Daily Market Outlook, July 16, 2024

Munnelly’s Macro Minute…

“Markets Mull Trump VP Candidate Pick Ahead Of Retail Sales Data”

Asian stocks declined, counterbalancing the gains in Wall Street, amid speculation about Donald Trump's potential running mate J.D Vance and the resulting new trade and geopolitical concerns. The MSCI AC Asia Pacific index experienced its third consecutive day of losses, dropping by 0.2%. Hong Kong witnessed the largest decline in stocks, while certain Chinese companies continued to fall due to investor anticipation of Trump's tariffs. On the other hand, Japan's stocks rose as exporters benefited from the weakening Yen.

Jerome Powell, the Chair of the Federal Reserve, made comments that were seen as leaning towards a more cautious approach, leading to expectations of an interest rate cut in September. The possibility of Donald Trump returning to the White House has influenced trading and is on the minds of investors. Powell's remarks, possibly his last before the Fed's policy meeting, indicated that recent inflation data may lead to the inflation rate reaching the Fed's target of 2%. This has caused a shift in market expectations, with traders now anticipating a significant easing of rates. The US dollar has been fluctuating in response to Powell's comments and speculation about the impact of a potential Trump presidency on inflation and interest rates. Trump's appearance at the Republican National Convention has further fueled expectations of his victory in the November election, leading to various market movements such as surging cryptocurrencies and gold approaching record highs. In Europe, futures suggest a quiet start to trading on Tuesday, with attention once again focused on developments involving Trump and Powell. Data wise the main macro driver today will be US retail sales, with nascent signs of the consumer pulling back markets will be attentive to any further dents in the data.

Overnight Newswire Updates of Note

Starmer’s Net Zero Plan Must Not Leave Heating Out In The Cold
US Executives Plans - First-Hand Insights From China Third Plenum
How Political Turmoil In France Could Affect Asia
Hungarian PM Orban: Donald Trump Will Demand Russia-Ukraine Peace Talks
Fed's Daly: Confidence Is Growing Wining Inflation Fight
Oil Prices Ease On Demand Concerns In China
Musk Sets Set A Year-End Deadline For Progress On 4680 Battery
Samsung Electronics To Use 4nm Foundry Process For HMB4
Total Energies - Enters Partnership With SSE To Create Joint Venture
Bitcoin Surges To Two-Week High As Trump’s Election Odds Improve
Ethereum ETFs Set To Launch On Tuesday

(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: 1.0845-55 (600M), 1.0875 (606M), 1.0900 (2.6BLN)
1.0905-10 (1.1BLN), 1.0920-25 (1.8BLN)
USD/CHF: 0.8900-15 (885M), 0.8950 (201M), 0.9000 (553M), 0.9030 (455M)
GBP/USD: 1.3000 (250M), 1.3090 (316M)
EUR/GBP: 0.8400 (830M), 0.8500 (1.6BLN)
EUR/SEK: 11.50 (763M)
AUD/USD: 0.6730-35 (432M), 0.6800-10 (803M), 0.6820 (200M)
AUD/NZD: 1.1050 (402M). NZD/USD: 0.6125 (293M)
USD/CAD: 1.3600 (1.1BLN) 1.3630 (560M), 1.3745 (386M), 1.3800 (2.2BLN)
USD/JPY: 158.00 (674M), 158.30 (794M), 159.00-10 (893M), 159.20 (882M)

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