Morning Jumpstart Macro View 1/12/21

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  • SPI200 (Dec) overnight futures down 35 pts to 7196
  • SP500 down 88.26 pts to 4567.01
  • NASDAQ Composite down 245.14 pts to 15537.69
  • Dow Jones down 652.22 pts to 34483.72
  • FTSE100 down 50.50 pts to 7059.45
  • DAX30 down 180.73 pts to 15100.13
  • GOLD futures US session (Dec) down $11.30 to $1771.00 an ounce
  • COPPER futures US session (Comex Dec) down $0.0347 to $4.3063 a pound
  • OIL futures US Session (Nymex Jan) down $3.25 to $66.70 a barrel
  • CRB Index down 6.53 pts to 219.19
  • AUDUSD trading at 0.7129
  • EURUSD trading at 1.1341
  • GBPUSD trading at 1.3303
  • USDJPY trading at 113.0400
  • USD Index US Session (ICE Dec) down 0.448 to 95.890

US indexes dropped hard along with other major markets on increasing Omicron worries. Prices fell sharply at the end of the ASX session after drugmaker Moderna warned existing vaccines are unlikely to be as effective against the new variant. We have to remember that the comments come from a company which benefits from more vaccines so they may be biased somewhat…coming data on vaccine effectiveness will be more telling. Traders piled into safe haven assets and bailed out of risk assets across the board. Prices in the US later accelerated lower after Fed Chair Powell said that ‘high inflation will persist until the middle of next year’ meaning the bank will likely discuss speeding up tapering…turning off the tap is not what investors wanted to hear when markets were under pressure. This is the bigger news and could hit risk assets harder over coming sessions as the negative sentiment builds. The DOW closed down 1.86% while the broader SP500 ended down 1.90% and the Nasdaq closed down 1.55% for the session. In Europe, major Indexes were hit hard on the open on Omicron news but the negativity was somewhat brushed aside until Powells comments on tapering. Traders focus will be on US tapering and what the BOE and ECB have to say.

Bond prices in Europe and the US initially rallied on safe haven buying but later reversed, especially in the US, after Powell admitted that inflation may not be so transient after all.

The USD Index was initially under pressure as major stock Indexes melted down before price turned on a dime and charged higher to make back all the losses. It seems that traders were caught off guard by the Powell comments and were quick to cut short positions as price squeezed higher. The news has brought some confusion into the action for FX traders who expected the Fed to hold off on tapering until further data is known on the Omicron variant. For now, expecting more volatility into the USD and support above 95.500. The EURUSD was also caught off guard by the Powell comments and was hit hard by the USD spike. Price smashed down through 1.1260 support to drop 140 pts from the highs before it recovered some losses. Sellers will be watching US data and Powell comments again tonight and may look to cap the current move up into the 1.1340 zone. The GBPUSD was also hit hard on the USD spike and price pushed down through lows at 1.3287 before recovery some losses into the close. Traders will be awaiting BOE comments tonight and will be on guard for hawkish comments on inflation and interest rates which could bring in the bulls. The AUDUSD flushed up through resistance at 0.7157 before being hit on the dollar spike. Price spiked into new lows through 0.7093 before recovering into the close. If markets come under further pressure, expect selling to weigh on the Aussie but the coming move into the USD will be key. If the dollar sees more strength, then the Aussie will continue lower. The USDJPY seemed more contained than other major pairs as price flushed lows before bouncing back on the dollar spike. Watching the 113.000 zone to see if buyers start to support price today.

SPOT GOLD was finding a minor safe haven bid on the virus news but later took a big hit to clear out all the buyers. Price fell from the 1810 area down to 1775 which suggests traders will not be happy with any USD strength. Expecting to see further weakness as the USD gains momentum to the upside on continued inflation talk. Crude Oil was again knocked about by the negative sentiment as price fell down through recent lows. Traders are happy to unwind longs on expectations of easing demand and increased supply. For now the trend down is anchored at 68.78 and may get worse before it gets better. Copper also took a hit to confirm a lower high at 4.3370 and bring in more sellers. Price is well under pressure and looking set to continue lower through 4.2500 in coming sessions especially if the USD finds further buying support as expected.

Cryptocurrencies weathered the negativity in global markets pretty well. Bitcoin and Ethereum were supported which flowed over into other cryptos. Bitcoin is currently trading at $57738.90 down 0.96% while Ethereum is trading at $4671.34 up 5.90% and Ripple is at $1.01089 up 2.31%.

The ASX200 rallied from the open yesterday and then faded back down into the close. The index lost 30pts in the 4:10pm match-off alone to end the day up only 16.2 points to 7256 well off the intraday highs of 7332.6. Markets were hit with news on the new Omicron variant at the close which may flow over into todays action. Shares in Telecom Services, A-Reits and Consumer Staples provided the bulk of the support while rising stocks outnumbered declining ones by 930 to 490 and 388 ended unchanged. The Hang Seng and Nikkei were both hit hard late in the session down 1.58% and 1.63% respectively.

The ASX200 is expected to open down 45 points after the SPI200 came under pressure overnight and may see more fear based selling today.


AUD GDP 11:30am

CNY Caixin Manufacturing PMI 12:45pm

EUR German Retail Sales 6pm

EUR German Final Manufacturing PMI 7:55pm

USD ADP Non-farrm Employment Change 12:15am

GBP BOE Gov Bailey Speaks 1am

USD Fed Chair Powell Testifies and ISM Manufacturing PMI 2am

USD Crude Oil Inventories 2:30am

USD Beige Book 6am


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