Daily Market Outlook, June 16, 2023

Munnelly’s Market Commentary… 

Asian equity markets traded higher, taking cues from the gains on Wall Street. The major indices in the US were boosted by a weaker dollar and lower yields, as investors processed a hawkish European Central Bank (ECB) announcement and the increase in US jobless claims. The ASX 200 in Australia rose by 1.1%, primarily driven by early strength in the energy and utilities sectors. AGL Energy's positive outlook for FY24 underlying profit and anticipated electricity tariff increases supported the market. Initially cautious ahead of the Bank of Japan (BoJ) policy decision, the Nikkei 225 in Japan experienced a slight decline but recovered after the BoJ maintained its ultra-easy policy settings. The Hang Seng in Hong Kong gained 0.8%, and the Shanghai Composite increased by 0.4%, with expectations of additional support measures from Beijing. China's plans to revive the economy, including potential infrastructure spending and relaxed rules for the property sector, provided support. However, mainland China's gains were limited due to ongoing tensions with the European Union regarding the ban on Huawei and ZTE equipment, as well as anticipation of US Secretary of State Blinken's visit, which is not expected to result in any major breakthroughs but aims to reduce the risk of miscalculations in relations with China.

The data docket for the day ahead is less impactful than the past few days as investors take a pause post the data heavy week that has been. Notable events include the release of the Eurozone Consumer Price Index (Final) and the preliminary University of Michigan Sentiment report in the US. Additionally, there will be publications on ECB repayments, as well as speeches from various central bank officials including the Federal Reserve's Waller, Barkin, and Bullard, and the ECB's Lagarde and de Guindos.

CFTC Data As Of 05-06-23

  • USD net spec short in May 31-Jun 5 period, $IDX +0.08% in period

  • Rates key driver of CCY moves, marts on edge ahead of Fed, ECB next wk

  • EUR$ -0.36% in period specs -7,304 contracts long cut to 158,421 contracts

  • $JPY -0.1% in period large short grew by 8,624 contracts, spec -104,817

  • GBP$ +0.09%, specs -751 contracts long 12,484; GBP eyes 23 highs abv 1.26

  • AUD$ +2.39% in period on hawkish RBA, specs -12,342 into rise now -56,468

  • $CAD -1.45%, CAD bid on exp'd BoC hike; specs -8,415 now short 38,329 contract

  • BTC -2.96% in period, specs buy 582 contracts on dip now long 769 (Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.0800-10 (4.14BLN), 1.0820-25 (586M), 1.0840-50 (3.5BLN)

  • 1.0855-60 (430M(), 1.0870-80 (892M), 1.0890-00 (4.3BLN)

  • 1.0905-15 (1.25BLN), 1.0960-65 (640M), 1.0980-85 (663M)

  • 1.1000 (1.35BLN), 1.1100-05 (1.9BLN)

  • USD/JPY: 139.35-40 (469M), 139.50 (378M), 139.70-80 (960M)

  • 139.90-00 (351M), 140.50-60 (947M), 141.00-10 (1.0BLN)

  • USD/CHF: 0.8900 (1.03BLN), 0.9145 (493M)

  • GBP/USD: 1.2790 (222M). EUR/GBP 0.8600 (200M)

  • AUD/USD: 0.6750 (667M), 0.6765-75 (553M), 0.6790-00 (875M)

  • 0.6820-25 (322M), 0.6850 (229M). NZD/USD: 0.6200 (220M)

  • USD/CAD: 1.3200 (744M), 1.3250 (824M), 1.3300 (415M)

  • 1.3350-60 (1.21BLN). USD/ZAR: 18.2400 (290M)

Overnight News of Note

  • ECB To Raise Rates Further Thursday Even As Economy Stutters

  • Fed Leaves Rates Steady, Sees Two Small Hikes By End Of 2023

  • Powell Says Nearly All Officials Expect ‘Some’ Further Fed Hikes

  • Fed To Release Banks' Stress Test Results On Thursday June 28

  • China Central Bank Ramps Up Policy Action With 1-Year Rate Cut

  • China’s Recovery Weakens As Industrial, Retail Activity Slow

  • New Zealand Falls Into Recession as GDP Drops In First Quarter

  • Australian Jobs Smash Expectations, Boosting Rate-Hike Bets

  • Japan’s Exports Weaken Further Amid Global Economic Slowdown

  • Japan’s Matsuno Says Excessive Moves In FX Markets Not Desirable

  • Dollar Rallies In Asia After Fed Signals Rate Hikes; Yuan, Kiwi Slide

  • Bond Traders Step Up Bets The Fed Will Steer US Econ Into Recession

  • Australia Yield Curve Inverts For First Time Since 2008

  • Crypto Altcoins Lead Slide After Fed Raises Possibility Of Hikes

  • HKMA Pushes HSBC, StanChart To Take On Crypto Clients

  • Global Stocks Stall Thursday As US Rates Seen Higher For Longer

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4395 - Target Hit New Pattern

  • Below 4370 opens 4340

  • Primary support is 4300

  • Primary objective is 4580

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearsih Below 1.09 - Target Hit New Pattern

  • Below 1.0880 opens 1.0830

  • Primary support is 1.0666

  • Primary objective is 1.0995

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2750 - Target Hit New Pattern

  • Below 1.27 opens 1.26

  • Primary support  is 1.2680

  • Primary objective 1.2880

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish Above Bearish Below 141 - Target Hit New Pattern

  • Below 140.90 opens 140.30

  • Primary support  is 139.50

  • Primary objective is 143.49

  • 20 Day VWAP bullish, 5 Day VWAP bullish

AUDUSD Bias:Intraday Bullish Above Bearish Below .6740 Target Hit New Pattern

  • Below .6740  opens .6680

  • Primary support  is .6660

  • Primary objective is .6917

  • 20 Day VWAP bullish, 5 Day VWAP bullish

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

  • Above 26300 opens 26900

  • Primary resistance is 27160

  • Primary objective is 23300

  • 20 Day VWAP bearish, 5 Day VWAP bearish