Daily Market Outlook, July 06, 2023
Munnelly’s Market Commentary…
Asian equity markets mostly traded lower, influenced by weak global data releases, a rising yield environment, and limited guidance from the FOMC Minutes regarding future rate increases. The Nikkei 225 faced selling pressure after falling below the 33K handle. The Hang Seng and Shanghai Comp also declined, with Hong Kong-listed Chinese banks experiencing notable pressure. Mainland losses were mitigated ahead of US Treasury Secretary Yellen's arrival in Beijing for meetings with senior officials.
In the UK, the Decision Maker Panel (DMP) survey of businesses will be released, which is closely monitored by policymakers. The report's findings on firms' pricing behaviour, inflation expectations, and wage growth will be particularly scrutinised. The survey suggests that firms' price and wage growth expectations are moderating but remain high compared to historical averages. Additionally, the UK construction PMI for June will be published, with solid growth expected in the commercial and civil engineering sectors but contraction in housebuilding activity.
Retail sales figures for May in the Eurozone were expected to show modest month-on-month growth. German factory orders for May showed a significant increase but remained lower compared to a year ago. Tomorrow's German industrial production report will be closely watched for signs of further deceleration in activity, following recent weaker-than-expected outcomes and survey evidence.
Stateside the upcoming employment and ISM services data are of note on today's data docket The ADP gauge of private payrolls is expected to show a decrease to 228,000 from the previous reading of 278,000. Challenger layoffs data will also be released. The JOLTs data for May, which provides insights into job openings, is anticipated to moderate to 9.9 million from 10.1 million in April. Weekly initial jobless claims and continuing claims data are expected to show a slight increase. S&P Global will release its final composite and services PMI data shortly before the release of the ISM services index for June. The ISM headline index is forecasted to rise to 51.0 from 50.3, indicating growth in the services sector. The business activity index is also expected to improve slightly to 51.9 from 51.5. The services sector has shown more resilience compared to the manufacturing sector, and analysts will be monitoring how long this resilience can be sustained, considering the manufacturing decline and the lagged impact of previous interest rate hikes by the Federal Reserve.
CFTC Data As Of 30-06-23
USD IMM net spec short in the Jun 21-27 reporting period; $IDX -0.02%
EUR$ +0.38% in period, specs stayed on sidelines +379 contracts now +145,028
$JPY rose 1.91%, specs -5,214 contracts now -112,870 as BoJ remains steady
Recent test of 145, tipped intervention area may stir long profit-taking
GBP$ -0.1%, specs +5,386 contracts now +51,994 on rising UK rate view
BTC rose 8.86%, specs sold 2,491 contracts into strength, flip to -2,094
$CAD -0.31% in period, specs +30,696 contracts short pared to -2,847
AUD$ -1.49% in period, specs +10,192 contracts now -39,424
BoC, RBA had been considering further rate hikes amid persistent inflation
Inflation stalling has weakened CAD and AUD since Jun 21, may see recent longs lighten(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 (450M), 1.0820 (300M), 1.0840-50 (1BLN)
1.0890 (775M), 1.0950 (785M)
USD/CHF: 0.8875 (255M). GBP/USD: 1.2850 (490M)
EUR/GBP: 0.8550 (180M), 0.8600 (220M), 0.8625 (188M)
AUD/USD: 0.6655 (273M), 0.6675-80 (261M)
USD/JPY: 144.00 (2.4BLN), 144.40-50 (369M), 145.00 (1.1BLN)
Overnight News of Note
Minutes Revealed Some Fed Officials Supported Raising Rates In June
Fed's Williams Says Data Supports More Action On Interest Rates
BoE’s Dovish Talk May Have Worsened UK Inflation, Economists Say
UK Edges Closer To Re-joining EU’s £85Bln Horizon Science Programme
SNB’s Maechler: SNB Doesn't Rule Out Further Rate Hikes
China Analysts: China To Prefer Near Term Structural Policy Support
China Has Ample Tools Even In ‘Panic’ Yuan Drop, PBoC Paper Says
Australia's Trade Surplus Swells To $11.8 Billion, Beating Forecasts
Dollar Firms On Rate Hike Views After Fed Minutes, Yen Gains
BlackRock Wants To Make It Cheaper To Trade Bitcoin, Larry Fink Says
Oil Prices Steady As China Demand Fears Offset Tighter Supply Forecasts
Stocks Slide, US Yields Climb Amid Hawkish Fed, China Tensions
Bank Of America Increases Dividend By 9% After Fed Stress Test
As Twitter Falters, Threads Surpasses 5 Million Sign Ups On Day One
ExxonMobil Sees $4 Billion Earnings Hit From Gas Prices, Refining
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4412
Below 4400 opens 4370
Primary support is 4300
Primary objective is 4540
20 Day VWAP bullish, 5 Day VWAP bullish
EURUSD Intraday Bullish Above Bearsih Below 1.0840
Below 1.0840 opens 1.08
Primary support is 1.07
Primary objective is 1.1050
20 Day VWAP bullish, 5 Day VWAP bearish
GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2650
Below 1.26 opens 1.2550
Primary support is 1.26
Primary objective 1.2880
20 Day VWAP bullish, 5 Day VWAP bullish
USDJPY Bullish Above Bearish Below 143.50
Below 143 opens 142.30
Primary support is 141
Primary objective is 145.50
20 Day VWAP bullish, 5 Day VWAP bullish
AUDUSD Bias:Intraday Bullish Above Bearish Below .6660
Below .6600 opens .6550
Primary support is .6448
Primary objective is .6917
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
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!