Daily Market Outlook, June 13, 2023

Munnelly’s Market Commentary… 

Asian equity markets traded mostly higher, taking cues from the gains on Wall Street. The S&P 500 and Nasdaq 100 reached their highest levels in a year, supported by the strong performance of big tech companies. Yields softened ahead of upcoming risk events, contributing to the positive sentiment. Additionally, investors digested the news of the People's Bank of China (PBoC) cutting its 7-day reverse repo rate. The Nikkei 225 outperformed, surging by 1.9% and surpassing the 33k handle for the first time in over three decades. This impressive performance was driven by strength in the automaker sector, as well as positive news surrounding SoftBank. It was announced that Intel (INTC) would discuss becoming an anchor investor in the Arm IPO, which boosted investor confidence. The Hang Seng and Shanghai Composite indices showed mixed results. Initially subdued, despite the PBoC's cut to its short-term interbank funding rate, both indices experienced limited movement. The prospects of a cut to the MLF rate and benchmark LPR raised cautious optimism, but ongoing growth concerns and tensions resulting from the US adding 43 entities to its export control list dampened overall sentiment.

In the UK, Megan Greene, the newly appointed member of the Monetary Policy Committee (MPC), is scheduled to appear before the Treasury Select Committee for a hearing this morning. She will be replacing Tenreyro, who is known for being the most dovish member of the MPC. In a separate event, Bank of England Governor Bailey is set to appear before a House of Lords committee to discuss central bank independence, while Dhingra, another dovish MPC member, will deliver a speech later in the day.

In Europe, the German ZEW survey results, which are due this morning, are expected to show a fourth consecutive decline in the expectations index. Nevertheless, this is unlikely to dissuade the European Central Bank (ECB) from proceeding with a rate hike on Thursday.

This afternoon, the US May Consumer Price Index (CPI) inflation data is expected to indicate a decline, with a forecasted decrease from 4.9% to 4.2%, while the core rate (excluding food and energy) is predicted to fall from 5.5% to 5.3%. The Federal Reserve will commence its two-day policy meeting today and it is anticipated that they will pause after a series of interest rate hikes in the past ten meetings. However, they are expected to keep the possibility of further tightening on the table for future meetings.

CFTC Data As Of 05-06-23

  • USD net spec short in May 31-Jun 5 period, $IDX +0.08% in period

  • Rates key driver of CCY moves, marts on edge ahead of Fed, ECB next wk

  • EUR$ -0.36% in period specs -7,304 contracts long cut to 158,421 contracts

  • $JPY -0.1% in period large short grew by 8,624 contracts, spec -104,817

  • GBP$ +0.09%, specs -751 contracts long 12,484; GBP eyes 23 highs abv 1.26

  • AUD$ +2.39% in period on hawkish RBA, specs -12,342 into rise now -56,468

  • $CAD -1.45%, CAD bid on exp'd BoC hike; specs -8,415 now short 38,329 contract

  • BTC -2.96% in period, specs buy 582 contracts on dip now long 769 (Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.0700 (600M), 1.0735 (602M), 1.0750-60 (1.2BN), 1.0775-85 (920M),

  • 1.0785-1.0800 (1.3BN)

  • GBP/USD: 1.2500 (400M)

  • EUR/GBP: 0.8605 (655M)

  • NZD/USD: 0.6210 (357M)

  • USD/CAD: 1.3255 (500M), 1.3330 (690M)

  • USD/JPY: 139.50-60 (636M)

  • AUD/USD: 0.6870 (655M)

Overnight News of Note

  • China Central Bank Cuts Reverse Repo Rate By 10 Basis Points

  • US Inflation Set To Have Cooled To Lowest Level Since Early 2021

  • Australia’s Consumer Sentiment ‘Near Recession Lows’ After Hike

  • Australia Business Sentiment Falters, Reinforcing Downside Risks

  • NAB Raises Forecast RBA Peak Rate To 4.6% From 4.35%

  • Japan Eyes Delaying Defence Tax Hike To 2025 Or Later - Nikkei

  • Dollar Dips Ahead Of Us Inflation Data, Central Bank Meetings

  • Citigroup Warns Bond Traders Are Misreading Inflation Ahead Of CPI

  • Binance's Exchange Flow Flips Positive; Bitcoin Trades Flat

  • Oil Holds Near Three-Month Low As Demand Concerns Reverberate

  • Asia Shares Track Wall Street Rally With Inflation Data, Fed In Focus

  • Demand Grows For Asian Investment Products That Exclude China

  • Oracles Beats Sales Estimates as AI-Frenzy Boosts Cloud Demand

  • Intel Is Said To Discuss Being An Anchor Investor In Arm IPO

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4300

  • Below 4260 opens 4220

  • 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 support is 1.0666

  • Primary objective is 1.0840

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.25

  • Below 1.2490 opens 1.2440

  • Primary support  is 1.2430

  • Primary objective 1.2680

  • 20 Day VWAP bullish, 5 Day VWAP bullish

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 .6660

  • Below .6650 opens .6610

  • Primary support  is .6600

  • Primary objective is .6818

  • 20 Day VWAP bullish, 5 Day VWAP bullish

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

  • Below 2500 opens 24200

  • Primary support is  25300

  • Primary objective is 27500

  • 20 Day VWAP bearish, 5 Day VWAP bullish