Daily Market Outlook, July 14, 2023

Munnelly’s Market Commentary… 

Asian equity markets were mostly positive in overnight trading following a favourable performance on Wall Street. Yields continued to decline, supported by the softer consumer inflation and PPI data, strengthening the case for just one more rate hike by the Federal Reserve. The Nikkei 225 remained flat, alternating between gains and losses. It faced challenges from the strength of the Japanese yen and speculation that the Bank of Japan (BoJ) might raise its inflation forecast above the 2% target during its upcoming meeting, potentially paving the way for policy normalisation. Former BoJ Director Hayakawa anticipated that the BoJ could adjust its yield curve control by raising the 10-year yield ceiling to 1.0%. The Hang Seng and Shanghai Composite were positive, with modest gains despite the People's Bank of China's renewed support pledges to maintain appropriate credit growth, along with efforts to strengthen counter-cyclical adjustments and support key sectors.

Today's data docker is scant at best, concluding a busy week. Notable data releases were absent in the UK, and the Eurozone only presented the May international trade report. The Eurozone's trade deficit with the rest of the world had initially widened significantly last year but has since narrowed, achieving its first surplus in March 2023 (since September 2021), although it slipped back into deficit in April. Fluctuations in export and import volumes may contribute to these variations, but the Eurozone's status as a net energy importer suggests that a significant portion is influenced by last year's energy price surge. Consequently, with energy prices now lower than their peaks, the trade balance may continue to improve.

Stateside the University of Michigan's July update on consumer sentiment survey, set to release this afternoon will offer timely insights into the sentiments of US consumers. In June, the measure reached its highest level in four months as both present and future sentiments improved. This was likely driven by growing indications of decreasing inflation. Therefore, we anticipate further improvement in consumer sentiment this month, accompanied by a decline in near-term inflation expectations. It's worth noting that the survey was conducted before the release of the lower-than-expected June CPI inflation data.

CFTC Data As Of 07-07-23

  • USD net spec short pared in Jun 28-Jul 3 period, $IDX +0.58% in period

  • EUR$ -0.77% in period, specs -2,191 contracts into dip, now +142,837

  • $JPY +0.3% in period, specs -5,050 contracts on diverging rates now -117,920

  • GBP$ -0.29%, specs -1,729 contracts, now +50,265; less-dovish Fed lifts USD

  • $CAD +0.21% specs +7,374 contracts flip position to +4,527

  • AUD$ +0.09% in period, specs -5,158 contracts now -44,582

  • BTC +0.5% in period specs +18 contracts now short 2,076 contracts(Source: Reuters)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.1165-75 (750M), 1.1200 (1BN)

  • USD/CAD: 1.3040 (310M), 1.3100-05 (700M), 1.3150 (266M)

  • AUD/USD: 0.6900 (804M)

Overnight News of Note

  • Asia Stocks Set For Best Week Of 2023, Dollar Reels On Dovish Fed Bets

  • Australia Appoints Michele Bullock To Be Central Bank Governor

  • China Central Bank Pledges To Use Policy Tools To Spur Recovery

  • BoK: Governor Did Not Rule Out Possibility Of A Rate Cut In 2023

  • Japan FinMin Suzuki: G7 Finance Chiefs To Meet On July 16

  • Fed's Waller Eyes July Rate Rise, And Another Hike Before Year Ends

  • Dollar At 15-Month Low As Easing Inflation Firms Rate Peak Bets

  • Coinbase Will Re-Enable Trading For XRP After Mixed Court Ruling

  • Oil Set For Third Weekly Gain As African Outages Tighten Supply

  • FTC Asks Appeals Court To Pause Microsoft Deal After Lower Court Refuses

  • Microsoft, Activision Weigh Sale Of Some UK Cloud-Gaming Rights

  • SpaceX Nears $150 Bln Valuation After Secondary Share Sale

  • Roivant In Talks To Sell Stomach Drug To Roche, Deal Valued At More Than $7 Bln

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

Technical & Trade Views

SP500 Intraday Bullish Above Bearish Below 4490 - Target Hit New Pattern Emerging

  • Below 4480 opens 4460

  • Primary support is 4370

  • Primary objective is 4630

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Intraday Bullish Above Bearsih Below 1.1150 Target Hit New Pattern Emerging

  • Below 1.1150 opens 1.1050

  • Primary support is 1.10

  • Primary objective is 1.13

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD: Intraday Bullish Above Bearish Below 1.30 Target Hit New Pattern Emerging

  • Below 1.2830 opens 1.2710

  • Primary support  is 1.26

  • Primary objective 1.3850

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bullish Above Bearish Below 141 - Target Hit, New Pattern Emerging

  • Above 139.50 opens 141.80

  • Primary resistance 142

  • Primary objective is 136.20

  • 20 Day VWAP bullish, 5 Day VWAP bearish

AUDUSD Intraday Bullish Above Bearish Below .6800

  • Below .6795 opens .6750

  • Primary support  is .6448

  • Primary objective is .7000

  • 20 Day VWAP bearish, 5 Day VWAP bullish

BTCUSD Intraday Bullish Above Bearish below 30000

  • Below 29400 opens 28600

  • Primary support  is 28400

  • Primary objective is 32750

  • 20 Day VWAP bullish, 5 Day VWAP bullish