OVERNIGHT MARKET SNAPSHOT FOR MONDAY 1/11/21
- SPI200 (Dec) overnight futures up 68 pts to 7348
- SP500 up 8.96 pts to 4605.38
- NASDAQ Composite up 50.27 pts to 15498.39
- Dow Jones up 89.08 pts to 35819.56
- FTSE100 down 11.90 pts to 7237.57
- DAX30 down 7.56 pts to 15688.77
- GOLD futures US session (Dec) down $17.60 to $1785.00 an ounce
- COPPER futures US session (Comex Dec) down $0.0632 to $4.3753 a pound
- OIL futures US Session (Nymex Dec) up $0.76 to $83.57 a barrel
- CRB Index down 0.78 pts to 237.70
- AUDUSD trading at 0.7518
- EURUSD trading at 1.1558
- GBPUSD trading at 1.3682
- USDJPY trading at 113.9500
- USD Index US Session (ICE Dec) up 0.782 to 94.108
US indexes ended the week with minor gains to cap off a positive month for October. Inflation is back in focus for traders after a data release for the Feds preferred inflation measure showed that prices continue to rise faster than its 2% target. There is a growing expectation that global rates will be raised quicker than expected with major central banks including the US Fed Reserve, RBA, BOE and ECB indicating tapering and persistent inflation…the question is how long will Central banks let inflation run hotter than their upper end targets. Policy meetings this week for RBA, the US Fed and BOE will be closely watched by traders. The USD rallied hard after the inflationary data release while Bond yields also rallied but ahead of the release through the European session before easing in US trade. The DOW closed up 0.25% while the broader SP500 ended up 0.19% and the Nasdaq closed up 0.33% for the session. In Europe, major Indexes were flat to end the week and month as bond yields surged keeping a lid on any rally. Strength into Financial stocks offset weakness into high-div stocks and commodity companies. Inflationary CPI numbers came out stronger than expected leaving the ECB with a dilemma on the next steps for policy as bond bears come out to play.
Global Central banks are saying that high inflation is due to supply chain issues and continue to spruik that it is only ‘transitory’…the problem is that the market is not believing it and sees a lot of pent up consumer demand that could continue to support higher inflationary numbers.
The USD Index spiked hard after the PCE data release ahead of the US open. The move in the prior session proved to be a setup and flush of some longs as the release showed that we should expect further USD strength. Price moved into a key support area the prior session to drag in and trap some sellers and then broke up through 94.000 which was the anchor to the contractive move lower. Watching now for a move up and more pressure from dollar bulls in coming sessions. The EURUSD could not capitalise on the previous sessions gains through 1.1665 and failed miserably and take out the 1.1585 minor support level. The moves show the uncertainty around interest rates with mixed signals from the ECB. Traders no longer seem to believe what the ECB are saying (a change from the previous session) and expect that they will be forced into tapering sooner rather than later. For now expecting to see a flush of 1.1528 support and then will be watching the reaction from sellers. The GBPUSD also took a USD fuelled hit as price failed to hold above 1.3780. Price is extended after the move so may see a grind back up to clear out some sellers prior to another leg lower. Either way it seems that there is a major lower high put in place around 1.3832 that could bring in more selling pressure longer term. The AUDUSD was much more contained on the downside, on the back of the dollar rally, than the other major pairs. Price was capped at 0.7554 before the action started to move lower through European trade. The key level will be 0.7545 which may be the line in the sand for bears and provide selling pressure for a move down. The USDJPY bulls came back out to provide support as the USD rallied and lifted the pair up and off 113.400 again. Expecting to see more bullish action into the USDJPY but price may need to flush lower to clear out some late buyers first.
SPOT GOLD did as expected and failed off the 1810 zone. Once the USD started holding a bid and moving up, gold came under fire and took out 1790 to trigger a wave of sellers into action. The key level today will be the 1785 area and whether it holds for another move down into gold or whether we see a slow grind back up above the level. Crude Oil did see another attempted move into 81 support although buyers stepped in early to defend 81.50. There continues to be bullish support even against the flow of the stronger USD which suggests buyers remain adamant that increasing demand will support higher prices and the 81.00 level to hold. Copper came under pressure and took out the previous days lows as the higher dollar continues to weigh on bulls. Still, the longer term action remains looking bullish but will need to fend off any further selling above 4.3160 and start to consolidate above the level to convince new buyers to get involved.
Cryptocurrencies were mixed over the weekend with Bitcoin and Ethereum coming under some pressure while others, such as Ripple and EOS, managed to hold a minor higher level. Bitcoin is currently trading at $61019.50 down 1.06% while Ethereum is trading at $4273.76 down 0.84% and Ripple is at $1.11270 up 2.93%.
The ASX200 took a big hit Friday to end the week and month on a sour note. The ASX was all one way action from the open to end the day down 106.7 points to 7323.7. A lot of the weakness could be attributed to end of month portfolio rebalancing…and some general Fund window dressing…although the ASX is expected to see some bargain hunting on the open today. A-REITS took the biggest hit along with the Telecom Services and Financials Sectors as Falling stocks outnumbered advancing ones by 812 to 572 and 397 ended unchanged.
The ASX200 is expected to open up 65 points as the SPI200 rallied hard off the day sessions lows in overnight trading.
ECONOMIC DATA OUT TODAY (AEDT)
AUD MI Inflation Gauge 11am
AUD ANZ Job Adverts 11:30am
CNY Caixin Manufacturing PMI 12:45pm
EUR German Retail Sales 6pm
USD ISM Manufacturing PMI 1am
SPI200 INTRADAY LEVELS TO WATCH