The Morning Jumpstart Macro View

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 2/06/21 (as at 7:15am AEST)

  • SPI200 (Jun) overnight futures up 12 pts to 7159
  • SP500 down 2.07 pts to 4202.04
  • NASDAQ Composite down 12.26 points to 13736.48
  • Dow Jones up 45.86 pts to 34575.31
  • FTSE100 up 57.85 pts to 7080.46
  • DAX30 up 146.23 pts to 15567.36
  • GOLD futures US session (Aug) down $2.80 to $1902.50 an ounce
  • COPPER futures US session (Comex July) down $0.0255 to $4.6520 a pound
  • OIL futures US Session (Nymex July) up $1.40 to $67.72 a barrel
  • CRB Index up 2.74 pts to 208.44
  • AUDUSD trading at 0.7748
  • EURUSD trading at 1.2215
  • GBPUSD trading at 1.4151
  • USDJPY trading at 109.5000
  • USD Index US Session (ICE Jun) down 0.071 to 89.922

US indexes came back from a long weekend and put in a lacklustre effort to kick off the new week. Traders bought up energy shares as the sector ended the day up 3.9% while the financial sector also helped to support the action. Weighing on the markets was the heavyweight tech sector along with healthcare which was dragged down by some weak profit forecasts. Traders may be happy to remain on the sidelines as they await key employment data out Friday while overnight releases showing US manufacturing activity picked up in May on the back of pent up demand although unfinished work continued to pile up due to shortages of raw materials and labor. The data continues to highlight inflationary pressures which seems to be keeping a lid on investor enthusiasm for now so any unexpected uptick in jobs numbers could pressure shares lower. The DOW closed up 0.13% while the broader SP500 ended down 0.05% and the Nasdaq closed down 0.09% for the session. In Europe, major Indexes opened strong and managed to fend off late selling pressure in the US session to end the day with healthy gains. The DAX rallied hard into new all time highs being supported by positive employment and manufacturing data and strong commodity and energy prices. The ECB continues to tow the FED party line that higher inflation is transitory and reaffirmed continued support which leaves only one way for traders…up for now until things change so bulls are happy to embrace the ‘risk on’ moves.

The USD Index was adamant that it wanted to hold up off support around the 89.650 zone as price rejected the level a few times. Buyers soaked up the selling pressure into the US open and rallied price off lows after the positive data release on manufacturing. We still expect that price will be range bound for now off support at 89.650 and resistance at 90.300 and will be watching the 89.920 area to see if sellers cap the overnight gains and put some pressure on buyers from current levels. The EURUSD was again basically the mirror image of the USD and found selling pressure to give back earlier gains from the start of the US session. Price action rejected a push into previous highs and then proceeded to take out the anchor to the move up so we will be watching for extended weakness today but any selling into the Euro will depend on whether the dollar moves through resistance or not. Want to see the Euro hold a lower high first before any sell setup. The GBPUSD played out as expected with a flush up through resistance to trigger some stop losses and trap some buyers before reversing and moving lower on the back of the USD rally. Price is extended lower so we may see some back and fill of the move down to clean out some sellers. Expecting the action to be contained below 1.4230 and off 1.4100 for now as the USD awaits employment data Friday. The AUDUSD did extend on the previous sessions gains early in Asian trade before price was capped on data releases and then later weighed down as the RBA kept rates at 0.10%. Price was generally range bound after that as early European bullishness was into highs around 0.7767 evaporated as US Indexes faded off the open. Expecting to see the Aussie remain in the range between 0.7732 and 0.7767 today. The USDJPY played out as expected and built some support around 109.360 as buyers rejected the area a few times during the overnight session. Bulls will again need to defend this level today if they are expecting a further rally into the USD. If price fails to hold above 109.360, then we are watching for a move down to the 109.000 area.

SPOT GOLD initially kicked up through the 1910 level but could not keep the momentum going and price was quick to fail lower on the back of the USD rally. The move lower flushed out a lot of weak handed bulls so we will be watching the following action closely to see if there will be some continuation lower or whether bulls will soak up further selling pressure and continue to target a move up towards 1960. Crude Oil rallied hard through the Asian and European session before sellers piled in at the start of US trade to squeeze out some buyers. The 67.40 area will be key today to see if there is continued commitment from bulls to hold a higher low and continue the push up or whether we see a correction lower to clear out bulls from the recent run up off 62.00. Copper managed to spike up into resistance at 4.7015 before failing under the weight of the USD rally. The anchor to the recent trend up remains at 4.5940 but price is having problems extending higher and we may need to see a minor pullback to clean out some late bulls before price can continue up.

Cryptocurrencies generally found some pressure lower off highs to edge their way down but more in a contractive pattern than a selloff. Prices generally held minor lower highs and lower lows but kept off key support which suggests that there may be a run higher on the cards. Bitcoin is trading at $36279.3 down 1.64% while Ethereum is at $2585.76 down 1.57% and Ripple is at $1.00108 down 0.04%.

The ASX200 came under pressure early yesterday but did manage to limit the damage into the close rallying 30 points off the lows to end down 19 points to 7142.6. Energy stocks were the best performers helping to support the action and Resources also ended in the green while Financials weighed most on the market. As expected the RBA left the cash rate unchanged at 0.10% and made no hint of scaling back its emergency stimulus measures. Falling stocks outnumbered advancing ones by 786 to 575 and 386 ended unchanged.

The ASX200 is expected to open up 10/15 points after the SPI200 tested highs in the European session before giving up some of the gains in US trade.

ECONOMIC DATA OUT TODAY (AEDT)

AUD GDP 11:30am

EUR German Retail Sales 4pm

GBP Mortgage Approvals and Net Lending to Individuals 6:30pm

AUD RBA Deputy Gov Debelle Speaks 7pm

EUR PPI 7pm

EUR German Buba President Weidmann Speaks 1:45am

USD Beige Book, FOMC Members Bostic and Evans Speak 4am

SPI200 INTRADAY LEVELS TO WATCH