Morning Jumpstart Macro View 18/10/21

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  • SPI200 (Dec) overnight futures up 31 pts to 7364
  • SP500 up 33.11 pts to 4471.37
  • NASDAQ Composite up 73.91 pts to 14897.34
  • Dow Jones up 382.20 pts to 35294.76
  • FTSE100 up 26.32 pts to 7234.03
  • DAX30 up 124.64 pts to 15587.36
  • GOLD futures US session (Dec) down $29.80 to $1768.10 an ounce
  • COPPER futures US session (Comex Dec) up $0.0885 to $4.7200 a pound
  • OIL futures US Session (Nymex Nov) up $0.97 to $82.28 a barrel
  • CRB Index up 1.14 pts to 239.27
  • AUDUSD trading at 0.7421
  • EURUSD trading at 1.1601
  • GBPUSD trading at 1.3751
  • USDJPY trading at 114.2200
  • USD Index US Session (ICE Dec) down 0.001 to 93.960

US indexes ended the week on a bullish note to add to previous sessions gains. Another bout of strong earnings fuelled the rally into the weekend after Goldman Sachs smashed expectations to report a 66% surge in third quarter profit. Inflation concerns took a back seat for now with oil continuing to push higher and US bond yields back on the move up signally more inflationary pressure to come. Traders are expecting the good earnings to continue and be supported into the future by the strong economy…but how much of that has already been well and truly factored in…and once cheap money is gone and companies have to deal with higher energy costs, expecting that bears will start to weigh on the action. The DOW closed up 1.09% while the broader SP500 ended up 0.75% and the Nasdaq closed up 0.50% for the session. In Europe, major Indexes also added to gains on earnings optimism but face continued challenges with higher inflation.

In a statement a few hours ago, Bank Of England Gov Bailey said that “money supply can not solve supply-side problems, but it (BOE) will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations”. Expectations are now that the BOE will be the first of the big Central Banks to raise rates potentially later this year.

A rare comment from a Chinese central bank official trying to downplay the Evergrande issues saying that any spillover and debt problems on the banking system are ‘controllable’…we will see although Chinese shares are finding some bargain hunters provide support.

The USD Index held relatively steady in a narrow choppy range between 93.850 and 94.050 on Friday. Price action did find buying support to stem the recent selling as Bond prices head lower on persistently high inflation. Expecting to see buyers continue to provide support now that the BOE is setting up for a rate rise. Expect price to hold above 93.850 and push through 94.050. The EURUSD was also well contained although sellers were pressuring price all session holding minor lower levels. If the USD does start to break higher again, then expect that the EURO will come under pressure and move below 1.1585. The GBPUSD moved higher in European and US trade with rate rise expectations in focus. Price pushed up through 1.3735 resistance and closed above the level. After BOE Gov Bailey comments early this morning, expect to see some volatility on the open and price action to again be supported by bulls…potentially after a squeeze lower. The AUDUSD was largely held in line around the 0.7415 area with spikes above and below capped. Aussie traders may be awaiting China’s data release today before getting to excited. For now the trend up remains in tact although any build back into the USD will weigh on the Aussie. The USDJPY continued the march higher in Asian and European trade but ran into some sellers at the start of the US session. Price is extended into a resistance zone which triggered some profit taking although bulls will be watching the USD closely today to see if a break up through 114.520 is on the cards.

SPOT GOLD took a big hit Friday to give up Thursdays gains and head straight back down to 1765. The action shows the continued unwillingness for buyers to hold and lack of any further buying pressure to provide support for a sustained rally. There did not seem to be much of a trigger although bulls may be anticipating a rally back into the USD from Fridays move lower into bonds. Not holding out much hope at the moment for gold to be a ‘hedge against inflation’ unless I am short unfortunately. Crude Oil continued to march higher and hit new short term highs into the US close. Price action continues to be supported by rising energy concerns as coal and natural gas prices charge higher. The anchor to the current leg up is around 81.63 so as long as this level holds, the ‘trend is your friend’. Copper also saw the recent rally continue as price busted up through the 4.6250 zone. Price is extended which I would expect to see trigger new buyer caution and some profit taking although I would prefer to see a lower high hold first….for now the trend up remains in force but may run into some issues if the USD rallies up off current levels.

Cryptocurrencies ended the week with strength but gave back some of the gains overthe weekend. Bitcoin ramped up through the $60K level triggering enthusiasm into other pairs. Bitcoin is currently trading at $59806.00 down 1.92% while Ethereum took a hit this morning and is at $3719.93 down 2.91% and Ripple is at $1.06772 down 6.62%.

The ASX200 had a mixed session Friday but ended the day with gains as bulls fended off a selloff around midday and end up 50.3 points to 7362 and extend on the previous sessions bullish action. Gains in the Metals and Mining, IT and Materials sectors did the bulk of the heavy lifting. The Nikkei and Hang Seng also had a good session to end up 1.81% and 1.48% respectively.

The ASX200 is expected to open up 30 points after the SPI200 brushed aside the day sessions weakness and rallied into resistance in the US session.


NZD CPI 8:45am

CNY GDP, Retail Sales and Industrial Production 1pm

USD Industrial Production 12:15am

CAD BOC Business Outlook Survey 1:30am


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