Daily Market Outlook, October 25, 2024 

Munnelly’s Macro Minute…

"US Yields Off Highs As Dollar Rally Stalls Ahead Of A Big Week For Earnings ”

As the week comes to an end, yields are thankfully lower, relieving some of the tension that has been plaguing stocks and enabling the battered yen and euro to restore some stability in relation to the dollar. However, with risk events swirling over the horizon next week—including mega-cap results from five of the "Magnificent 7"; a highly crucial U.S. payrolls data on Friday; and the final lap leading up to a potential photo-finish U.S. presidential election on November 5—this relative quiet feels like the eye of the storm. Despite polls showing a close race, the "Trump trade" has gained traction as the odds of Donald Trump winning a second term as president have increased significantly on several betting sites. As a result of Trump's platform of higher tariffs and taxes, which many in the market view as inflationary, the dollar is expected to gain for a fourth week and Treasury rates are expected to rise for a sixth week. Bets on Fed easing have quickly decreased in response to a wave of strong U.S. economic data, which is also helping to boost the currency and rates. Although stocks are taking a brief break to end the week, a recovery is still a long way off. The majority of Wall Street's modest overnight gains were driven by optimism over Tesla's earnings, and the Dow actually declined. Now, investors are anticipating Alphabet, Amazon, Apple, Meta, and Microsoft's three-day profits from Tuesday.

Amid a currency recovery and concerns over a general election on Sunday that would deny the coalition government its lower house majority, Asian stocks are mixed, with Japan's Nikkei falling 0.5%. The MSCI World Equity Index continues to stutter towards a weekly loss of 1.2%, which would end a two-week winning run.

October survey data shows a divide between British and European activity, with UK manufacturing and services indices remaining in expansionary territory, while the Eurozone manufacturing sector shrank for the 28th consecutive month. Demand was sufficient for UK businesses to continue to raise output prices, while input costs declined. In contrast, the Eurozone saw a decline in new orders, leading to increased spare capacity and job cuts, with services also under pressure.

Overnight Newswire Updates of Note

  • BoE’s Bailey: Clearing Houses Could Pose Risks

  • ECB Hints At Accelerated Neutral Rate Approach

  • Germany’s Ifo Business Morale Expected To Rise

  • China Holds 1Y MLF Rate After Record Cut

  • Chinese Banks Face Liquidity Pressure, Funding Costs Surge

  • China Stimulus Shapes Banks; HSBC Focuses On Overhaul

  • BoJ Urges Banks To Watch Market Risks

  • Japan’s Kato, Yellen Discuss FX As Warnings Rise

  • Australia’s Treasurer Sees Economy On Soft Landing Path

  • Capital One Tops Profit Estimates On Loan Growth

          (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: 1.0700 (340M), 1.0750 (763M), 1.0800-10 (1.9BLN)

  • 1.0820-30 (1.5BLN), 1.0845-50 (437M), 1.0875-85 (1.2BLN)

  • USD/CHF: 0.8650 (220M). EUR/CHF: 0.9375-85 (421M)

  • 0.9525 (717M). GBP/USD: 1.2775 (510M), 1.2850 (300M)

  • 1.2895-00 (290M), 1.2950 (230M), 1.2975 (400M)

  • EUR/NOK: 11.75 (696M), 11.90 (849M), 11.9300 (394M)

  • AUD/USD: 0.6555-65 (681M), 0.6650-55 (956M)

  • 0.6700 (320M), 0.6740 (330M)

  • NZD/USD: 5850 (400M). AUD/NZD: 1.1100 (396M)

  • USD/CAD: 1.3725 (324M), 1.3775-85 (577M)

  • 1.3795-05 (890M)

  • USDJPY: 149.18 (496M), 150.00 (831M)

  • 150.60-65 (750M), 151.00 (376M), 151.60 (302M)

  • 151.95-00 (565M). EUR/JPY: 164.60 (366M)

  • USD/ZAR: 17.80 (401M)

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 bearish

  • Weekly VWAP bullish

  • Below 5720 opens 5660

  • Primary support 5660

  • Primary objective 5950

EURUSD Bullish Above Bearish Below 1.0950

  • 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 1.31

  • Daily VWAP bullish

  • Weekly VWAP bearish

  • Below 1.31 opens 1.29

  • Primary support is 1.29

  • Primary objective 1.29 - TARGET HIT NEW PATTERN EMERGING

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 2680

  • 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