Daily Market Outlook, July 04, 2023

Munnelly’s Market Commentary… 

Wall Street saw slight gains in a range bound trading session ahead of the Independence Day holiday. The market remained cautious, and upside momentum was limited. Investors digested the weak US ISM Manufacturing PMI data as holiday-thinned trading conditions pinned the price action. Asian markets traded with mixed results, mostly range bound amid the subdued activity in the US markets. The ASX 200 initially showed caution ahead of the Reserve Bank of Australia (RBA) rate decision. Analysts saw the decision as a close call, but the central bank ultimately kept rates unchanged at 4.10%. This decision provided support to the ASX 200, which gained 0.4%.

The Nikkei 225 underperformed, slipping below the 33.5K handle. The decline was also influenced by a pullback in USDJPY from its recent peaks. Meanwhile, the Hang Seng and Shanghai Composite posted gains, albeit with limited upside due to trade frictions. China's announcement to ban exports of gallium and germanium-related products from August 1st, which are used in high-performance chips, added to the concerns. US Treasury Secretary Yellen had a productive discussion with China's ambassador, addressing areas of concern and emphasising the importance of collaboration between the two countries. Maintaining open lines of communication was a key topic of discussion.

With US markets offline today and a scant European data docket investors will start to focus on a combination of economic data and second-quarter earnings as they seek fresh trading cues. However, there is a level of uncertainty surrounding the policy path of the U.S. Federal Reserve. Wednesday’s release of the minutes from the Fed's last meeting could offer further insights into the central bank's policy direction. These minutes have the potential to introduce some volatility into the market as investors analyse the information and adjust expectations accordingly.The minutes precede Friday's non farm payrolls data which is expected to be the major macro catalyst of the holiday shortened week, according to a Reuters poll, the forecast for June's non-farm payrolls suggests a moderation to 225,000 from May's figure of 339,000. The unemployment rate is expected to remain steady at 3.7%. Average hourly earnings are projected to increase by 0.30% month-on-month, matching May's figure, and by 4.2% year-on-year, slightly lower than the 4.3% recorded in May.

CFTC Data As Of 30-06-23

  • USD IMM net spec short in the Jun 21-27 reporting period; $IDX -0.02%

  • EUR$ +0.38% in period, specs stayed on sidelines +379 contracts now +145,028

  • $JPY rose 1.91%, specs -5,214 contracts now -112,870 as BoJ remains steady

  • Recent test of 145, tipped intervention area may stir long profit-taking

  • GBP$ -0.1%, specs +5,386 contracts now +51,994 on rising UK rate view

  • BTC rose 8.86%, specs sold 2,491 contracts into strength, flip to -2,094

  • $CAD -0.31% in period, specs +30,696 contracts short pared to -2,847

  • AUD$ -1.49% in period, specs +10,192 contracts now -39,424

  • BoC, RBA had been considering further rate hikes amid persistent inflation

  • Inflation stalling has weakened CAD and AUD since Jun 21, may see recent longs lighten(Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.0750 (495M), 1.0760-65 (711M), 1.0785-90 (1.18BLN)

  • 1.0840-50 (225M)

  • USD/CHF: 0.8965 (200M)

  • GBP/USD: 1.2600 (242M), 1.2670 (299M)

  • AUD/USD: 0.6605-10 (456M)

Overnight News of Note

  • Reserve Bank Of Australia Leaves Official Cash Rate Steady At 4.1%

  • US Looks To Restrict China’s Access To Cloud Computing To Protect Adv Tech

  • China Hits Back With Export Curbs On Chipmaking Materials

  • Japan's Currency Diplomat: Tokyo In Constant FX Dialogue With US

  • NZ Firms Are Downbeat On Economy, Sales As Growth Slows

  • Oil Edges Higher After Saudi Arabia And Russia Curb Supplies

  • Rally In Global Shares Halted; Aussie Falls On RBA’s Pause

  • Meta Set To Release Twitter Competitor Soon Called Threads

  • Adobe’s $20 Billion Takeover Of Figma Faces EU Merger Review

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4412

  • Below 4400 opens 4370

  • Primary support is 4300

  • Primary objective is 4580

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Intraday Bullish Above Bearsih Below 1.0840

  • Below 1.0840 opens 1.08

  • Primary support is 1.0666

  • Primary objective is 1.1050

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2650

  • Below 1.26 opens 1.2550

  • Primary support  is 1.2680

  • Primary objective 1.2880

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bullish Above Bearish Below 143.50

  • Below 143 opens 142.30

  • Primary support  is 141

  • Primary objective is 145.50

  • 20 Day VWAP bullish, 5 Day VWAP bullish

AUDUSD Bias:Intraday Bullish Above Bearish Below .6660

  • Below .6600 opens .6550

  • Primary support  is .6448

  • Primary objective is .6917

  • 20 Day VWAP bearish, 5 Day VWAP bullish

BTCUSD Intraday Bullish Above Bearish below 30000

  • Below 29400 opens 28600

  • Primary support  is 28400

  • Primary objective is 32750

  • 20 Day VWAP bullish, 5 Day VWAP bullish