The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 26/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 35 pts to 7081
  • SP500 down 8.92 pts to 4188.13
  • NASDAQ Composite down 3.99 pts to 13657.18
  • Dow Jones down 81.52 pts to 34312.46
  • FTSE100 down 21.80 pts to 7029.79
  • DAX30 up 27.58 pts to 15465.09
  • GOLD futures US session (June) up $15.40 to $1899.90 an ounce
  • COPPER futures US session (Comex July) down $0.0152 to $4.5103 a pound
  • OIL futures US Session (Nymex July) up $0.02 to $66.07 a barrel
  • CRB Index down 0.52 pts to 202.44
  • AUDUSD trading at 0.7750
  • EURUSD trading at 1.2251
  • GBPUSD trading at 1.4146
  • USDJPY trading at 108.7800
  • USD Index US Session (ICE Jun) down 0.183 to 89.655

US indexes were mixed as prices generally drifted lower all session from the open not being able to add to the previous sessions gains. Support for Tech stocks helped the Nasdaq end flat while the SP500 and DOW ended slightly lower. US bond yields fell with bond prices spiking into previous highs looking set to further pressure to the upside for a squeeze on shorts. Bonds helped to provide some support to an otherwise un-enthusiastic session as traders await further direction from the Fed to assess the route of inflation. Data out showed that consumer confidence remained steady as some of the heat is coming out of the housing market. People are still worried about rising costs of goods at a time when government support is diminishing and the labour market is still under pressure. We expect that the Fed is right to hold off on rate rises as inflation is more due to supply chain bottlenecks that will ease in time to help cap prices of goods….which is what the bond market is potentially showing with the fall in yields. The DOW closed down 0.24% while the broader SP500 ended down 0.21% and the Nasdaq closed down 0.03% for the session. In Europe, major Indexes were mixed with the FTSE closing lower while the DAX played catch up and ended with minor gains. The DAX opened up in new all time highs territory but could not hold the level and faded back down into the close. Tech stocks were again the focus for the session while losses in mining stocks offset gains in tech.

The USD Index did find further selling pressure as we expected a flushed down below the 89.670 level in search of liquidity. Price did bounce before being sold lower again into the close to show the commitment of sellers remains an issue for bulls. The rise in bond prices is not helping the dollar as it shows less concern for inflation which would support the USD. For now, we expect the selling pressure will continue and price will edge lower with the 89.850 level to cap buying. The EURUSD moved up to shake out any sellers into 1.2230 resistance and put them back on the sidelines. Price continued the flush above the level which we would expect to see hold today unless there is a decent rally into the USD. We will be watching the 1.2230 area to provide support today and for buyers to continue the grind higher. The GBPUSD saw a spike into the 1.4200 level before the European open which was just a trap for the selling pressure that was to come. Bears pressed price back down to test into the 1.4120 zone before seeing a minor bounce into the close. As we expected, the break of the minor uptrend dragged in some sellers but for now price is happy to range between the 1.4100 and 1.4200 zones. The AUDUSD was weighed down by the overall ‘uncertain’ sentiment into the share markets. The USD rally could not help the Aussie hold above the 0.7770 area as expected and price again remains in a contractive phase holding higher lows and lower highs. Longer term the USD weakness will provide support but for bulls, share markets need to be risk on for a move above the 0.7780 level on the Aussie. The USDJPY was choppy over night as price flushed both minor support and resistance. Price flushed the 108.700 level to target the stops before pushing up and taking out the 109.000 resistance level and then dropping again. The move may be showing expectations by traders that the USD will hold steady ahead of Thursdays inflationary data releases.

SPOT GOLD had a good night for bulls as price spiked on the back of the back of the USD fall and bond rally. Bulls pushed price up and out of the recent consolidation zone and traded into the 1900 level into the US close. Now that buyers have held and cleared the zone, we expect that the next target is up to 1950 which suggests that bond prices have further to go higher and Dollar lower. Crude Oil managed to consolidate the previous sessions gains and hover just below the 66.70 resistance zone. We expect that there may need to be a squeeze on buyers before price can continue higher so expect to the pressure build on the downside in the near term. Copper pressured lower to test into the 4.5000 area where we expect to see some support build for a higher low. Buyers did soak up the selling pressure as the USD fell so we expect that there will be further pressure higher for a push up through 4.5425 in the near term.

Cryptocurrencies were mixed with some finding some buyer interest and others continuing to see selling. Many of the crypto pairs look set to pop today if Ethereum can break higher through 2676. Bitcoin is currently trading at $38117.3 down 0.71% while Ethereum is at $2653.27 up 2.06% and Ripple is at $0.96881 up 5.20%.

The ASX200 had a very positive session yesterday as bulls finally came back out to play. The index ended the day up 69.3 points to 7115.2 with the Telecommunication Services, Consumer Discretionary and Metals and Mining sectors the top performers. Asian markets were positive as inflation concerns eased although Japan continues to battle rising covid cases. BOJ Gov Kuroda pledged to keep monetary policy ultra-loose.

The ASX200 is expected to open down 30 points and give up some of the gains from the previous session as the SPI200 faded off the day sessions highs overnight.

ECONOMIC DATA OUT TODAY (AEDT)

AUD Construction Work Done 11:30am

NZD RBNZ Cash Rate and Rate Statetment 12pm

NZD RBNZ Press Conference 1pm

USD FOMC Member Quarles Speaks 12am

USD Crude Oil Inventories 12:30am

SPI200 INTRADAY LEVELS TO WATCH