Daily Market Outlook, August 1, 2024

Munnelly’s Macro Minute…

“BoE Takes Center Stage Ahead of Apple & Amazon Earnings ”

The optimistic sentiment from global markets overnight has helped Asian stock markets trade mainly higher on Thursday. This optimism results from the anticipation that the US Federal Reserve would decrease interest rates in September, which follows the Fed's monetary policy decision in which interest rates were left unchanged as expected but with a hint of future rate cuts in the accompanying statement. Despite the generally optimistic signs from global markets overnight, the Japanese market has given up all of the gains from the previous three sessions and is substantially lower on Thursday. With weakening in all sectors following the Bank of Japan's hawkish turn of raising short-term policy rates and announcing plans to cut back on monthly bond purchases, the Nikkei 225 is down 3% to below the 37,900 mark.

UK trader's attention will be focused on the Bank of England today, following the Bank of Japan's second interest rate increase in 17 years and the clearest signal yet from the U.S. Federal Reserve that it could lower rates in September. Most economists anticipate Britain's central bank will cut rates from their 16-year high. Markets estimate the likelihood at a more modest 58%, with the uncertainty not surprising given policymakers have not spoken publicly for over two months due to rules ahead of Britain's July 4 election.

Manufacturing surveys for the UK, Germany and France, as well as eurozone unemployment data, are also due today. Any weakness in these indicators would support the case for another interest rate reduction in Europe.

Stateside the Nasdaq experienced a tech-induced ramp, Nvidia saw a 13% increase, and Meta's earnings beat estimates, sending its shares up 7% following the bell. Later today focus will shift to the results from Apple and Amazon.

Overnight Newswire Updates of Note

BoE Tilted Toward First Rate Cut Since Pandemic
Australia’s Trade Surplus narrows to 5,589M (M/M)
EU And US Race To Prevent Mideast War
Multilateral Cooperation, To Deter Beijing In South China Sea
Alternative Investors Shifting Assets Into Japan
World Should Take Note, New Trade & Climate Change Deal
Germany Accuses China Of 2021 Cyberattack
Japan Ex-FX Chief Kanda Appointed Special Adviser

(Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut

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

.EUR/USD: 1.0775-85 (2.1BLN), 1.0800 (1BLN), 1.0825-30 (1.1BLN)
1.0850 (3BLN), 1.0855-60 (1BLN), 1.0875-80 (1.6BLN)
USD/CHF: 0.8720 (300M), 0.8840 (209M)
GBP/USD: 1.2800 (518M), 1.2825 (230M), 1.2850 (753M), 1.2875 (257M)
1.2900 (293M).
EUR/GBP: 0.8420 (1BLN), 0.8450 (320M)
AUD/USD: 0.6450 (1.2BLN), 0.6500 (276M), 0.6530 (316M), 0.6560 (811M)
AUD/NZD: 1.0950 (228M), 1.1000 (621M), 1.1050 (553M)
USD/CAD: 1.3725 (554M), 1.3795 (580M), 1.3850 (282M)
USD/JPY: 148.00 (715M), 149.30-40 (277M), 150.00 (386M), 151.00 (1.1BLN)
152.00 (842M). AUD/JPY: 97.50 (200M), 98.20 (580M)

CFTC Data As Of 23/7/24

Equity fund managers cut S&P 500 CME net long position by 2,812 contracts to 994,529
Equity fund speculators trim S&P 500 CME net short position by 89,786 contracts to 280,356
Japanese yen net short position is -107,108 contracts
Swiss franc posts net short position of -42,237 contracts
British pound net long position is 142,183 contracts
Euro net long position is 35,906 contracts
Bitcoin net short position is -661 contracts