Daily Market Outlook, June 19, 2023
Munnelly’s Market Commentary…
Asian equity markets traded in negative territory overnight as investors reacted to the losses on Wall Street from Friday. Market sentiment was also tempered as participants absorbed the outcome of US-China talks, and with US markets closed on Monday in observance of Juneteenth. The Nikkei 225 remained subdued and breached earlier support around the 33.5K handle. The Hang Seng and Shanghai Comp also declined as concerns over China's economic growth persisted, further exacerbated by downward revisions of Chinese GDP forecasts for 2023 by institutions such as Goldman Sachs, Nomura, and UBS. Additionally, market participants digested the meeting between US Secretary of State Blinken and Chinese Foreign Minister Qin in Beijing, described as candid, substantive, and constructive, although no significant breakthroughs were reported apart from agreeing to schedule a reciprocal visit at a suitable time.
Today’s data docket is relatively quiet in terms of major data releases, but several European Central Bank (ECB) policymakers are scheduled to deliver speeches. In last week's policy meeting, the ECB raised interest rates by 25 basis points to 3.5% for the deposit rate, marking the eighth consecutive increase in monetary policy meetings. President Lagarde emphasised that there is still progress to be made and clarified that, unlike the US Federal Reserve, the ECB is not taking a pause in its tightening measures. The latest economic forecasts from the ECB indicate higher underlying inflation pressures, primarily driven by a stronger employment market and wage pressures. This suggests a high likelihood of another rate hike at the next ECB meeting in July. However, there remains uncertainty about the extent to which rates may rise in the Eurozone. While both the Fed and the ECB depend on data for their decisions, market sentiment seems to lean towards more conviction in the ECB's tightening stance. Consequently, today's speeches by Simkus (09:00 BST), Lane (12:00), Schnabel (12:40), Villeroy (14:00), and de Guindos (19:00) will be closely monitored by market participants, seeking hints about the potential trajectory of euro interest rates based on individual rate-setting committee members' comments.
Stateside, there are no significant events or central bank speakers to note. However, the NAHB housebuilders survey for June will provide insights into the current impact of higher interest rates on sentiment within the housing market. The headline survey measure is expected to show a modest increase from 50 to 51, supported by a robust labour market and low inventory levels that continue to drive activity.
CFTC Data As Of 16-06-23
MM net spec USD short dipped in Jun 7-13 period, $IDX -0.75%
EUR$ +0.94% in period, specs -6,599 contracts now +151,822
$JPY +0.48% in period, specs +841 contracts now -103,976
GBP$ +1.54% in period, specs -5,749 contracts now +6,735
AUD$ +1.45%, specs -5,277 contracts now -61,745; $CAD -0.63% specs +1,661
BTC -4.1% in period specs -26 contracts now long 743 contracts
Positioning data pre-Fed, ECB, BoJ meetings, no surprises by c.banks
Post-meetings Fed pause weighed on USD vs EUR, GBP; JPY tumbles on ultra-soft BoJ guidance(Source: Reuters)
FX Options Expiries For 10am New York Cut
(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0725-35 (877M), 1.0770-75 (368M)
1.0825-30 (502M), 1.0840-50 (1.07BLN), 1.0900 (934M)
USD/JPY: 140.75 (339M),
AUD/USD: 0.6700 (275M), 0.6735-45 (371M)
NZD/USD: 0.6280 (379M)
USD/CAD: 1.3225 (200M), 1.3320-30 (437M)
Overnight News of Note
Blinken To Wrap Up Rare Visit To China, May Meet Xi Jinping
China State Council Mulls ‘Various Macroeconomic Policies’ To Boost Demand
Australia To Spend $1.4 Bln To Address Housing Affordability
Japan PM Kishida’s Support Slides, Clouding Election Prospects
'Russia Sees No Chance Of Extending Ukraine Grain Deal'
China Tech, Yuan Fall As Stimulus Hopes Unanswered
Ford Chairman Says US Can’t Yet Compete Against China With EVs
Boeing Poised To Hike 737 Output ‘Soon’ As Tail Glitch Fades
AstraZeneca Drafts Plan To Spin Off China Business Amid Tensions
Binance.US Reaches Agreement With SEC To Avoid Full Asset Freeze
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4395
Below 4370 opens 4340
Primary support is 4300
Primary objective is 4580
20 Day VWAP bullish, 5 Day VWAP bullish
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EURUSD Bias: Intraday Bullish Above Bearsih Below 1.09
Below 1.0880 opens 1.0830
Primary support is 1.0666
Primary objective is 1.0995
20 Day VWAP bullish, 5 Day VWAP bullish
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GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2750
Below 1.27 opens 1.26
Primary support is 1.2680
Primary objective 1.2880
20 Day VWAP bullish, 5 Day VWAP bullish
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USDJPY Bias: Bullish Above Bearish Below 141
Below 140.90 opens 140.30
Primary support is 139.50
Primary objective is 143.49
20 Day VWAP bullish, 5 Day VWAP bullish
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AUDUSD Bias:Intraday Bullish Above Bearish Below .6740
Below .6740 opens .6680
Primary support is .6660
Primary objective is .6917
20 Day VWAP bullish, 5 Day VWAP bullish
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BTCUSD Bias: Intraday Bullish Above Bearish below 26000
Above 26300 opens 26900
Primary resistance is 27160
Primary objective is 23300
20 Day VWAP bearish, 5 Day VWAP bullish
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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!