Daily Market Outlook, December 3, 2024
Munnelly’s Macro Minute...
"Euro Holding Steady With The French Government On The Precipice Of Collapse”
Since the recent US limitations on Chinese access to critical semiconductor and AI components weren’t as harsh as anticipated, most Asian markets witnessed gains overnight, especially in the technology sector. While stock indexes rose in a number of nations, such as Australia and Japan, Chinese equities initially dipped after the Yuan fell to its lowest level versus the dollar in a year because of worries about a faltering economy and rising tensions with the US. After the tech-focused Nasdaq 100 rose more than 1% on Monday and the S&P 500 set its 54th closing record of the year, US futures stayed steady overnight, leading to net gains across Asian markets heading into the close. Overall, investors were relieved that the Biden administration's new tech export restrictions on China were less severe than initially proposed, which may have had a more substantial effect on major Chinese companies. This helped to boost confidence for Asian markets. However, after disappointment over Chinese authorities' decision to withhold the results of a crucial conference that many expected would yield fresh policy insights, investor attitudes towards China's economy remained subdued.
After plunging as much as 1.1% the day before due to political unrest in France, which further taxed bonds and stocks, the Euro held steady. France remains the focal point of Europe's concerns on Tuesday, as the government is nearly certain to fall after both the right and left wings have put forward no-confidence motions. The tipping point was Prime Minister Michel Barnier's effort to push a social security bill through parliament without a vote, setting the stage for Wednesday to potentially mark the first French government ousted by a no-confidence vote since 1962. This situation deepens Europe's political turmoil as the year concludes, with Germany also facing snap elections following its government’s collapse, coinciding with Donald Trump’s anticipated return to the White House, which poses a threat of significant tariffs on the region for not purchasing enough American vehicles and agricultural products. However, France can at least find some solace in the warming relations with the President-elect. Trump has praised the reconstruction of the Notre Dame Cathedral and plans to attend its reopening on Saturday, his first foreign visit since winning the election.
There are no macro events on the European economic data calendar today, but an event in Milan will broadcast a pre-recorded interview with ECB board member Piero Cipollone. Fed speakers today include Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler, who will be speaking in Chicago and Detroit, respectively. The key focus of the day will be the U.S. JOLTS job openings report, which is a favourite among Fed officials and serves as a precursor to the crucial monthly payrolls report due on Friday. Expectations for a quarter-point rate cut on December 18 have increased, now sitting at 75% according to CME's FedWatch Tool, up from 66% the previous day and 52% a week ago.
Overnight Newswire Updates of Note
S&P Sticks With France Rating In Reprieve For PM
Stellantis CEO Tavares Resigns Amid US Challenges, Profit Decline
Trump Threatens BRICS With 100% Tariff Over Dollar Alt Push
Canadian Minister: New Measures Are Imminent After Trump Meeting
China’s 10Y Falls Toward Record 2% On PBoC Easing Bets
China Factory Activity Expands In Nov, Beats Forecasts
Japan Wants To Lift GPIF Real Investment Return Target To 1.9%
Japanese Firms Boost CAPEX In Sign Of Confidence Holding Up
Australia's Central Bank: Risks From Non-Bank Lenders Limited
Australian Retail Strengthens In Positive Sign For Holidays
Putin Approves New Budget With Record Defense Spending
Israeli Strikes Hit Southern Lebanon, But Tense Ceasefire Holds
(Sourced from reliable financial news outlets)
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0470 (726M), 1.0500 (1.4BLN), 1.0520-25 (387M), 1.0550 (290M)
1.0565 (734M), 1.0580 (612M)
USD/CHF: 0.8735 (250M), 0.8890 (191M)
EUR/GBP: 0.8225 (300M), 0.8420 (282M)
AUD/USD: 0.6450 (325M), 0.6500 (240M), 0.6555 (223M), 0.6575 (581M)
NZD/USD: 0.5800 (270M). AUD/NZD: 1.1100 (296M), 1.1175 (1.2BLN)
USD/CAD: 1.3935 (260M), 1.4070-80 (479M), 1.4200 (430M)
USD/JPY: 149.00 (730M), 151.00 (270M), 151.80 (660M)
CFTC Data As Of 29/11/24
Equity fund managers raise S&P 500 CME net long position by 60 contracts to 1,079,539
Equity fund speculators trim S&P 500 CME net short position by 29,885 contracts to 258,924
Euro net short position is -42,557 contracts
Japanese yen net short position is -46,868 contracts
Swiss franc posts net short position of -37,071
British pound net long position is 40,315
Bitcoin net short position is -2,084 contracts
Speculators trim CBOT US Treasury bonds futures net short position by 6,123 contracts to 35,645
Speculators increase CBOT US 10-year Treasury futures net short position by 91,701 contracts to 907,502
Speculators increase CBOT US 5-year Treasury futures net short position by 113,816 contracts to 1,983,026
Speculators increase CBOT US 2-year Treasury futures net short position by 23,473 contracts to 1,447,344
Technical & Trade Views
SP500 Bullish Above Bearish Below 6000
Daily VWAP bullish
Weekly VWAP bullish
Below 5990 opens 5930
Primary support 5795
Primary objective 6100
EURUSD Bullish Above Bearish Below 1.0450
Daily VWAP bearish
Weekly VWAP bearish
Above 1.0590 opens 1.0728
Primary resistance 1.0950
Primary objective 1.0728
GBPUSD Bullish Above Bearish Below 1.26
Daily VWAP bearish
Weekly VWAP bearish
Above 1.2760 opens 1.2859
Primary resistance 1.3050
Primary objective 1.2859
USDJPY Bullish Above Bearish Below 154
Daily VWAP bearish
Weekly VWAP bearish
Below 150 opens 148
Primary support 150
Primary objective is 157.50
XAUUSD Bullish Above Bearish Below 2600
Daily VWAP bearish
Weekly VWAP bullish
Below 2530 opens 2467
Primary support 2530
Primary objective is 2800
BTCUSD Bullish Above Bearish Below 92000
Daily VWAP bearish
Weekly VWAP bullish
Below 91000 opens 87500
Primary support is 85000
Primary objective is 100,000
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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!