Daily Market Outlook, July 07, 2023
Munnelly’s Market Commentary…
Asian equity markets lower as global markets experienced selling pressure driven by declines on Wall Street. The Nikkei 225 opened with a slump following disappointing Household Spending data, although it later recovered some of its losses. The Hang Seng and Shanghai Comp. were also in negative territory due to growth concerns and ongoing trade frictions with the US.
According to building society Halifax, house prices in the UK experienced a slight decline of -0.1% in June. The data indicates that the housing market stabilised during the month, with a consistent number of mortgage applications, especially from first-time buyers. However, the rising costs of borrowing and concerns about inflation have led to higher mortgage rates, which could affect affordability and potentially dampen demand in the future. Existing mortgage holders may also face rate increases as a result. These factors contribute to a more cautious outlook for the housing market going forward.
In the Eurozone German industrial production figures released earlier showed a third consecutive monthly decline, indicating a slowdown in manufacturing activity.There are no major economic releases on the docket, but market participants will pay attention to speeches from ECB officials including Vice President Guindos along with the head of the Bundesbank Nagel.
Stateside the focus of the day was on the monthly US labour market report, which will provide insights into the likelihood of the Federal Reserve resuming interest rate increases later in July. Expectations are for the US economy to have added 225k jobs in June, with a decline in the unemployment rate to 3.6%. However, in June, labour market indicators presented a mixed picture. Initial jobless claims showed a significant increase during the survey week, with the four-week moving average also trending higher. The employment sub-indices within S&P Global's flash PMI data eased but remained above the 50-mark, indicating expansion. The ISM manufacturing data revealed a contraction in employment, while the services gauge showed an increase in the employment index, indicating expansion. ADP's measure of payroll growth saw a notable increase, while Challenger Layoff numbers decreased. Currently, market expectations point to a potential interest rate hike by the Federal Reserve in July, and it is presumed that only a substantial miss in data, coupled with weakness in other indicators, would cause a rapid repricing in the market. Robust economic data this week have led to a lifting in market expectations for the Fed's terminal rate, which is now anticipated to reach 5.45% by November 2023.
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 (854M),1.0850 (1.1BLN), 1.0880 (454M), 1.0900 (1.3BLN)
1.0920-25 (918M), 1.0970 (1BLN), 1.1000 (2.2BLN), 1.1010-15 (1.1BLN)
GBP/USD: 1.2625-35 (351M), 1.2825 (478M)
EUR/GBP: 0.8600 (265M), 0.8620 (217M)
AUD/USD: 0.6600 (500M), 0.6690 (331M), 0.6700 (1.5BLN)
USD/JPY: 143.00 (532M), 144.00 (359M), 145.00 (1.3BLN)
EUR/NOK: 11.70 (524M)
USD/CAD: 1.3300 (1.5BLN), 1.3350 (400M), 1.3400 (488M)
Overnight News of Note
Shares Fall In Asia After Treasury Yields Spike
US Renews Audit Inspection Of China Firms As Tensions Mount
BoJ Deputy Governor Uchida Vows To Keep Yield Control For Now
Japan's Wage Growth Doubles Estimates, Feeding BoJ Speculation
Japan Ex Vice FinMin Japan’s Currency May Weaken To 160 And Beyond
Market Surveys Show Wall Street Expected Less Hawkish Fed Outlook
ECB's Lagarde: We Still Have Work To Do To Bring Infl Back To Target
EU Paves Way To Quit International Accord On Energy Investments
Chinese State Media Says Yuan To Be Defended If Necessary
Crypto Trading Volume Dropped In Second Quarter To Lowest Since 2019
Oil On Track For Second Straight Weekly Gain On Resilient Demand
Shares Fall In Asia After Strong US Data Sent Treasury Yields Higher
Twitter Sends Meta Cease-And-Desist Letter Over New Threads App
AbbVie Trims Full-year Profit Forecast On Higher R&D Expenses
Tesla Starts To Lay Off Some Battery Workers At China Factory
Electric Car Sales Growth Slows In US As Inventory Builds Up
US FDA Grants Standard Approval Of Eisai/Biogen Alzheimer's Drug
Samsung Profit Beats As Memory Chip Sector Recovers From Trough
China To End Ant Group's Regulatory Revamp With Fine Of At Least $1.1Bln
(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 bearish
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 bearish
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 bearish
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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!