Daily Market Outlook, May 10, 2023
Asian equity markets maintained a muted tone overnight, mostly in the red after a lacklustre handover from Wall Street, where Fed officials comments were deemed more hawkish than expected, while Fed’s Williams ceded he would consider a pause in the rate cycle at the next meeting, he was keen to confirm that he did not see the case for rate cuts this year as markets are currently predicting. The Debt ceiling debate continues without any meaningful developments in discussions after another round of deadlock, negotiations are set to resume Friday.
With a distinct lack of tier one data on the docket for both UK and European investors the data catalyst for today will be in the US session with US Consumer Price Inflation. Markets are expecting to see a small uptick in the headline print on a month over month basis to 0.4% snapping the nine months of declines, while the annualised metric is expected to maintain its 5% level, however, there is a view that core inflation ex food and energy, could see a small downtick from 5.6% to 5.5%. As the major macro driver of the day Goldman Sachs believe that any deviation from market expectations could have volatility implications for the markets with the benchmark SP500 likely to see at least a 0.5% gain on the day on any headline print sub 5%, while any upside surprise above 5.9% would see the market sell off by at least 2%. Markets are favouring a Fed pause at the June meeting and today's data will be eyed as to further confirmation of that pause or the need for a rapid repricing, bringing another Fed increase back into play, further out markets are pricing in 63pbs of rate cuts by the end of 2023, this would suggest at least two 25bps cuts in the fourth quarter.
FX Options Expiries For 10am New York Cut
(In bold represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0900 (321M), 1.0950 (331M), 1.100 (527M), 1.1050 (825M)
1.1070 (1.1BLN), 1.1100 (649M), 1.1150 (800M)
USD/CHF: 0.8860 (250M), 0.9010-20 (464M)
EUR/CHF: 0.9840 (200M), 0.9855-65 (500M)
AUD/USD: 0.6900 (3BLN).
USD/CAD: 1.3350 (284M), 1.3450 (711M), 1.3600 (785M)
USD/JPY: 134.50 (405M), 135.45 (600M) . EUR/JPY: 146.65 (300M)
CFTC Data As Of 02/05/2023
USD spec net short cut in Apr 26-May 2 period, $IDX +0.11%
EUR$ +0.36% in period, specs +4,089 contract now +173,489 ahead of ECB hike
$JPY +1.98%, specs +420 contract, now -68,324; Fed rate path uncertain
GBP$ +0.43%, specs -4,774 contracts now +1,065, sellers into strength
AUD$ +0.54% spec short grows by 5,548; $CAD 0.04% spec short grows to 50,096
AUD, CAD under pressure amid global growth concerns, oil hit hard in period
BTC +2.56% in period flips to positive as specs buy 461 contracts on dip early in period (Source RTRS)
Overnight News of Note
Asia Markets Fall As Investors Await Key U.S. Inflation Numbers
Biden, McCarthy Divided Over Debt Ceiling But Still Talking
Wall Street Leaders Warn Of ‘Unthinkable’ Fallout If US Defaults
Williams Says Fed Is Data Dependent, Leaves Door Open To Pause
ECB Must Do More To Return Inflation To 2%, Schnabel Says
Sharp Fall In Recruitment Of UK Permanent Staff In April, Report Finds
BoJ’s Ueda Says Too Early To Talk About Addressing ETF Holdings
China’s GDP Growth To Pick Up In Q2 On Policy Support - Paper
Dollar Softer As US Debt Ceiling Crisis Unresolved, Inflation Data Eyed
Jane Street, Jump Pull Back Crypto Trading Amid US Crackdown
Option Traders Doubt Fed Cuts As Hedge Funds Boost Futures Short
Goldman Says Yields Biased Higher Despite End Of Tightening
Oil Prices Edge Lower After Surprise Build In U.S. Crude, Gasoline
Russia Says Its Oil Output Cuts Almost Hit Pledged Goal In April
Asian Stocks Decline Wednesday Ahead Of US Inflation Data
Stocks Will Rally If Inflation Data Is Soft, Goldman And JPMorgan Say
Airbnb’s Bookings Rise Amid Strong Travel Demand
Occidental Petroleum Misses Quarterly Profit Estimates
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4100
Below 4090 opens 4040
Primary support is 4000
Primary objective is 4207
20 Day VWAP bearish, 5 Day VWAP bullish
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EURUSD Bias: Intraday Bullish Above Bearish below 1.0940
Below 1.0935 opens 1.0890
Primary support is 1.07
Primary objective is 1.1128
20 Day VWAP bearish, 5 Day VWAP bearish
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GBPUSD Bias: Intraday Bullish Above Bearish below 1.2560
Below 1.2475 opens 1.24
Primary support is 1.2350
Primary objective 1.2750
20 Day VWAP bullish, 5 Day VWAP bullish
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USDJPY Bias: Intraday Bullish above Bearish Below 134
Below 133.90 opens 133
Primary support is 133
Primary objective is 138.80
20 Day VWAP bearish, 5 Day VWAP bullish
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AUDUSD Bias: Intraday Bullish Above Bearish below .6750
Below .6730 opens .6690
Primary support is .6640
Primary objective is .6826
20 Day VWAP bullish, 5 Day VWAP bullish
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BTCUSD Intraday Bias: Bullish Above Bearish below 29300
Primary resistance 30000
Primary objective is 26000
Below 26000 opens 25800
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!