Daily Market Outlook, July 18, 2023

Munnelly’s Market Commentary… 

Asian equity markets failed to sustain the momentum from Wall Street. The Nikkei 225 initially made gains upon its return from a long weekend but eventually erased those gains, reflecting weakness in its peers. The Hang Seng and Shanghai Composite were also lower, with property stocks leading the declines in Hong Kong. This was attributed to the long-delayed results of Evergrande, the world's most indebted developer, which reported significant net losses for 2021 and 2022. The US-China relationship remained in focus, with amicable comments in talks between US Climate Envoy Kerry and China's top diplomat Wang Yi. However, reports that the US aims to propose investment limits on China and potential new curbs on chips and semiconductor-making devices tempered the positive sentiment.

In the US, the economy has so far exceeded expectations of a recession. GDP grew in the first quarter and is likely to have continued growing in the second quarter. Data releases for June, including retail sales, industrial production, and business inventories, will provide further insights into the likely economic outcome. Despite ongoing headwinds from higher interest rates and inflation, US retail sales and consumer spending have surpassed expectations this year. It is expected that consumer spending will continue to contribute positively to Q2 GDP growth. However, the outlook for the second half of 2023 remains uncertain.While there have been reports of struggles in the manufacturing sector globally, official industrial production measures have been relatively strong, outperforming unofficial sources such as the ISM surveys. Another small increase in output is predicted for June, potentially supported by incentives in the US to encourage "green" investment in the sector.

CFTC Data As Of 14-07-23

  • USD net spec short fell a touch in the Jul 5-11 period as $IDX slid 1.37%

  • Fairly serious moves among majors w/hardly any position changes

  • Suggest a fair amount of position replacement as specs were getting stopped

  • EUR$ +1.2% in period, specs -2,675 contracts into strength now +140,162

  • $JPY -2.84% in period after breaching 145 last wk, specs buy 738 contracts

  • GBP$ +1.73% as BoE seen a cointoss for +50bp Aug 3, specs +7,798 now +58,063

  • CHF specs relatively active -4,503 contracts now short 7,907

  • $CAD +0.06%, Aussie -0.06% specs sell less than 1k contracts

  • BTC fell a scant 0.74%, specs +221 on dip now short 1,855 contracts(Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.1100-10 (5BLN), 1.1225 (706M)

  • GBP/USD: 1.3010 (852M), 1.3130-40 (300M). EUR/GBP: 0.8580 (300M)

  • AUD/USD: 0.6800 (1BLN), 0.6815 (242M), 0.6850 (1.1BLN), 0.6865 (358M)

  • 0.6875-80 (450M), 0.6885-95 (807M). NZD/USD: 0.6400 (400M)

  • AUD/NZD: 1.0800 (603M), 1.0850 (627M), 1.0900 (535M)

  • USD/CAD: 1.3200 (200M), 1.3240 (525M). EUR/JPY: 155.50 (230M)

  • USD/JPY: 138.0 (234M), 139.50 (481M), 139.75-85 (485M)

Overnight Newswire Updates of Note

  • Stocks Rise To Kick Off Busy Week Of Earnings Reports

  • RBA Hit Pause As Policy Clearly Restrictive, Risking Growth

  • China Recovery Uneven And Differentiated By Sector, Moody’s Says

  • China Likely To Cut RRR In Third Quarter To Boost Economy - CSJ

  • US Limits On China Tech Investment To Be Narrow And Slow

  • US Banks Face Stiffer Mortgage Capital Rule Than Basel Standard

  • More Americans Are Getting Turned Down For Loans, Fed Data Shows

  • ECB's Visco: Inflation May Drop More Quickly Than Forecast

  • Officials: EU's AI Lobbying Blitz Gets Lukewarm Response In Asia

  • Dollar Teeters Near One-Year Low; Euro Scales 17-Month Peak

  • Dollar’s Painful Rout Looks Overdone, Says Barclays FX Executive

  • BofA: Yen Could Fall In 2024 As Officials Face 'Policy Trilemma'

  • HSBC: Dollar May Weaken As Fed’s Hiking Cycle Nears End

  • Goldman Sachs Says This Yield Curve Inversion Is ‘Different’

  • BofA Says Credit Market Bears In Retreat As Recession Fears Ease

  • Oil Holds Two-Day Drop As China Angst Offsets Russia Export Cuts

  • Asia Shares Mixed Tuesday Amid Lingering China Concerns

  • BofA Says Earnings Season Is Off To A Better-Than-Average Start

  • JPMorgan Strategists Predict Further Euro-Area Stock Weakness

  • JPMorgan’s Kolanovic Sees ‘Modestly Wider’ Path To Soft Landing

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

Technical & Trade Views

SP500 Intraday Bullish Above Bearish Below 4490

  • 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 1.12

  • 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

  • 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 139.60

  • Above 139.60 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 bearish