Morning Jumpstart Macro View 16/12/21

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  • SPI200 (Mar) overnight futures up 40 pts to 7253
  • SP500 up 75.76 pts to 4709.85
  • NASDAQ Composite up 327.94 pts to 15565.58
  • Dow Jones up 383.25 pts to 35927.43
  • FTSE100 down 47.89 pts to 7170.75
  • DAX30 up 22.79 pts to 15476.35
  • GOLD futures US session (Feb) up $5.70 to $1778.00 an ounce
  • COPPER futures US session (Comex Mar) down $0.0080 to $4.2495 a pound
  • OIL futures US Session (Nymex Jan) up $0.79 to $71.52 a barrel
  • CRB Index down 0.51 pts to 223.82
  • AUDUSD trading at 0.7175
  • EURUSD trading at 1.1294
  • GBPUSD trading at 1.3263
  • USDJPY trading at 114.0300
  • USD Index US Session (ICE Dec) down 0.243 to 96.295

US indexes were largely range bound ahead of the FOMC announcement then prices rallied hard into the close. The Fed said that their inflation target has been met and that they will end bond purchases by March therefore paving the way for three rate hikes by the end of 2022. Tapering has been ramped up as the Fed acknowledges that inflation has been higher than expected and is not transient. Analysts expect that there will also be three rate hikes in 2023. Markets may have been factoring in a more bearish result as Indexes rally, USD drops and short term bonds edge higher. The Fed also said that rate hikes will be tied to employment numbers which gave markets the go ahead to rally as bears were expecting the timeline to be sooner. Generally, the FOMC hit the markets consensus and were as neutral as possible so shares reacted accordingly by flushing out speculative shorts. The Fed may be getting the soft landing scenario they are hoping for…inflation gradually easing in coming years and unemployment remaining low in a growing economy. The DOW closed up 1.08% while the broader SP500 ended up 1.63% and the Nasdaq closed up 2.15% for the session. In Europe, major Indexes were mixed ahead of the Fed announcement. The DAX edged higher while the FTSE moved down after some better than expected inflationary numbers which put pressure on the interest rate rise narrative.

The USD Index initially flushed out sellers after the FOMC release before turning lower to take out the buyers. Expect that there is some re-positioning going on into the end of the year as the last major hurdle for markets was the FOMC. Now traders have a better idea of what to expect from the Fed and its inline with expectations. Watching for the dollar to find a bid around 96.100/200 as the longer term expectations for a stronger Dollar remain. The EURUSD simply mirrored the move into the USD but, as usual, in reverse. Price flushed through support to trigger stop losses and trap shorts before running higher to flush the 1.1277 level. It will be interesting to see if price can target the 1.1320 anchor level or whether sellers jump back into the action to pressure price lower as they favour the USD over the Euro on the yield advantage going forward. The GBPUSD initially spiked higher on the back of better than expected inflationary numbers but bears were quick to push prices back down to setup for the FOMC meeting. Price flushed into the support zone around 1.3180 before ramping back up to session highs as the USD fell. Expecting that bulls will start to take control as the rate rise narrative builds for the Pound. The AUDUSD rallied hard into the US close on the back of the risk on mood into shares and as the dollar dropped. A lot of traders were caught on the wrong side of the action going into FOMC and the surprise dollar weakness. The Aussie may find resistance up around previous highs at 0.7183 and see some short term bulls lock in some gains. The USDJPY traded higher as expected and flushed up through the 114.000 level. Price generally brushed aside the weakness into the USD suggesting that the dollar will look to build a base and head higher. Watching for any pullback to be soaked up by bulls and for price to hold above the 113.800 area.

SPOT GOLD traded similar to the Euro…in reverse to the USD move. Price flushed lower through support around 1760 before ramping back up on the dollar weakness. Price spiked up and through 1772 but the momentum may stall today as traders continue to decipher the reaction to the Fed and interest rate expectations. Crude Oil moved higher off the $69.50 area as bulls took charge. Price action was supported by weaker than expected US inventories and risk on into markets from the FOMC statement. Expecting to see price test into the $72.00 area and then potentially see some short term buyers lock in some gains. Copper had a very choppy session as price dumped into the start of European trade before seeing a massive short squeeze into the US close. Price ended the session around where it started leaving many bulls and bears scratching their heads. The move down flushed support around 4.2040 so expecting to see some more buyers dip their toes into the action on dips.

Cryptocurrencies reacted higher into the FOMC release but were generally making back some lost ground. Prices are still under some pressure but are showing better signs for bulls as they build a base. Bitcoin is currently trading at $49088.20 up 2.70% (last 24 hours) while Ethereum is trading at $4061.19 up 5.98% and Ripple is at $0.83386 up 3.01%.

The ASX200 came under pressure yesterday as sellers took control from the open and ended the index down 51.3 points to 7327.1. Shares in Gold, Property (A-REITs) and IT weighed the most on the index while falling stocks outnumbered advancing ones by 935 to 452 and 371 ended unchanged. The Hang Seng was again under pressure to end down 0.91% while the Nikkei ended up 0.10%.

The ASX200 is expected to open up 35/40 points after the US ramped higher into the close. The ASX will see a delayed open due to futures December expiry.


AUD RBA Gov Lowe Speaks 10:30am

AUD Employment Change and Unemployment Rate 11:30am

EUR French Flash Services and Manufacturing PMI 7:15pm

EUR German Flash Services and Manufacturing PMI 7:30pm

CHF SNB Policy Rate 7:30pm

GBP Services and Manufacturing PMI 8:30pm

GBP MPC Official Bank Rate and Monetary Policy Statement 11:45pm

EUR ECB Press Conference 12:30am

USD Unemployment Claims 12:30am

USD Industrial Production 1:15am


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