Global Markets Overview – July 7, 2014

4th of July celebrations — Lower Manhattan is seen as the "Macy's 4th of July" fireworks explode over the East River in New York July 4, 2014. Hotdog eating champs, backyard picnickers and small-town parade lovers pressed on with July Fourth celebrations, some with less sizzle after wet weather on the U.S. East Coast postponed fireworks shows. REUTERS/Eric Thayer (UNITED STATES - Tags: CITYSCAPE ANNIVERSARY SOCIETY)

Lower Manhattan is seen as the "Macy's 4th of July" fireworks explode over the East River in New York July 4, 2014. Hotdog eating champs, backyard picnickers and small-town parade lovers pressed on with July Fourth celebrations, some with less sizzle after wet weather on the U.S. East Coast postponed fireworks shows. REUTERS/Eric Thayer (UNITED STATES - Tags: CITYSCAPE ANNIVERSARY SOCIETY)

With US markets having been closed on Friday, there are very limited leads for the region to work off this morning. Risk currencies have gotten off to a relatively flat start to the week, which is a firm indicator that nothing much has changed sentiment-wise as of Friday. Perhaps something to focus on is the weakness we saw in European trade after a disappointing German factory orders reading. This saw the major European bourses lose ground, apart from the FTSE which was relatively flat for the session.

Overall, last week was a pivotal week for markets and wrapped up on a relatively positive note for most global markets. With that in mind, there is a good chance we'll see this momentum continue in today's trade until we get some fresh leads from the US.

One of the key factors to look out for this week will be the start of US earnings, with Alcoa set to kicking off proceedings for Q2. Alcoa is up a whopping 40% year-to-date and this result will deserve some attention given its link to global growth expectations. Additionally there will be some Fedspeak which will help shape expectations after the solid jobs report we received last week.

AUD testing some key levels

AUD/USD has been sidelined at 0.936 and hasn't done much since reacting to Glenn Stevens' comments last week. No doubt talk of a potential rate cut is the new conversation now and until we get a bit more clarity, expect to see a choppy AUD. The near-term trend remains upward but some traders will be reluctant to push the local currency higher given the jawboning risk. This poses a reversal risk for AUD/USD particularly after a daily close below the uptrend support which comes in at 0.936.

Today we have ANZ job ads and the AIG construction index to look out for. While these readings are not massively market-moving, there is a good chance we'll see an AUD reaction, particularly to the jobs numbers. Tomorrow we'll have NAB business confidence and Westpac consumer sentiment on Wednesday. On Thursday we will also get the official jobs number which is expected to show a pickup in employment change and a rise in the unemployment rate. There will also be a bit of activity out of China with CPI and trade balance due out Thursday/Friday.

ASX 200 pointing higher

Ahead of the Aussie market open, we are calling the ASX 200 up five points at 5530. We closed right near the highs on Friday and that's a positive sign heading into this week's trading. Unfortunately we are also now knocking on some key resistance levels after having ascended quite rapidly last week. There is a bit of a congestion zone as highs from April, May and June all converge in this region. The highest point was April highs at 5554.8 and could be a key level in the near term. There isn't much company news to focus on and as a result, sentiment, along with price momentum, are likely to grab most of the attention.

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