ethereum is at $2145.47 down 8.86% and Ripple is at $0.79040 down 13.32%.

The ASX200 had a rather uneventful session to end the week with the index swinging from green to red to green again and ended up 10.7 points to 7030.3. The Energy sector was the biggest drag on the index followed by Resources and Metals and Mining while Consumer Staples and IT balance the losses out.

The ASX200 is expected to open flat after a very range bound session into the weekend from the SPI200 which lacked any commitment from either the bulls or the bears.

ECONOMIC DATA OUT TODAY (AEDT)

NZD Retail Sales 8:45am

EUR German Bank Holiday

EUR French Bank Holiday

CAD Bank Holiday

JPY BOJ Gov Kuroda Speaks 10:05pm

CNY CB Leading Index 11pm

USD FOMC Member Brainard Speaks 11pm

GBP BOE Gov Bailey Speaks 12:30am

USD FOMC Member Bostic Speaks 2am

SPI200 INTRADAY LEVELS TO WATCH