Daily Market Outlook, October 28, 2024
Munnelly’s Macro Minute…
"Geopolitical & Macroeconomic Headline Risk Abounds In A Busy Week For Investors”
The results of Japan's Lower House elections have led to a significant defeat for the Liberal Democrat-Komeito coalition. This is likely to contribute to ongoing volatility in the USDJPY exchange rate as political uncertainty in Japan is compounded by other macro risks, the benchmark Nikkei225 is trading sharply higher, gaining 1.8%. Mainland China stocks recovered from initial declines in early trading on Monday, while Hong Kong stocks also flipped from red to green as investors await potential outcomes of pivotal meetings at home and the U.S. presidential election next week. China's blue-chip index advanced 0.15%, while the Hong Kong benchmark Hang Seng also posted modest gains of 0.15%. China's top legislative body will meet from Nov. 4-8, with no mention on the agenda of highly anticipated debt and other fiscal measures. Earlier, China's central bank announced it had activated its open market outright reverse repo operations facility and would use it to trade with primary dealers in open market operations on a monthly basis. Republican former President Donald Trump and Democratic Vice President Kamala Harris are in a tight race in key swing states ahead of the November 5 election. Investors are concerned about a disputed outcome disrupting global markets and triggering renewed geopolitical uncertainty.
With important events like the Bank of Japan's policy meeting, the October jobs report from the United States, the UK budget, and the aftermath of the Japanese election, this week will be busy. Governor Ueda continues to indicate a cautious stance to further tightening, and the Bank of Japan is anticipated to keep its policy rate at 0.25%. Japan will publish a range of economic data, such as retail sales, industrial production, consumer confidence, and unemployment. Stateside Investors will have access to a broad set of economic data, such as consumer confidence, ADP jobs, advance Q3 GDP, the September PCE price index, JOLTS job openings, ISM manufacturing PMI, and the monthly jobs report, even though the U.S. Federal Reserve enters a blackout period prior to its policy meeting on November 6-7. A major event for rates, investors, and sterling is expected to be Wednesday's release of the UK's first budget under the new Labour government. China will announce its official and Caixin manufacturing PMIs, in the latter part of the week, while the euro zone will release flash Q3 GDP, sentiment indices, final October consumer confidence, and flash HICP.
Additionally, 41% of S&P market cap is scheduled to report next week, which is the busiest week of the 3Q earnings season. Some of the key highlights include:
Tuesday - AMD, GOOGL
Wednesday - META, MSFT
Thursday - AAPL, AMZN
Overnight Newswire Updates of Note
IMF Cuts Global Growth, Sees Weak Yen For Japan ECN Boost
Yen Weakens, Japan Stocks Advance, LDP Election Blow
China Launches New Lending Tool Ahead FY24 Loan Expiry
Top Chinese Official: Stimulus Aims To Boost Consumption
China's Sept Industrial Profits Post Steepest Fall Of The Year
Popular Aussie-Kiwi Cross To Test Year’s High On Policy Outlook
Growth, Storm Impacted Jobs Data Set Table For Fed Meeting
Bond Market Faces Key 10-Day Test Amid Selloff
Gold Falls; US Economic Data in Focus
Israel’s Limited Attack On Iran May Help Spur Regional Deal
Oil Slumps 5% As Israel Limits Iran Strike To Military Targets
ECB’s Knot: Europe Must Tighten Finances, Stay Rate-Nimble
BoE’s Bailey: Pursues Digital Currency To Address Banking Gaps
UK Chancellor Historic Budget Ahead; Rules Out New Freeports
UK Banks Face Billions In New Payouts After Auto Loan Ruling
Boeing To Plan Over $15B Capital Raise As Soon As Monday
(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)
USD/JPY: 132.00 ($1.01b), 151.00 ($460m), 143.15 ($455m)
EUR/USD: 1.0900 (EU863.5m), 1.1100 (EU613.2m), 1.0750 (EU484.4m)
USD/CNY: 7.6000 ($347.4m)
USD/CAD: 1.3855 ($1.39b), 1.3850 ($909.6m), 1.3640 ($590.8m)
AUD/USD: 0.6660 (AUD944m), 0.6700 (AUD623.4m), 0.6550 (AUD450m)
EUR/GBP: 0.8500 (EU500m), 0.8800 (EU444.9m)
USD/MXN: 19.55 ($315.6m)
CFTC Data As Of 25/10/24
EUR net speculative long position disappears, now short 28,524 contracts, down from long 17,150 the previous week.
JPY long position drops to 12,771 contracts from 34,110.
GBP long position cut to 74,576 contracts from 85,802.
AUD long position increases to 27,679 contracts from 19,269.
CAD short position grows to 140,631 contracts from 122,393.
Speculators trim CBOT US 10-year Treasury futures net short position by 16,874 contracts to 848,191
Equity fund managers raise S&P 500 CME net long position by 15470 contracts to 1,065,824
Equity fund speculators trim S&P 500 CME net short position by 19,439 contracts to 304,612
Technical & Trade Views
SP500 Bullish Above Bearish Below 5775
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 1.29 opens 1.27
Primary support is 1.29
Primary objective 1.31
USDJPY Bullish Above Bearish Below 148
Daily VWAP bullish
Weekly VWAP bullish
Below 148 opens 144
Primary support 148
Primary objective is 156
XAUUSD Bullish Above Bearish Below 2680
Daily VWAP bullish
Weekly VWAP bullish
Below 2670 opens 2600
Primary support 2550
Primary objective is 2800
BTCUSD Bullish Above Bearish Below 64000
Daily VWAP bearish
Weekly VWAP bullish
Below 62000 opens 59000
Primary support is 50000
Primary objective is 70000
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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!