Daily Market Outlook, June 18, 2024

Munnelly’s Macro Minute…

“French Political Turmoil Front And Center ”

On Tuesday, the Reserve Bank of Australia (RBA) decided to keep rates unchanged, citing persistent domestic price pressures. This is a common issue faced by central banks worldwide. The day was relatively quiet in Asia, with limited economic data in Europe. Attention now shifts back to political unrest in the region. However, futures indicate that markets may recover after last week's downturn.

Campaigning for France's snap parliamentary election began on Monday, with polls predicting a victory for the far-right National Rally over a left-wing alliance. President Emmanuel Macron's centrist group is currently trailing in third place. In the United States, all eyes are on May's retail sales figures and speeches from six Fed officials.

Stateside It is expected that retail sales in May will show a slight increase compared to April's disappointing results. However, overall consumer spending momentum is anticipated to slow down. Regarding the Fed's communication, policymakers are likely to echo Chair Jerome Powell's sentiments from last week, especially after the recent benign inflation report.

While many countries are considering loosening monetary policy, Japan's central bank governor Kazuo Ueda mentioned the possibility of raising interest rates next month depending on economic data. This underscores the commitment to gradually reduce extensive stimulus measures. Despite this news, the Japanese yen barely reacted and remained weak against the dollar on Tuesday. It seems that investors have tempered their expectations regarding the Bank of Japan, particularly after last week's policy decision, which did not meet the expectations of those anticipating an immediate reduction in bond purchases.

Overnight Newswire Updates of Note

Australia Holds Key Rate At 12-Year High On Inflation Worries
BoJ’s Ueda Keeps July Rate Hike Door Open Amid Skepticism
Mester Urges Fed To Explain Its Decisions, Policies More Clearly
Fed’s Harker: One Rate Cut In 2024 Is Appropriate Based On Outlook
EU Leaders Delay Top-Jobs Deal, Adding To Post-Election Turmoil
AUD/USD Defends 0.6600 After RBA's Status Quo, Bullock's Presser Eyed
Oil Holds Gain As Risk-On Sentiment Helps To Support Commodities
Citi Ramps Up US Stock Outlook, Joining Goldman And Evercore ISI

(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: 1.0670-75 (2.8BLN), 1.0700 (1.4BLN), 1.0725-30 (1.6BLN)
1.0750-60 (1.3BLN), 1.0775 (1BLN)
USD/CHF: 0.8850 (309M), 0.8915 (300M), 0.9000 (255M)
GBP/USD: 1.2675 (308M)
AUD/USD: 0.6585-0.6600 (1.3BLN), 0.6615 (319M), 0.6650 (453M), 0.6700 (837M)
NZD/USD: 0.6100 (377M)
USD/CAD: 1.3670-80 (550M), 1.3745-55 (793M), 1.3800 (519M)
USD/JPY: 156.50 (351M), 158.00 (488M)

CFTC Data As Of 14/06/24

Equity fund speculators increase S&P 500 CME net short position by 20,612 contracts to 352,937
Equity fund managers raise S&P 500 CME net long position by 13,149 contracts to 967,970
Euro net long position is 43,644 contracts
Japanese yen net short position is 138,579 contracts
British pound net long position is 52,121 contracts
Swiss franc posts net short position of -42,863
Bitcoin net short position is -1,138 contracts