Asian Open US Job Demand Hits Record High CADCHF Ready to Roll

Asian Futures:

• Australia's ASX 200 futures are up 10 points (0.14%), the cash market is currently estimated to open at 7,302.60
• Japan's Nikkei 225 futures are down -90 points (-0.31%), the cash market is currently estimated to open at 28,873.56
• Hong Kong's Hang Seng futures are up 27 points (0.09%), the cash market is currently estimated to open at 28,808.38

UK and Europe:

• UK's FTSE 100 index rose 17.87 points (0.25%) to close at 7,095.09
• Europe's  Euro STOXX 50  index fell -1.64 points (-0.04%) to close at 4,096.01
• Germany's DAX  index fell -36.55 points (-0.23%) to close at 15,640.60
• France's CAC 40 index rose 7.45 points (0.11%) to close at 6,551.01

Tuesday US Close:

• The Dow Jones Industrial fell -30.42 points (-0.09%) to close at 34,599.82
• The S&P 500 index rose 0.74 points (0.02%) to close at 4,227.26
• The Nasdaq 100 index rose 7.971 points (0.06%) to close at 13,810.86

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VIX ticks higher from its lows

The S&P 500, Dow Jones and Nasdaq 100 closed effectively flat again, although the former remains just below its record highs and its daily range was 123.5% of its 10-day average. The Russell 2,000 put on the best show with a 1% gain with growth and value stocks equally matched at around 1%.

The VIX (volatility index) rose by points and trades around 18, in a sign that investors are hedging ahead of inflation data from the US this week. That said, it trades just above historic lows, so fear is not exactly gripping Wall Street as if yet. So we suspect markets to remain and a wait and see mode until Thursday’s US session.

The ASX 200 printed a (very slightly) bullish outside day, which saw a brief new record high before selling off to its key support level at 7282 then paring its losses. Futures market suggest the cash index should open back above 7300, just above yesterday’s POC (point of control) which sits at 7296.50. So we suspect the 2769.50 – 7300 zone could be pivotal level this session.

• R2: 7315.60 (record high)
• R1: 7306 (Yesterday’s value area high)
• S1: 7296.50 (yesterday’s POC)
• S2: 7275 – 7278 (value area low and high-volume node)
• S3: 7267.60 – 7269.40 (prior day’s lows)

ASX 200 Market Internals:

ASX 200: 7292.6 (0.15%), 08 June 2021

• Information Technology (1.45%) was the strongest sector and Materials (-0.39%) was the weakest
• 9 out of the 11 sectors closed higher
• 6 out of the 11 sectors outperformed the index
• 115 (57.50%) stocks advanced, 69 (34.50%) stocks declined
• 14 hit a new 52-week high, 0 hit a new 52-week low
• 75% of stocks closed above their 200-day average
• 69.5% of stocks closed above their 50-day average
• 77% of stocks closed above their 20-day average

Outperformers:

• + 8.76%   -  Mesoblast Ltd  (MSB.AX) 
• + 6.03%   -  EML Payments Ltd  (EML.AX) 
• + 5.95%   -  Pointsbet Holdings Ltd  (PBH.AX) 

Underperformers:

• -2.55%   -  Collins Foods Ltd  (CKF.AX) 
• -2.06%   -  A2 Milk Company Ltd  (A2M.AX) 
• -1.98%   -  Altium Ltd  (ALU.AX) 

Forex: The Swiss franc is in favour ahead of ECB meeting

There was a slight risk-off tone in currency markets with NZD and CAD being the weakest majors whilst CHF and USD were the strongest. Month-to-date NZD and CAD are also the wort performers so far and CHF is also the strongest.

Inflation data for China is scheduled for 11:30 and the recent trend is to see factory prices (PPI) rise whilst CPI remains relatively lacklustre. Should CPI begin to turn high it’s a sign that inflation is more broadly spread (and real).

USD/CNH has so far failed to break beneath Monday’s low to further suggest a swing high is in place. A stronger-than expected CPI print today could help this pair move lower, in line with its bearish trend. A break above last week’s high invalidates the idea.

A pattern that is seemingly creeping into play this week is a slow rotation into the Swiss franc ahead of Thursday’s ECB meeting. EUR/CHF broke beneath 1.0928 support overnight although its currently teasing the June 2020 high, the apparent last line of defence for bulls right now. Our bias is now bearish beneath yesterday’s high as quick break back above it then labels it a bear-trap. CHF/JPY may have seen its corrective low discussed in yesterday’ Asian Open report and printed a Morning Star Reversal (3-bar bullish reversal pattern) at its support zone. AUD/CHF and NZD/CHF are approaching their cycle lows and, should risk-off sentiment erupt then they could surely break beneath them.

CAD/CHF: It’s ‘tough at the top’

And not wanting to miss out, the Canadian dollar may also be carving out a top ahead of today’s BOC meeting. We noted recently that weekly bearish hammers have formed. And the thing about such grinding tops is that, when they give way, they can do so with great speed. As always, timing is key but we have today’s BOC meeting to fall back on for a likely pocket of volatility.

There are a few signs that CAD/CHF is topping out. Its May high failed to retest the March (YTD) high and a second lower high formed on June 3^rd. The 20 and 50-day eMA’s are converging to show a loss of momentum and, after three bearish days, prices are sitting right on cycle lows to show bearish intensions. A break beneath0.7395 and the 50-day eMA assumes bearish continuation and brings the 0.7350 and 0.7300 and 0.7314 lows.

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Commodities: WTI back above $70 (just)

WTI’s correction may have been short lived judging by yesterday’s bullish engulfing candle which closed just above 70.0. All eyes are on this market now to see if it can break out with conviction.

Gold closed below 1900 for a fourth consecutive session. Given real rates are rising we continue to suspect there may be another shakeout for gold bulls as part of a correction before its bullish trend.

Gold continues to struggle at 28.0 and therefore remains a pivotal level over the near-term. A break beneath Friday’s bearish hammer low suggests a swing high is in place.

Up Next (Times in AEST)

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