Daily Market Outlook, March 9, 2023
Powell Hawkishness Tapered, Choppy Action Ahead of Non Farm Payrolls
Asian markets followed Wall Streets indecisive lead, the US session ended marginally positive on the day, after choppy trading as Fed Chair Powell’s encore on Capitol Hill was deemed less decisive by investors, there appeared to be a tapering Tuesday’s distinctly hawkish messaging, Powell was keen to clarify that the FOMC had not yet made any decision with respect to the scale of rate hikes for the March 22nd meeting. Overnight data from China also weighed on risk appetite as softer CPI and PPI data was compounded by consumer prices registering weakest growth over the past twelve months. European bourses are opening on the back foot this morning as European investors mull yesterday’s testimony fro Powell, given his data reliance stance tomorrow’s Non Farm Payrolls data is likely to decide the week for markets another hot number will pile pressure onto pricing for a 50bps rate move in March, adding further weight to risk sentiment into the weekend, with equity investors likely paring risk exposure further, a cooler number tomorrow will likely drive a renewal in risk appetite and a recovery of the midweek Powell fuelled losses. With a scan data docket across the board today expect further consolidation ahead of tomorrow’s data.
Overnight Bank of Japan Governor Kuroda will issue his final rate decision as the Japanese central bank chief, market watchers expect him to leave rates unchanged and no major policy adjustment announcements ahead of the new Governor Ueda taking the helm in April, any deviation from this would certainly create volatility, it is noteworthy that FX option dealers have seen a jump in implied volatility overnight with the market now pricing the potential for a 230pip+ move, with overnight vol premium favouring JPY calls over puts, at six year highs, forewarned is forearmed!
FX Options Expiration New York Cut
EUR/USD: 1.1000 (EU1.82B), 1.0600 (EU1.74B), 1.0650 (EU1.57B)
USD/JPY: 137.00 ($1.38B), 136.50 ($1.05B), 130.00 ($939M)
AUD/USD: 0.6785 (AUD871.9M), 0.6900 (AUD840.3M), 0.7050 (AUD803M)
USD/CNY: 6.9000 ($1.33B), 6.4353 ($836M), 6.8400 ($306M)
USD/CAD: 1.3500 ($1.07B), 1.3875 ($605.4M), 1.3100 ($425M)
EUR/GBP: 0.8915 (EU737.9M), 0.8950 (EU683.8M), 0.9000 (EU623.6M)
GBP/USD: 1.2185 (£686.1M), 1.1950 (£523.3M), 1.0900 (£394.5M)
USD/KRW: 1330.00 ($349.6M), 1120.00 ($300M)
USD/BRL: 5.4060 ($403.5M), 5.4900 ($400.7M), 5.2600 ($395.4M)
Overnight News of Note
Asian Shares Stutter Amid Data Supporting Hawkish Powell
US futures Flat, Wall Street Weighs Likelihood Of Higher Rate Hikes
US Economy Got A Strong Start In 2023, Fed’s Beige Book Says
Eberly Emerges As Frontrunner To Be Biden Fed Vice Chair Pick
US, EU To Launch Free-Trade-Like Status Talks, Easing Dispute
Biden To Urge 25% Billionaire Tax, Big Levies On Rich Investors
China Consumer Inflation Slows As Demand Eases Post Holiday
Kuroda’s Last Meeting Has Markets Eyeing A Final BoJ Surprise
Japan Lower House Approve Ueda As Next Bank Of Japan Chief
Japan Economy Narrowly Avoids Recession In Fragile Recovery
UK Economy Seen Sputtering Below Pre-Pandemic Area To 2024
UK RICS House Prices Slide Further But Market Pessimism Falls
Gundlach Doesn’t Think Two-Year Treasury Yields Have Hit Peak
Silvergate Prepare To Wind Down Bank Operations And Liquidate
Yen Carry Trade Poised For Potential Comeback If BoJ Risks Abate
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4030
Primary support is 3885
Primary objective is 4384
Below 3880 opens 3835
20 Day VWAP bearish, 5 Day VWAP bearish
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EURUSD Bias: Intraday Bullish Above Bearish below 1.0610
Primary resistance is 1.0805
Primary objective is 1.0430
Above 1.0805 opens 1.0925
20 Day VWAP bearish, 5 Day VWAP bearish
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GBPUSD Bias: Intraday Bullish Above Bearish below 1.1915
Primary resistance is 1.2265
Primary objective 1.1785
Above 1.2265 opens 1.2337
20 Day VWAP bearish, 5 Day VWAP bearish
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USDJPY Bias: Intraday Bullish above Bearish Below 136.75
Primary support is 133.50
Primary objective is 138.99
Below 133.40 opens 132.80
20 Day VWAP bullish, 5 Day VWAP bullish
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AUDUSD Bias: Intraday Bullish Above Bearish below .6696
Primary resistance is .7030
Primary objective is .6541
Above .7050 opens .7150
20 Day VWAP bearish, 5 Day VWAP bearish
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BTCUSD Intraday Bias: Bullish Above Bearish below 22500
Primary support 2100
Primary objective is 26700
Below 20300 opens 19500
20 Day VWAP bearish, 5 Day VWAP bearish
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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!