Daily Market Outlook, January 23, 2025 

Munnelly’s Macro Minute...

"Trumps Davos Address, The Next Volatility Driver”

Asian stocks rallied as Chinese authorities reiterated their commitment to bolstering the market and elevating share prices, reassuring investors and instilling a sense of confidence.China's CSI 300 Index surged by up to 1.8%, hitting its highest level in over three weeks before experiencing a slight retreat. Conversely, the Hang Seng China Enterprises Index, which monitors mainland stocks listed in Hong Kong, initially witnessed a 1.6% intraday rise that diminished as some investors interpreted Beijing's interventions as short-term boosts. The MSCI Asia Pacific index continued its grind higher, marking its fourth consecutive day of gains and achieving its longest winning streak in almost a month. The positive momentum in Chinese indices came after a conference held by China's securities regulator, urging local insurers and mutual funds to increase their investments in equities. This directive lifted the spirits of Chinese investors following the cloud cast by Trump's tariff threats earlier in the week, which had subdued market sentiment. Asian markets remain in a phase of assessing the implications of Trump's early actions in office, which have sent conflicting signals to investors. Despite threats of tariffs on China, Trump has exhibited restraint in escalating trade disputes, adding layers of complexity to the market environment and investor perceptions.

Thursday's economic calendar is relatively subdued, with few significant macro drivers aside from US jobless claims. The main event investors will monitor is likely President Trump’s virtual address to the Davos Economic Forum, where he will also take questions from the attendees. Given the President's off-the-cuff stlye, markets will be alert to potential tape bombs from this event. The Bank of Japan commenced its two-day policy meeting on Thursday. Market participants widely anticipate a 25-basis-point rate increase, as hinted at by BOJ officials last week. To counteract the yen's recent decline from its one-month peak earlier this week, both the expected rate hike and a firm commitment to future hikes may be necessary. Such actions would likely aim to stabilise the yen and prevent further depreciation.

Overnight Newswire Updates of Note

  • EU Plans Subsidy For EV Car Sales To Counter China

  • LNG Tankers Change Course To Europe As Gas Storage Levels Drop

  • BRC Survey: Nearly Half Of Britons Expect Economy To Worsen

  • Fed To Keep Rates On Hold For ‘Foreseeable Future’, Pimco Says

  • Trump Vows ‘Drill, Baby, Drill’ For New Energy Boom

  • US Top Diplomat Rubio Discusses Iran, Gaza With Israeli PM

  • Asian Currencies Consolidate; Mild Risk-On Sentiment May Support

  • China Pushes Insurers To Boost Equity Investments

  • BoJ Expected To Raise Interest Rates By Most In 18 Years

  • Japan Swings To Monthly Trade Surplus, Tariffs Darken Outlook

  • Japan’s Love Of Foreign Stocks Risks Pushing The Yen Even Lower

  • Nvidia Supplier SK Hynix Posts Record Profit On AI Boom

  • Fortescue’s Iron Ore Exports Edge Up With Guidance Unchanged

          (Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.0295-1.0305 (3.7BLN), 1.0320 (1.2BLN), 1.0335 (861M)

  • 1.0365 (886M), 1.0400-05 (3.3BLN), 1.0435-40 (1.2BLN), 1.0450-60 (1.6BLN)

  • 1.0500-15 (2.5BLN)

  • USD/CHF: 0.9005-15 (405M), 0.9050 (370M), 0.9100 (201M)

  • GBP/USD: 1.2300 (361M), 1.2400 (456M), 1.2500 (961M)

  • AUD/USD: 0.6200-05 (1.9BLN), 0.6260 (704M), 0.6275 (392M), 0.6300 (1.3BLN)

  • NZD/USD: 0.5650-60 (900M), 0.5675 (796M)

  • USD/CAD: 1.4375 (580M), 1.4390-1.4405 (1.7BLN), 1.4445-50 (1.5BLN)

  • USD/JPY: 155.00 (2.2BLN), 156.00 (1BLN), 156.15 (732M), 156.50-60 (782M)

  • 156.80 (347M), 157.00 (711M)

  • EUR/JPY: 161.50 (330M), 166.05 (823M). AUD/JPY: 99.80-99.95 (1.4BLN)

CFTC Data As Of 17/1/25

This summary provides an overview of the trading positions held by equity fund managers and speculators in various futures markets as of the reporting period ending January 14:

  1. S&P 500 Futures:

    • Equity fund managers reduced their net long positions by 70,424 contracts, leaving them with a total of 923,997 contracts. A "net long position" means they hold more contracts betting on a rise in the S&P 500 index compared to those betting on a decline.

    • Equity fund speculators reduced their net short positions by 38,472 contracts, bringing the total net short position down to 311,085 contracts. A net short position indicates that these speculators are betting on a decline in equity prices. The reduction in their positions suggests a lessened bearish outlook compared to previous levels.

  2. Currency Positions:

    • Japanese Yen: Speculators have a net short position of 29,411 contracts, meaning they expect the Yen to weaken.

    • Euro: Net short position of 60,397 contracts, indicating expectations of a weakening Euro.

    • British Pound: A net long position of 438 contracts suggests a minor expectation for the Pound to strengthen.

    • Swiss Franc: A net short position of 38,701 contracts implies expectations of a weaker Franc.

    • Bitcoin: A net long position of 1,335 contracts shows a favorable outlook on Bitcoin’s price increasing.

  3. CBOT US Treasury Futures:

    • Ultrabond: The net short position decreased by 4,966 contracts to 242,422, suggesting some reduction in bearish bets.

    • 2-year Treasury: Increased net short position by 64,188 contracts to 1,257,206, indicating a stronger expectation for rising yields (or falling prices).

    • 10-year Treasury: Net short position trimmed by 104,511 contracts to 567,935, showing reduced bearish sentiment.

    • 5-year Treasury: Decreased net short position by 23,282 contracts to 1,777,621, also indicating less bearishness.

    • Treasury Bonds: Shifted from a net short position of 16,827 contracts to a net long position of 52, indicating a switch to an expectation of rising bond prices (or falling yields).


Technical & Trade Views

SP500 Pivot 6040

EURUSD Pivot 1.0435

  • Daily VWAP bullish

  • Weekly VWAP bearish 

  • Seasonality suggests bearishness into March 30th

  • Above 1.0505 target 1.0634

  • Below 1.0435 target 0.9758

GBPUSD Pivot 1.2614

  • Daily VWAP bullish

  • Weekly VWAP bearish 

  • Seasonality suggests bearishness into March 10th

  • Above 1.2685 target 1.2812

  • Below 1.2615 target 1.1878

USDJPY Pivot 153.77

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness into jan 23rd

  • Above 1.5377 target 165.50

  • Below 152.41 target 150

XAUUSD Pivot 2692

  • Daily VWAP bullish

  • Weekly VWAP bullish 

  • Seasonality suggests volatile bullishness into Feb 22nd

  • Above 2725 target 2762

  • Below 2692 target 2475

BTCUSD Pivot 101,960

  • Daily VWAP bearish

  • Weekly VWAP bullish 

  • Seasonality suggests bullishness into Apr 9th

  • Above 104,020 target 110,000

  • Below 101,942 target 86,266