The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 1/06/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures down 31 pts to 7135
  • SP500 closed
  • NASDAQ Composite closed
  • Dow Jones closed
  • FTSE100 closed
  • DAX30 down 98.85 pts to 15421.13
  • GOLD futures US session (Aug) up $4.20 to $1909.50 an ounce
  • COPPER futures US session (Comex July) down $0.0080 to $4.6695 a pound
  • OIL futures US Session (Nymex July) up $0.59 to $66.91 a barrel
  • CRB Index closed
  • AUDUSD trading at 0.7734
  • EURUSD trading at 1.2227
  • GBPUSD trading at 1.4207
  • USDJPY trading at 109.5800
  • USD Index US Session (ICE Jun) down 0.173 to 89.820

US indexes were closed for the session to leave markets to fend for themselves. The OECD moved its growth forecasts higher as the global economic outlook is improving on vaccine rollouts and as the US pumps trillions of dollars into its economy. In Europe, major Indexes, namely the DAX and Stoxx50, moved lower off recent highs on some end of month selling as major markets were closed. The end of month still marked the 4th straight month of gains as traders remained focused on stimulus and Fed support coming out of the pandemic. German CPI data came in better than expected showing inflation is stronger than initially thought and above the ECB’s 2% target. Like the US Fed Reserve, the ECB argues that they still have some way to go with employment and corporate balance sheets which are depleted and only being supported by copious central bank and government support…so do not expect any sudden easing of support for now.

The USD Index flushed back below the 90.000 level as recent bulls were squeezed back out of the action in a thin market. The previous sessions spike higher trapped a lot of over eager bulls but traders continue to pressure the dollar ahead of key US employment data on Friday. A weak number will keep the pressure on but we expect that a stronger then expected release will trigger inflation concerns again. For now, we expect the move down to find buyers providing support and the dollar to be range bound between 89.650 and 90.300. The EURUSD obviously took its que from the USD and spiked higher through 1.2200 to retest into resistance around 1.2235. We expect to see price capped around this area and work through trapping buyers for a squeeze back down. Like the dollar, we would expect to see more range bound action from traders in the near term. The GBPUSD continued to toy with the resistance zone around 1.4200/1.4230 as the dollar fell away. Sellers remain in force into the zone and soaked up the buying pressure for now but the Pound continues to hold a higher low in a show of strength, most recently at 1.4165. We would expect to see price contained below resistance for now…but not before highs are tested and flushed. The AUDUSD managed to move up off the 0.7700 zone after the recent spike lower which cleaned out bulls. It seems that the AUD traders are expecting to see some risk on buying into the US to start the new month and may look to push up through 0.7742 to extend on the gains today. If not, then we would expect a higher low to hold after a washout move lower through 0.7728 ahead of the European session. The USDJPY traded as expected with a move below the 109.730 level to clear out more buyers. We expect that the spike lower into 109.360 was an exhaustion move and will tempt some buyers into the action to build some support today. Watching to see if another flush lower will be held above the 109.360 level before any move back up.

SPOT GOLD held onto recent gains and looks set to add to the move up today. If bulls can hold above the 1902 level, then expect to see more upside pressure and a test of 1910 and potentially through to higher levels. If the 1902 level breaks, then expect a deeper corrective move lower to flush out some buyers prior to any move higher. Crude Oil pushed back up through the 66.50 level to test the recent highs into 67.40 before edging lower in a shortened US session. We still expect that price will need to put in some more work around 66.50 before bulls will be happy to push up and through the 67.40 resistance zone. Copper was range bound as both buyers and sellers were content to take the foot off the gas for the session. Price held between 4.6585 and previous session highs around 4.6975. We expect to see a flush lower to trap some sellers before bulls once again ramp higher to continue the move up. The key anchor for the move up is held at 4.5940.

Cryptocurrencies had a mixed session to initially push lower early in the Asian session and then put in a strong rally to clear out recent lower highs and drag in some buyers. Bulls look like they are trying to hold and build a base to fight back from the recent selloff. Bitcoin is currently trading at $37196.4 up 4.16% while Ethereum is at $2656.11 up 9.63% and Ripple is at $1.01002 up 11.40%.

The ASX200 rallied struggled to hold onto any gains right from the open yesterday as many traders were happy to lock in some risk from last weeks run higher. The index ended the session down 17.9 points near the days lows at 7161.6. The Energy and IT sectors were the biggest drag on the action while Gold stocks put in a good performance for the gold bugs as Spot Gold continues to push higher. Expecting the index will be range bound until the RBA rates announcement at 2:30pm AEST.

The ASX200 is expected to open down 30 points as the SPI200 continued on from the days weakness and drifted lower in the overnight session with no lead from the US.

ECONOMIC DATA OUT TODAY (AEDT)

JPY Capital Spending 9:50am

JPY Final Manufacturing PMI 10:30am

AUD Building Approvals and Current Account 11:30am

CNY Caixin Manufacturing PMI 11:45am

AUD Cash Rate and RBA Rate Statement 2:30pm

EUR German Final Manufacturing PMI and Unemployment Change 5:55pm

GBP Final Manufacturing PMI 6:30pm

EUR CPI Data and Unemployment Rate 7pm

ALL OPEC_JMMC Meetings All Day

USD ISM Manufacturing PMI 12am

GBP BOE Gov Bailey Speaks 1am

USD FOMC Member Brainard Speaks 4am

SPI200 INTRADAY LEVELS TO WATCH