The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 25/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 20 pts to 7066
  • SP500 up 41.19 pts to 4197.05
  • NASDAQ Composite up 190.18 pts to 13661.17
  • Dow Jones up 186.14 pts to 34393.98
  • FTSE100 up 33.54 pts to 7051.59
  • DAX30 closed
  • GOLD futures US session (June) up $4.90 to $1881.60 an ounce
  • COPPER futures US session (Comex July) up $0.0520 to $4.5330 a pound
  • OIL futures US Session (Nymex July) up $2.47 to $66.05 a barrel
  • CRB Index up 2.09 pts to 202.96
  • AUDUSD trading at 0.7755
  • EURUSD trading at 1.2216
  • GBPUSD trading at 1.4154
  • USDJPY trading at 108.7500
  • USD Index US Session (ICE Jun) down 0.180 to 89.825

US indexes ended the session with gains as the Nasdaq and big tech bounced back from Fridays weakness. Tech was supported by a move lower in US bond yields taking some heat out of the inflation narrative…for now. Risk sentiment also improved as cryptocurrencies found a bid after the weekend selloff on the back of the Chinese crackdown. Traders will be awaiting upcoming inflationary data out on Thursday for a further indication on where the markets may head in anticipation of any change in the Fed Reserves stance on bond buying and monetary policy. We expect that there will be no change from the Fed but markets will be looking for a change in tone indicating the inflation is starting to become a concern. The DOW closed up 0.54% while the broader SP500 ended up 0.99% and the Nasdaq closed up 1.41% for the session. In Europe, major Indexes also found buyers to lift prices higher into the close on the back of the positive sentiment to start the new week. Trading was subdued with the DAX and other markets in Europe closed but the DAX is expected to make up for the lost ground tonight and could potentially touch into new all time highs. As in the US, tech and energy stocks led the charge to support the overall market. Traders in both the US and Europe know that the ECB and US Fed have their backs in the near term as they both have mentioned it is too early for talk of easing of support…so the bullish theme should remain the same until the winds change.

The USD Index moved back below the 90.000 level after Fridays push up off support. The move was supported by falling bond yields as inflation concerns eased. The move confirms a lower high at 90.144 and may drag in more sellers to test the 89.670 area today. We expect that the level will hold or be flushed in search of liquidity but generally remain in tact until the inflationary data release Thursday. The EURUSD did test towards the 1.2160 area before ramping up on the USD weakness back into resistance around 1.2230 where buyers locked in minor intraday gains. We expect that traders will be playing the range between the two levels in the near term unless there is a decisive move in the USD before Thursday. The GBPUSD saw a relatively choppy session but did break the uptrend with a move down to 1.4100 which may trigger some sellers into action today. We expect to see price hold below the 1.4170 area for a squeeze on buyers and a move below 1.4100 on the cards. The AUDUSD broke out of its contractive pattern to the downside with a test into 0.7700 support. Price did rebound with the risk on sentiment into the share markets and dollar weakness but we expect to see more pressure lower. Bulls may flush price higher to clear out some sellers before swinging lower again and hold below the 0.7770 area. The USDJPY remained heavy with sellers providing resistance at 109.000 and moving price lower into the US close. We will be watching to see if price can flush below 108.700 and build some momentum to the downside.

SPOT GOLD continued to consolidate above the 1875 area with a minor bid into the precious metal overnight as bond yields and the USD fell. The pressure remains on the buy side for now but trading is relatively contained. Expect to see a range bound session today but for price to hold above 1875. Crude Oil had a very bullish session to carry on from where it left off Friday. Price spiked higher in the US session showing some serious strength. Price action was supported after Iran and the UN nuclear watchdog extended a recently expired monitoring agreement by a month. Expect that the move up is extended and may run into resistance around 66.70. Copper also found a bid off support around 4.4375 as buyers pushed price higher. The bullish sentiment for the session coupled with the fall into the USD triggered buyers into the action. If the same theme continues we expect to see Copper work its way higher to squeeze out some recent sellers so watching for a higher low to hold potentially around 4.5000.

Cryptocurrencies managed to move higher as bulls fought back off the lows on some bargain hunting. Risk on sentiment helped buyers fight back with Bitcoin currently trading at $38749.3 up 14.61% while Ethereum rallied hard and is trading at $2632.13 up 25.80% and Ripple is at $0.93085 up 18.34%.

The ASX200 had a pretty choppy session yesterday considering, but bulls still managed to soak up any selling pressure and close the day out with gains. The Index ended up 15.6 points to 7045.9 with Gold and Energy shares supporting the action while Metals and Mining and Materials stocks weighed the most on the action. The Asian market was mixed with the Hang Seng ending lower and Nikkei higher as Crypto volatility continued.

The ASX200 is expected to open up 20 points after the SPI200 drifted higher along with the US and European markets.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Goods Trade Balance 11:30am

JPY BOJ CPI Data 3pm

EUR German Final GDP 4pm

EUR German Ifo Business Climate 6pm

USD Consumer Confidence and New Home Sales 12am

GBP MC Member Tenreyro Speaks 2am

SPI200 INTRADAY LEVELS TO WATCH