The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 28/05/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 58 pts to 7148
  • SP500 up 4.89 pts to 4200.88
  • NASDAQ Composite down 1.72 pts to 13736.28
  • Dow Jones up 141.59 pts to 34464.64
  • FTSE100 down 7.26 pts to 7019.67
  • DAX30 down 43.99 pts to 15406.73
  • GOLD futures US session (June) down $4.90 to $1896.30 an ounce
  • COPPER futures US session (Comex July) up $0.1385 to $4.6680 a pound
  • OIL futures US Session (Nymex July) up $0.64 to $66.85 a barrel
  • CRB Index up 2.34 pts to 205.78
  • AUDUSD trading at 0.7739
  • EURUSD trading at 1.2194
  • GBPUSD trading at 1.4203
  • USDJPY trading at 109.8300
  • USD Index US Session (ICE Jun) down 0.028 to 90.002

US indexes were mixed with focus moving again to values stocks as tech stocks weighed on the action. The DOW opened up through previous session highs then faded during the session but now looks set for another run higher as price continues to hold minor higher levels off 33600. The broader market SP500 was weighed down by tech stocks as the NASDAQ was generally range bound but did edge lower into the close. The number of Americans filing new unemployment claims dropped more than expected last week which led to the US 10-year Bond moving lower. Bonds were already heading south on anticipation of the data release and managed to hold support into the US close. the rally in yields capped the attractiveness of the higher growth names but bonds still remained well within the previous sessions range with the action being attributed to intraday movements rather than a noticeable change in sentiment for inflation. The DOW closed up 0.41% while the broader SP500 ended up 0.12% and the Nasdaq closed down 0.01% for the session. In Europe, major Indexes gave up earlier gains into the close as the US open weighed on sentiment. The Broader STOXX600 european index ended at a new all time high which continues to support the DAX and FTSE indexes. Price was supported by Airbus which jumped 9.2% after it set out big goals to expand production of jetliners. Traders continued to move to cyclical names as banks and basic resource stocks rallied.

The USD Index was choppy right from the European session open and into the US close. Price swung many times between the 89.920 and 90.100 zones as bulls and bear fought it out. There remains many traders focusing on upcoming inflation that are happy to provide some support while bears see the shorter term outlook as remaining dollar negative. A lot of the dollar chop can also be attributed to the rally into the Pound and CAD pressuring price lower while traders await inflation data. The EURUSD was also a choppy mess with swings between 1.2180 and 1.2210 as bulls were adamant of support holding. Price is holding at the bottom end of the rising trend channel and we expect to see more buying pressure flow into the action to lift price which suggests the USD moves lower off the highs. The GBPUSD rallied hard from the start of the European session being supported by BOE comments saying that the central bank could raise interest rates in the first half of the next year if the job market bounces back faster than expected. The Pound continued the move up into recent resistance around 1.4215 where it settled for the session. We expect that there will be some short term profit taking off the resistance zone considering that any rate rise is well in the future. The AUDUSD was also very choppy thanks to the lack of direction in both the USD and US stock markets. The Aussie continues to hold minor higher levels off support around 0.7700 with the latest being at 0.7728. A minor lower high to cap buyers held at 0.7755 so we expect that the action may be contained today within the 0.7755 and 0.7728 range until the USD makes a clear move up or down from current levels. The USDJPY spiked hard as the YEN was squeezed lower ahead of Japan CPI data out this morning. Traders may be setting for a weaker number of Japans inflation as covid continues to pressure the economy. Price spiked hard up through resistance around 109.300 and also through previous highs at 109.750. Price is well and truly extended so we would not be surprised to see some heat come out of the action and buyers lock in some gains around 109.800.

SPOT GOLD again drifted lower into 1890 where it found buying support to spike price higher back towards the 1900 area. We expect to see the 1890 area hold and bulls pressure price up through 1900 to continue the rally and drag in more enthusiastic gold bulls. Price did find some pressure from the minor rally into US bond yields ahead of data tonight but we do not see the Fed narrative changing anytime soon meaning bonds will find some support and in turn support gold. Crude Oil inventories came out less than expected to put pressure on the supply side and support a rally into the commodity. Price traded straight down to our support zone at 65.50 before ramping up to take out resistance at 66.50. Expect to see more pressure highs today which may clear resistance enough to open up a move to new highs. Either way the longer term price action is looking very bullish as the global economy continues to open up. Copper played out nicely to plan overnight with the 4.5000 support zone holding and bulls taking the reins to ramp price higher. Price is extended so may see some profit taking but we do expect that a higher low will hold and the overnight move has broken price up and out of the recent contraction for the start of a leg higher.

Cryptocurrencies were well contained in European and US trade as price ranged below resistance zones on both Ethereum and Bitcoin leaving other cryptos to follow suit. Bitcoin is currently trading at $38802.5 down 0.42% while Ethereum is at $2780.47 down 1.04% and Ripple is at $0.97993 down 2.99%.

The ASX200 swung between gains and losses yesterday as neither bulls or bears were willing to commit to the market fully ahead of US inflationary data. The Index ended the session up 2.4 points to 7094.9 as it claws its way tentatively to new all time highs. The Nikkei and the Hang Seng both ended lower for the day as they hovered around recent highs.

The ASX200 is expected to open up 60 points as the SPI200 ramped up into resistance suggesting the ASX may target new all time highs in coming sessions.

ECONOMIC DATA OUT TODAY (AEDT)

JPY CPI Data and Unemployment Rate 9:30am

EUR German Import Prices 4pm

USD Goods Trade Balance, Personal Income and Spending and Wholesale Inventories 10:30pm

USD Consumer Sentiment and Inflation Expectations 12am

SPI200 INTRADAY LEVELS TO WATCH