Daily Market Outlook, November 22, 2023
Munnelly’s Market Commentary…
Asia - Stocks in the Asia-Pacific region had a mixed performance due to negative sentiment from Wall Street, where weak data and pre-Thanksgiving positioning affected the market. The latest FOMC minutes had little impact on prices, and geopolitical developments, such as North Korea's satellite launch and the agreement between Israel and Hamas, were also taken into consideration. The Nikkei 225 outperformed and recovered from initial losses despite the government's lowered view on the economy. The KOSPI was pressured by North Korea's satellite launch plans, while the Hang Seng and Shanghai Comp were cautious due to a lack of fresh macro drivers from China, but Baidu's post-earnings performance supported the Hong Kong benchmark.
Europe - All eyes in the UK will be on British Chancellor Jeremy Hunt who is set to unveil 110 measures aimed at bolstering the UK economy in his second autumn statement. In response to calls from concerned Tory MPs for tax cuts, the announcement is geared towards "turbo charging" growth. Initial steps will be taken to reduce personal taxes, with plans to extend tax breaks for business investment and reduce national insurance contributions. Further income tax reductions are anticipated in the spring, coinciding with a near-10% increase in the minimum wage for low-paid workers. The comprehensive measures reflect an effort to stimulate economic activity and address fiscal concerns within the political landscape.
The forecast for Eurozone (EZ) Consumer Confidence in November is -17.6, showing a slight improvement compared to the previous month's figure of -17.9. This forecast suggests a marginally more positive outlook among consumers in the Eurozone for the specified period, reflecting potential changes in economic sentiment or expectations. IN an otherwise quiet data slate focus will turn to comments from Centeno from the ECB/BOP who will present the Financial Stability, while Elderson from the ECB will give a speech in Berlin.
US - Stateside, Nvidia’s eagerly anticipated earnings report was released after the close on Wall Street last night. The company's Q3 earnings and Q4 forecasts exceeded expectations, but due to the high expectations already built into the stock, there was only a slight increase in share prices. The company acknowledged that sales to China would be significantly reduced due to US restrictions on technology transfers, but stated that growth in other regions would offset this. This caused a significant drop in stock prices, with the value sinking to under $475.00 at one point. Despite this, the company's market capitalization remained at $1.2 trillion. The high volume of orders caused the stock price to continue moving erratically even hours into the Asian trading day. As of the official close, the stock was down 1.7% at $499.44. Datawise the focus will be on US jobless claims released a day early due to Thanksgiving holidays, markets are looking for another modest uptick from last week's 220k to 223k today.
FX Positioning & Sentiment
The USD/CNH currency pair experienced a decline to 7.1325 from 7.1440 following the People's Bank of China (PBOC) fixing the USD/CNY lower. This movement once again poses a threat to breaking the 200-day moving average support, currently at 7.1313. The PBOC's fixing at 7.1254 was below the expected range of 7.1430-7.1480 and significantly lower than the previous fixing of 7.1406 and the Tuesday spot low of 7.1256. This indicates the PBOC's clear intention to strengthen the yuan while the USD weakens, potentially leading to speculation of an upcoming easing of China's monetary policy.
CFTC Data As Of 17-11-23
USD net long up as JPY sales trump EUR buys, in Nov 8-14 period, $IDX -1.42%
Specs broadly long feeling pain as USD slips in new period on lower Fed view
EUR$ 1.69%, specs +19,851 contracts now +108,907 on lower Fed rate view
$JPY +0.01%, specs -26,209 contracts, now -130,249 contracts; pair lower
GBP$ +1.63% in period, specs -11,478 contracts now -11,478 contracts
AUD$ (+1.11%), $CAD (-0.53%) saw specs sell into strength
BTC +0.27%, specs +333 contracts now -1,344; specs sell near BTC 2023 highs (RTRS)
FX Options Expiries For 10am New York Cut
(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0925 (EU1.56b), 1.0600 (EU1.32b), 1.0940 (EU1.17b)
USD/JPY: 147.75 ($1.17b), 149.10 ($671m), 151.50 ($651.2m)
USD/CNY: 7.2420 ($814.5m), 7.3000 ($795.9m), 7.2000 ($741.7m)
AUD/USD: 0.6320 (AUD1.1b), 0.6440 (AUD1.05b), 0.6437 (AUD621.4m)
USD/CAD: 1.3650 ($580m), 1.3750 ($446.5m)
USD/MXN: 17.25 ($1.33b), 16.80 ($500m), 18.25 ($486.1m)
GBP/USD: 1.2500 (GBP328.8m)
EUR/GBP: 0.8710 (EU629.9m), 0.8810 (EU500.6m), 0.8735 (EU457.7m)
USD/BRL: 5.0290 ($335.8m)
Overnight Newswire Updates of Note
Israeli Govt Approves Hostage Deal, Pause In Fighting With Hamas In Gaza
Japan Cuts View On Economy For First Time In 10 Months
China Govt Advisers Call For Steady Growth Target In 2024, More Stimulus
South Korea Approves Motion To Partially Suspend 2018 Military Accord
US Nuclear-Powered Sub Arrives In South Korea After Satellite Launch
Fed Minutes Show FOMC In Position To 'Proceed Carefully' On Future Hikes
ECB’s Lagarde Says Too Early To Declare Victory On Inflation
ECB's Schnabel Says Disinflation Process Is Projected To Slow
JPMorgan Expects BoE To Deliver Its First Rate Cut In Q4 2024
JGB Yields Bounce From Multi-Month Lows As BoJ Trims Bond Purchases
Nvidia Earnings Crush Wall Str Estimates Again, Company Tempers China Outlook
HP’s Stock Falls Despite Solid Results, Vow To Ship AI PCs In H2 2024
Disney Sees Higher Costs To Create Content After Hollywood Pay Raises
Judge Finds Evidence That Tesla, Musk Knew About Autopilot Defect
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Bullish Above Bearish Below 4525
Below 4519 opens 4485
Primary support 4420
Primary objective is 4580
20 Day VWAP bullish, 5 Day VWAP bullish
EURUSD Bias: Bullish Above Bearish Below 1.0830
Below 1.08 opens 1.0750
Primary support 1.0650
Primary objective is 1.10
20 Day VWAP bullish, 5 Day VWAP bullish
GBPUSD Bias: Bullish Above Bearish Below 1.2430
Below 1.24 opens 1.2350
Primary support is 1.2185
Primary objective 1.2570
20 Day VWAP bearish, 5 Day VWAP bullish
USDJPY Bias: Bullish Above Bearish Below 149
Above 149 opens 149.80
Primary resistance 147.30
Primary objective is 147
20 Day VWAP bearish, 5 Day VWAP bearish
AUDUSD Bias: Bullish Above Bearish Below .6520
Below .6500 opens .6420
Primary support .6330
Primary objective is .6620
20 Day VWAP bullish, 5 Day VWAP bullish
BTCUSD Bias: Bullish Above Bearish below 34000
Below 33600 opens 32400
Primary support is 30000
Primary objective is 37000
20 Day VWAP bullish, 5 Day VWAP bullish
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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!