Daily Market Outlook, October 14, 2024
Munnelly’s Macro Minute…
"Markets Mixed As China Stimulus Remains Plans Remain Long On Rhetoric Short On Detail”
Following the generally positive signals from Wall Street on Friday, Asian stock markets are trading mostly higher on Monday. Traders are reacting to the report showing producer prices in the United States were unexpectedly unchanged in September, so reinforcing optimism the US Fed will continue lowering interest rates in the next months, although hopes for another 50-basis point cut next month mostly evaporated. Following an upside surprise in the September CPI report, producer prices fell short of forecasts and supported a 25bps rate drop in November.
Beijing's weekend stimulus pledges elicited a mixed and turbulent response in Chinese markets on Monday, with investors offering no consensus on promises made over the weekend that were strong on purpose but short on details. Hong Kong equities started ceded early gains falling sharply, in contrast to mainland Chinese peers, which largely traded higher. The mixed performance seemed driven by a lack of a dollar amount for the package, which may have been more important to foreign investors than their Chinese counterparts. The broad actions, which ranged from assisting local governments with their financial issues to supporting the property market and replenishing state bank capital, demonstrated authorities' commitment to bolstering the struggling Chinese economy. However, the restricted scope of attempts to increase domestic demand remains a major concern for investors, especially after data released on Sunday revealed that China's consumer inflation unexpectedly fell in September while producer price deflation intensified. The mixed picture in Chinese markets on Monday set a dismal tone for Europe.
This week financial markets will be influenced by the European Central Bank's rate decision, Chinese trade, activity, and GDP statistics, and Federal Reserve comments this week.
After September's inflation fell below 2%, over 90% of experts expect the ECB to lower rates by 25 basis points to 3.25% on Thursday and again in December. Expectations will depend on the monetary policy statement and news conference tone. In the eurozone, September HICP, August trade and industrial production, and the German ZEW survey are notable.
Monday is Columbus Day in the US. September retail sales and industrial output, weekly jobless claims, and the Philly Fed Business Index are due Thursday, building permits and housing starts on Friday, and Federal Reserve officials will weigh in throughout the week.
Friday brings Chinese home prices, industrial output, retail sales, urban investment, unemployment figures, and Q3 GDP, which is expected to fall to 4.6% from 4.7% in Q2.
With Beijing's stimulus efforts projected to treble new yuan loans, credit figures may be released.
Overnight Newswire Updates of Note
China Tries To Reassure Investors Despite Lack Of Fresh Stimulus
China’s Deflation Pressure Builds, Inflation Cools
Goldman Sachs Raises 2024, 2025 China GDP Targets
Japan PM Ishiba: Won't Intervene In BoJ's Rate Policy
NZ Performance Of Services Index Shows Contraction
New Zealand Consumer Spending Fell Further In Q3
Bond Volatility Puts Traders On Alert, Fed Cut Doubts
ECB Set To Intensify Easing With Unforeseen Rate Cut
US Pension Fund Calpers Invests In UK’s Octopus Energy
NFU: UK Farmers Cut Food Output To Stay Viable
Autumn Budget Sparks Fears; National Insurance Hike
Boeing Managers Prepare For Details Of Cost Reduction
GAC Considers EV Production In Europe As Tariffs Loom
Taiwan Official: TSMC Plans More Chip Plants In Europe
Stellantis CEO: Tax Hikes in France Will Hurt Investment
BTC Eyes $63.5K, China’s Stimulus Fails To Attract Capital
(Sourced from reliable financial news outlets)
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FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0900 (393M), 1.0910-20 (690M), 1.0945-50 (1.6BLN)
USD/CHF: 0.8565 (300M), 0.8650 (353M)
EUR/GBP: 0.8375 (225M), 0.8460 (378M)
GBP/USD: 1.3025 (300M). EUR/SEK: 11.4200 (316M),
AUD/USD: 0.6680 (351M), 0.6700 (253M), 0.6730 (700M), 0.6750 (656M)
NZD/USD: 0.6075 (225M), 0.6150 (452M), 0.6200 (327M)
AUD/NZD: 1.1000 (350M), 1.1050 (250M)
USD/CAD: 1.3840 (850M)
USD/JPY: 149.00 (3.3BLN)
CFTC Data As Of 11/10/24
Japanese Yen net long position is 36,528 contracts
British Pound net long position is 93,135 contracts
Euro net long position is 39,098 contracts
Bitcoin net short position is -1,282 contracts
Swiss Franc posts net short position of -22,459 contracts
Equity fund speculators increase S&P 500 CME net short position by 26,533 contracts to 328,810
Equity fund managers cut S&P 500 CME net long position by 6,124 contracts to 1,041,583
Speculators trim CBOT US 10-year Treasury futures net short position by 183,760 contracts to 960,129
Technical & Trade Views
SP500 Bullish Above Bearish Below 5750
Daily VWAP bullish
Weekly VWAP bullish
Below 5720 opens 5660
Primary support 5575
Primary objective 5820
EURUSD Bullish Above Bearish Below 1.11
Daily VWAP bearish
Weekly VWAP bearish
Above 1.1030 opens 1.1120
Primary support 1.0850
Primary objective 1.0850
GBPUSD Bullish Above Bearish Below 1.3230
Daily VWAP bearish
Weekly VWAP bearish
Below 1.31 opens 1.29
Primary support is 1.29
Primary objective 1.29
USDJPY Bullish Above Bearish Below 144
Daily VWAP bullish
Weekly VWAP bullish
Below 141.50 opens 138
Primary resistance 152
Primary objective is 152
XAUUSD Bullish Above Bearish Below 2645
Daily VWAP bullish
Weekly VWAP bullish
Below 2600 opens 2550
Primary support 2550
Primary objective is 2720
BTCUSD Bullish Above Bearish Below 57000
Daily VWAP bullish
Weekly VWAP bullish
Below 57000 opens 52000
Primary support is 500000
Primary objective is 700000
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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!