Daily Market Outlook, June 08, 2023

Munnelly’s Market Commentary… 

Asian equity markets had a mostly subdued performance overnight, influenced by mixed signals from Wall Street. The technology sector underperformed as global yields rose following a surprising rate hike by the Bank of Canada. Following the unexpected move by the Reserve Bank of Australia earlier this week, the Bank of Canada surprised the markets with a 25bps rate hike, this development prompted investors to revise their expectations for the U.S. Federal Reserve's upcoming policy decisions and become concerned about the overall policy outlook. The general consensus suggests that the Federal Reserve will implement at least one more rate hike, however, the key question remains whether this will occur next week or in July. According to the CME FedWatch tool, the probability of a 25bps hike by the Fed next week stands at 36%, compared to 22% from the previous day. However, the Russell 2000 continued its recent rally, reflecting a rotation into small-cap stocks. 

The Nikkei 225 experienced choppy trading despite stronger-than-expected upward revisions to Q1 GDP. The index oscillated around the significant 32,000 milestone. Both the Hang Seng and Shanghai Composite exhibited lacklustre performance due to ongoing concerns about the economic growth of the world's second-largest economy. However, losses were limited after the four major banks reduced their deposit rates in response to government calls to support the economy.

Thursday is expected to see markets drifting with a scant data docket, the upcoming series of central bank meetings next week will remain a focal point for market participants. Revised data revealed that Japan's economy experienced stronger-than-initially-reported growth in the January-March period, leading to a strengthening of the yen. In the corporate sphere, GameStop announced the removal of its CEO and appointed Ryan Cohen, the billionaire investor who gained popularity among meme stock traders for his investment in the video retailer, as its executive chairman. CEO of Coinbase, Brian Armstrong, responded to the U.S. Securities and Exchange Commission Chair Gary Gensler regarding the agency's lawsuit against the cryptocurrency exchange. Armstrong referred to Gensler as an "outlier" and reassured customers that their funds were secure.

CFTC Data As Of 02-06-23

  • USD IMM net spec short pared in May 24-30 reporting period; $IDX +0.51%

  • EUR$ long -8,011 contracts to +165,725; EUR$ -0.35% in period

  • $JPY +0.88% in period, specs +15,533 contracts now -96,193

  • GBP$ -0.05% in period, specs +1,646 contracts now long 13,235

  • $CAD +0.74%, specs sell into USD rise +18,612 contracts short cut to 29,914

  • AUD$ largest loss in period -1.41%, specs buy 4,955 on dip now -44,126

  • BTC +2.04% in period, specs -706 contracts now long 187 (Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.0650 (1.3BLN), 1.0670-80 (560M), 1.0690-00 (3BLN)

  • 1.0740-50 (500M), 1.0800 (1.3BLN)

  • USD/JPY: 140.00 (3BLN), 141.00 (518M). EUR/JPY 151.25 (363M)

  • USD/CHF: 0.8890 (506M), 0.9025 (439M)

  • GBP/USD: 1.2475 (800M), 1.2550 (609M)

  • EUR/GBP: 0.8600 (260M), 0.8620 (300M)

  • AUD/USD: 0.6645-55 (759M), 0.6665-75 (361M), 0.6710-15 (584M)

  • USD/CAD: 1.3350 (746M), 1.3400 (1.1BLN)

Overnight News of Note

  • China’s State Banks Cut Deposit Rates To Bolster Economy

  • China Paper Sees Likely LPR Cut Following Bank Deposit Rate Drop

  • BoJ Watchers Push Back Calls For Policy Adj On Ueda’s Dovish Tone

  • Japan Economy Grows At Faster Pace As Businesses Spend More

  • Japan's Current Account In Black For Third Straight Month

  • Australia’s Trade Surplus Narrows As Iron Ore Exports Slide

  • UK Housing Market Improves But Slowdown Seen As Rates Rise

  • REC: Momentum In UK Labour Market Fades Further In May

  • Dollar Steady As Traders Consider Fed, Global Rates Outlook

  • Bonds Everywhere Are Suffering As Rate-Hike Fears Swamp Traders

  • Ray Dalio Says US At Beginning Of ‘Late, Big-Cycle Debt Crisis’

  • Oil Steady After Mixed Stockpile Data As Demand Concerns Linger

  • Asia Feels Upward Rates Pressure And Equities Decline

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4250

  • Below 4240 opens 4190

  • Primary support is 4160

  • Primary objective is 4384

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearsih Below 1.0750

  • Above 1.0765 opens 1.0840

  • Primary resistance is 1.0840

  • Primary objective is 1.0840

  • 20 Day VWAP bearish, 5 Day VWAP bearish

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2440

  • Below 1.23 opens 1.2234

  • Primary support  is 1.23

  • Primary objective 1.2680

  • 20 Day VWAP bearish, 5 Day VWAP bearish

USDJPY Bias: Bullish Above Bearish Below 139.60

  • Below 139.50 opens 138.90

  • Primary support  is 137.40

  • Primary objective is 141

  • 20 Day VWAP bullish, 5 Day VWAP bearish

AUDUSD Bias:Intraday Bullish Above Bearish Below .6580

  • Below .6490 opens .6450

  • Primary resistance  is .6680

  • Primary objective is .6450

  • 20 Day VWAP bearish, 5 Day VWAP bullish

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

  • Below 26000 opens 25000

  • Primary resistance  27500

  • Primary objective is 25000

  • 20 Day VWAP bearish, 5 Day VWAP bullish