Daily Market Outlook, September 23, 2024
Munnelly’s Macro Minute…
"China Stimulus Hope Supports Holiday Thinned Asian Action ”
Asian stocks rose amid expectations that China would implement additional stimulus measures to stimulate the world's second-largest economy subsequent to the commencement of the United States' easing cycle. China announced that it was preparing for a rare economic briefing by three senior financial regulators. This announcement coincided with the reduction of one of its short-term policy rates, which has fuelled speculation that new stimulus is imminent. Markets are anticipating the implementation of additional stimulus measures to revitalise the global economy and revive China's GDP. The bleak picture was further exacerbated by a slew of Chinese data on Friday. The MSCI Asia Pacific Index increased in response to the uptick in equities in South Korea, Hong Kong, and China. After BoJ Governor Ueda stated on Friday that officials were not in a rush to raise interest rates again, the Yen experienced a decline. Asia suspended cash trading in US Treasury bonds due to a holiday in Japan. The dollar index remained relatively unchanged as Australian bonds declined in anticipation of the central bank's anticipated extension of a policy halt on Tuesday. This is because housing costs are the primary driver of persistent inflation.
A comparatively low-key week for financial markets after last week's significant risk events, investors will focus on speeches by several U.S. Federal Reserve officials, rate decisions from the Reserve Bank of Australia, the Swiss National Bank and PMIs for major economies. A number of central bank officials are scheduled to deliver speeches as the dust settles on the Fed's 50 basis-point rate cut from last week. These speeches are expected to offer a comprehensive overview of the current sentiment within the Fed regarding inflation and policy expectations. Highlights include the speech of New York Fed President John Williams at a conference on Thursday, as well as the pre-recorded remarks of Chair Jerome Powell.
The S&P flash PMIs are the first item on the U.S. data schedule, which is then quite busy with consumer confidence, new home sales, weekly jobs, final Q2 GDP, durable goods, and the PCE Price Index, the Federal Reserve's preferred inflation gauge, on Friday. Additionally, sentiment and inflation expectations from the University of Michigan are due on Friday. It is widely anticipated that the Reserve Bank of Australia (RBA) will maintain its benchmark rate at 4.35% on Tuesday, while also reiterating its commitment to maintaining a higher rate for an extended period, in light of the persistent inflation and resilient labour market. The RBA releases its Financial Stability Review on Thursday, and the August CPI is published on Wednesday. It is anticipated that the SNB will decrease its critical policy rate from 1.25% on Thursday. Futures markets assume that a 25 bp reduction is imminent and assign a 44% probability of a 50 bp reduction as inflation decreases and growth declines. The sole significant data is the flash manufacturing PMI, services PPI, and Tokyo September CPI, as Japan is currently on holiday Monday. The policy decision that the Bank of Japan announced on Friday will take precedence over the meeting minutes for its historic rate hike on July 31. Ueda, the Governor of the Bank of Japan, will deliver a speech on Tuesday. The euro zone's schedule is relatively low-key, featuring the German Ifo business climate survey, sentiment indexes, consumer confidence, and flash September PMIs. Conversely, the United Kingdom also reports PMIs on Monday.
Overnight Newswire Updates of Note
Bitcoin Jumps, Japan Holiday Dulls Most Currencies
China Cuts Rates Amid Worsening Slowdowns
RBA Reforms In Limbo As Greens Demand Rate Cut
RBA Plans To Hold; Housing Crisis Props Up Prices
Australia Manufacturing PMI Weakens In September
NZ Exports, Imports Down, Trade Deficit Hit $2.2B
Commerzbank Warns Of UniCredit Merger Risks
Botched German Data Worsen Economic Outlook
German's SPD Leads Far-right AfD In German Election
HSBC: BoE Rates To Plunge To 2.75% Next Year
Labour’s £7B Pledge Pressure UK Infrastructure Bank
Toyota, VW Fall Further Behind In The Software Race
Chipmaker Qualcomm To Explore Intel Acquisition
Apollo Plans Multibillion-Dollar Investment In Intel
(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)
USD/JPY: 154.60 ($770m), 144.85 ($500m), 144.75 ($500m)
EUR/USD: 1.1150 (EU748.7m), 1.1350 (EU660.8m), 1.1025 (EU326.5m)
AUD/USD: 0.6780 (AUD755.8m), 0.6530 (AUD500m), 0.6830 (AUD465.6m)
USD/CAD: 1.3300 ($552m)
NZD/USD: 0.6300 (NZD1.15b), 0.5925 (NZD700m)
USD/CNY: 7.2100 ($519.4m), 7.5000 ($400m)
GBP/USD: 1.3000 (GBP542.3m), 1.2350 (GBP300m)
USD/MXN: 19.80 ($306m)
USD/KRW: 1400.00 ($550m), 1280.00 ($300m)
EUR/GBP: 0.8425 (EU527.9m)
CFTC Data As Of 20/9/24
Equity fund managers raise S&P 500 CME net long position by 36,522 contracts to 1,021,562
Equity fund speculators increase S&P 500 CME net short position by 108,938 contracts to 362,306
Speculators increase CBOT US 10-year Treasury futures net short position by 71,921 contracts to 1,094,026
Euro net long position is 69,646 contracts
Japanese yen net long position is 56,840 contracts
Swiss franc posts net short position of -17108 contracts
British pound net long position is 62,979 contracts
Bitcoin net short position is -973 contracts
Technical & Trade Views
SP500 Bullish Above Bearish Below 5670
Daily VWAP bullish
Weekly VWAP bullish
Below 5650 opens 5630
Primary support 5475
Primary objective is 5750
EURUSD Bullish Above Bearish Below 1.1140
Daily VWAP bullish
Weekly VWAP bullish
Above 1.12 opens 1.1240
Primary resistance 1.12
Primary objective 1.0950
GBPUSD Bullish Above Bearish Below 1.3230
Daily VWAP bullish
Weekly VWAP bullish
Below 1.32 opens 1.3140
Primary support is 1.2730
Primary objective 1.3390
USDJPY Bullish Above Bearish Below 141.50
Daily VWAP bullish
Weekly VWAP bearish
Above 144.50 opens 145.50
Primary resistance 144.50
Primary objective is 138.50
XAUUSD Bullish Above Bearish Below 2530
Daily VWAP bearish
Weekly VWAP bullish
Below 2500 opens 2460
Primary support 2430
Primary objective is 2598 - TARGET HIT, NEW PATTERN EMERGING
BTCUSD Bullish Above Bearish Below 60000
Daily VWAP bullish
Weekly VWAP bullish
Below 54000 opens 50000
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!