Daily Market Outlook, October 23, 2024 

Munnelly’s Macro Minute…

"US Yields Hit A Three Month Peak AS Markets Continue To Price A Trump Win ”

Following the conflicting signals from Wall Street overnight, Asian stock markets are mainly trading higher on Wednesday as traders react to the Biden administration's fresh drive for a Middle Eastern cease-fire. The markets are being weighed down by the recent increase in bond rates and declining hope on the direction of the interest rate. CME Group's FedWatch Tool shows an 89.6% possibility of a 25bps rate decrease next month, based on recent remarks made by US Fed officials implying the central bank intends to progressively lower rates. The Japanese stock market is experiencing a slight decline in volatile trading on Wednesday, continuing the losses from the previous two sessions, as a result of the mixed signals from Wall Street overnight. The Nikkei 225 is trading below the 38,300 level, with traders remaining cautious ahead of the upcoming general election this weekend. China and Hong Kong stocks rose on Wednesday, boosted by the prospect of government support for the economy, despite the uncertainty surrounding the extent and timing of stimulus measures.

The prospect of a Donald Trump presidency has been a focus for investors, with Trump's policies, including tariffs and restrictions on undocumented immigration, expected to increase inflation. This, in turn, has supported the dollar on expectations that U.S. rates may remain relatively high for a longer-than-anticipated period. Trump's odds of beating Vice President Kamala Harris, the Democratic candidate, have recently edged higher on betting websites, though opinion polls show the race to the White House remains too tight to call. With less than two weeks to go before the Nov. 5 election, investors are bracing for volatility in the markets. The yield on benchmark U.S. 10-year notes traded 4.234% in Asian hours, its highest in three months.

The Bank of Canada is expected to increase the pace of easing to 50bps on Wednesday, taking the target rate down from 4.25% to 3.75%. This decision is based on revised lower inflation forecasts, weaker growth assumptions, and the lagged effects of monetary policy, as well as global demand risks. The tight housing market is not likely to deter policymakers from easing, as downside price risks appear more prominent at this stage of the cycle.

Overnight Newswire Updates of Note

  • IMF Downgrades China Growth, Sees Global Inflation Fall

  • JPMorgan’s Zhu: China’s Stimulus Not A Game Changer

  • Xi Reaffirms China-Russia Ties At BRICS Summit

  • IMF Sees More BoJ Hikes, Confident On Inflation

  • Japan Voters Delay Nuclear Energy Debate Over Safety

  • ECB's Lagarde: Interest-rate Decline Pace Uncertain

  • Trump Accuses UK Labour Of Interfering In US Race

  • Takeda Cuts Jobs Amid Slow Growth In US, Japan

  • McDonald’s Falls 9.1% After CDC E.Coli Link

  • Starbucks Suspends 2025 Guidance Amid Sales Drop

  • Qualcomm, Alphabet AI; Mercedes Secures Chip Deal

  • Arm To Cancel Qualcomm License Amid Escalating Feud

  • L’oreal Misses Sales Targets Amid Beauty Slowdown

          (Sourced from reliable financial news outlets)

As the US elections draw near, the financial markets are bracing for potential volatility, presenting both opportunities and challenges for traders. To help navigate this crucial period, we have launched the US Elections - Traders Hub, a comprehensive resource tailored to meet the needs of traders at every level.

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.0780-85 (674M), 1.0800 (270M), 1.0820-25 (381M)

  • 1.0850-55 (3.5BLN), 1.0875 (224M), 1.0895-05 (2.1BLN)

  • 1.1000-05 (831M)

  • GBP/USD: 1.3000 (411M). EUR/GBP: 0.8340 (212M)

  • 0.8365 (290M)

  • USD/CHF: 0.8550 (488M). EUR/NOK: 11.7830 (239M), 11.80 (700M)

  • AUD/USD: 0.6580-90 (868M), 0.6630 (612M), 0.6655 (514M)

  • 0.6670-75 (1.61BLN), 0.6695 (240M)

  • NZD/USD: 0.6000 (482M), 0.6100-10 (638M)

  • USD/CAD: 1.3755-60 (848M), 1.3780-85 (394M), 1.3860 (279M)

  • 1.3875 (278M)

  • USD/JPY: 148.75 (500M), 149.00 (1BLN)

CFTC Data As Of 18/10/24

  • Euro net long position is 1750 contracts

  • Japanese Yen net long position is 34,110 contracts

  • Swiss Franc posts net short position of -26,161 contracts

  • British Pound net long position is 85,802 contracts

  • Bitcoin net short position is -1,872 contracts

  • Equity fund managers raise S&P 500 CME net long position by 8,773 contracts to 1,050,355

  • Equity Fund speculators trim S&P 500 CME net short position by 4,760 contracts to 324,051

  • Speculators trim CBOT US 10-year Treasury futures net short position by 95,064 contracts to 865,065

Technical & Trade Views

SP500 Bullish Above Bearish Below 5750

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 5720 opens 5660

  • Primary support 5660

  • Primary objective 5950

EURUSD Bullish Above Bearish Below 1.10

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Above 1.1030 opens 1.1120

  • Primary support 1.0750

  • Primary objective 1.0750

GBPUSD Bullish Above Bearish Below 1.32

  • Daily VWAP bullish

  • Weekly VWAP bearish

  • Below 1.31 opens 1.29

  • Primary support is 1.29

  • Primary objective 1.29

USDJPY Bullish Above Bearish Below 148

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 146.50 opens 144

  • Primary resistance 152 - TARGET HIT NEW PATTERN EMERGING

  • 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 2800

BTCUSD Bullish Above Bearish Below 63000

  • Daily VWAP bearish

  • Weekly VWAP bullish

  • Below 62000 opens 59000

  • Primary support is 50000

  • Primary objective is 70000