Daily Market Outlook, September 17, 2024
Munnelly’s Macro Minute…
"US Retail Sales: The Final Input Ahead Of The Fed Decision”
On Tuesday, Asian equities were mixed in thin trade, as markets in mainland China and South Korea were closed for public holidays. In Asian trading, the dollar was held down by rate cut bets, and gold was marginally higher. Oil extended overnight gains as a result of concerns regarding Hurricane Francine's influence on U.S. Gulf of Mexico output. The Hang Seng index of Hong Kong experienced a rise of more than 1%. The dollar's value against the yen was at its lowest in over a year, as tech equities followed their U.S. counterparts lower and Japan's Nikkei average declined by 1.5%. This decline was exacerbated by a decrease in U.S. Treasury yields.
The yen experienced a 38-year low against the dollar in early July; however, it has since gained over 12% as the difference between two-year U.S. and Japanese rates has decreased by approximately 130 basis points over the course of 11 weeks. A dovish Fed or a hawkish BOJ could provide a push that propels it past 140, which would pave the way for an assault on the yen peak of 127.215 per dollar from last January. Subsequent gains are probable. Additionally, it would force the yen to surpass the high end of corporate expectations for exchange rates this fiscal year, thereby converting them into purchasers and bolstering the already robust momentum.
Datawise, the German ZEW survey, which is scheduled to be released this morning, is anticipated to indicate a modest decline in sentiment this month. Later today, the U.S. Federal Reserve will commence a two-day policy meeting. Investors are progressively anticipating a half-point reduction in interest rates. The CME FedWatch Tool indicates that Fed funds futures traders are presently pricing in a 62% probability of a 50 basis-point cut and a 38% probability of a 25 basis-point cut. The U.S. retail sales data for August, which is due out later in the day, might have an impact on the Fed's interest-rate decision. It is expected that retail sales will experience tailwinds from back-to-school spending. Stateside, with market watchers expecting an above-consensus print (+0.2%), this would underpin the Goldilocks economic scenario. Downside risks to the data may come from increased concerns among consumers given weaker labor market data, which may translate to reduced spending, with a miss on consensus likely to up the ante on a 50 basis point cut.
Overnight Newswire Updates of Note
ZEW German Investor Outlook Faces Potential Third Drop
FM Suzuki: Japan To Analyse Impact Of Stronger Yen
Polls Show Japan Leadership Race A Three-Way Tussle
Asia Shares Fall, Yields Squashed On Fed Cut Bets
US & Japan Near Deal To Curb Chip Exports To China
Fed's SOFR Prices In 60% Chance Of 50bps Rate Cut
Intel, AWS Collaboration For US Chip Manufacturing
EU Urged To Address Air-Defence Gaps With Joint Debt
EU Plans To Raise €40B In Loans For Ukraine Without US
Blinken To Make 10th Trip To Middle East, Ceasefire
(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: 1.0970-80 (2.52BLN), 1.1025-30 (3.6BLN)
1.1050-60 (1.41BLN), 1.1095-00 (1.26BLN), 1.110 (379M)
1.1115-25 (2.14BLN), 1.1130-40 (1.06BLN)
1.1175-85 (1.38BLN, 1.1195-00 (903M)
USD/CHF: 0.8400 (275M), 0.8630 (800M)
EUR/GBP: 0.8400 (771M), 0.8440 (400M), 0.8500 (351M)
GBP/USD: 1.2990-1.3000 (722M), 1.3090-00 (884M)
1.3180 (273M), 1.3220 (378M)
AUD/USD: 0.6575 (815M), 0.6630-40 (1.83BLN)
NZD/USD: 0.6005 (1.1BLN), 0.6100-05 (442M), 0.6355 (434M)
USD/CAD: 1.3550 (446M), 1.3650 (1.9BLN)
USD/JPY: 140.00 (346M), 140.43-50 (576M)
140.70-72 (300M), 140.85 (1.23BLN), 141.00 (560M)
141.25 (300M), 142.00 (295M), 143.00 (355M)
USD/ZAR: 17.30 (200M), 17.50 (200M)
CFTC Data As Of 13/9/24
Euro net long position is 81,433 contracts
Japanese Yen net long position is 55,770 contracts
Swiss Franc posts net short position of -21,304 contracts
British Pound net long position is 90,288 contracts
Equity fund managers cut S&P 500 CME net long position by 6,179 contracts to 985,040
Equity fund speculators trim S&P 500 CME net short position by 18,194 contracts to 253,368
Speculators increase CBOT US 10-year Treasury futures net short position by 19,278 contracts to 1,022,105
Technical & Trade Views
SP500 Bullish Above Bearish Below 5565
Daily VWAP bullish
Weekly VWAP bullish
Below 5550 opens 5500
Primary support 5475
Primary objective is 5700
EURUSD Bullish Above Bearish Below 1.1140
Daily VWAP bullish
Weekly VWAP bearish
Below 1.09 opens 1.0850
Primary resistance 1.1150
Primary objective 1.0950
GBPUSD Bullish Above Bearish Below 1.3190
Daily VWAP bullish
Weekly VWAP bullish
Below 1.3050 opens 1.2960
Primary support is 1.2730
Primary objective 1.3390
USDJPY Bullish Above Bearish Below 141
Daily VWAP bearish
Weekly VWAP bearish
Above 141 opens 143.70
Primary resistance e143.70
Primary objective is 138.50
XAUUSD Bullish Above Bearish Below 2530
Daily VWAP bullish
Weekly VWAP bullish
Below 2500 opens 2460
Primary support 2430
Primary objective is 2598
BTCUSD Bullish Above Bearish Below 58000
Daily VWAP bullish
Weekly VWAP bearish
Below 54000 opens 50000
Primary support is 50000
Primary objective is 70000
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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!