Daily Market Outlook, July 15, 2024

Munnelly’s Macro Minute…

“Trump Assassination Attempt See’s Bitcoin Bid”

.After an attempted assassination, investors became more confident in Donald Trump's chances of winning the US presidential election, leading to a rise in the Dollar and a decline in Treasury futures. The Mexican peso dropped, the dollar strengthened against other major currencies, and Bitcoin reached its highest level in nearly two weeks. Futures indicated expectations of higher Treasury rates as cash trading began in Europe. These actions reflect bets on the possibility of the Republican-led administration implementing stricter fiscal policies and increased tariffs upon re-election, which is generally expected to boost the Dollar and lower Treasury values. Stocks in Asia experienced declines, particularly Chinese stocks in Hong Kong, following data indicating a slowdown in the world's second-largest economy. However, Indian shares rose and S&P 500 contracts suggested a higher open for the US market.

This week, the financial markets will be influenced by the European Central Bank rate decision, China's leadership meeting, a busy data schedule including Chinese GDP and monthly activity data, as well as U.S. politics and speeches by Federal Reserve officials. The ECB decision is expected to be the major event, with little surprise anticipated as markets predict a 95% chance of a steady 3.75% policy rate. The focus will be on inflation control and the timing of the next rate cut. Additionally, U.S. data such as retail sales, industrial production, housing starts, and speeches by Fed officials will provide insight into the economy. China's upcoming once-in-five-year meeting will be closely watched for potential policy changes to support the economic recovery. Meanwhile, the People's Bank of China is likely to maintain its one-year medium-term lending facility rate at 2.50% before the release of key economic data. The UK, Japan, and Australia will also contribute to the week's economic outlook with their respective data releases.

Overnight Newswire Updates of Note

BoE's Dhingra: Rates Should Come Down Now
US Secret Service Faces Intense Scrutiny After Trump Shot
US 10yr Treasury Notes Trades Below Its 200-Day Moving Average
China's Economy Slowed In The Last Quarter As Weak Consumer Demand Dragged On Growth
China’s Communist Party Meets To Set Direction For Troubled Economy
Dollar Buoyed By Safe-Haven Gains, Sliding Yen On Intervention Watch
Dollar Up, Bond Futures Down On Trump-Win Bets
Oil Wavers With Dollar Strength In Focus After Trump Shooting
XAU Keeps The Red Above $2,400, Amid Fed Rate Cut Bets
TSMC Q2 Profit Seen Jumping 30% On Surging AI Chip Demand
Bitcoin Climbs To More Than One-Week High After Attack On Trump

(Sourced from Bloomberg, Reuters and other 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: 1.0850 (1.2BLN), 1.0870-75 (1BLN), 1.0895-1.0900 (6.2BLN)
1.0910-20 (2BLN) , 1.0920-30 (1.8BLN), 1.0950 (1.1BLN)
USD/CHF: 0.8920-25 (350M). EUR/CHF: 0.9660 (600M) , 0.9700 (346M),
GBP/USD: 1.2970 (377M). EUR/GBP: 0.8400 (706M), 0.8445-60 (2.1BLN)
EUR/NOK: 11.6350 (1.1BLN). AUD/USD: 0.6750 (1BLN)
NZD/USD: 0.6095-0.6100 (301M), 0.6120 (201M)
USD/CAD: 1.3620-30 (654M), 1.3740-50 (840M)
USD/JPY: 157.75 (584M), 158.00 (1.2BLN)
AUD/JPY: 106.00 (250M), 106.25 (500M), 107.50 (600M)

CFTC Data As Of 9/7/24

Japanese yen net short position is -182,033 contracts
Euro net long position is 3,623 contracts
British pound net long position is 84,690 contracts
Swiss franc posts net short position of -46,088 contracts
Bitcoin net short position is -118 contracts
Equity fund speculators increase S&P 500 CME net short position by 47,949 contracts to 341,624
Equity fund managers raise S&P 500 CME net long position by 24,304 contracts to 977,432