Daily Market Outlook - Thursday, May 25

Asian equities were mainly lower overnight as caution prevailed in the region following Wall Street's losses. The market sentiment was influenced by concerns over the US debt ceiling and the release of the Federal Open Market Committee (FOMC) Minutes, which revealed a division among officials regarding support for further interest rate hikes. The credit rating agency Fitch said that it has put the US’s credit rating on watch as concerns mount regarding the US debt ceiling. However, US index futures received a boost in after-hours trading as NVIDIA shares surged by approximately 25% following their earnings announcement, bringing the company closer to the trillion-dollar market cap club. The Nikkei 225 index managed to stay afloat, posting a modest 0.3% gain, but lacked significant positive drivers or notable data release catalysts. The Hang Seng and Shanghai Composite also recorded modest declines; both markets were affected by ongoing tensions between the United States and China.

Data released this morning has just confirmed that the largest economy in the Eurozone has entered a technical recession, German GDP was revised to -0.2% for the first quarter confirming a second quarter of negative growth for the region. The remainder of the European data slate is scant, in the UK one notable release in May is the Confederation of British Industry's (CBI) retail survey, which provides an unofficial measure of retail activity. This survey is released a day before the official reading for April. The consumer outlook remains uncertain, but there have been preliminary indications of stabilisation in early 2023. In March, retail sales experienced a decline, although the preceding two months had seen gains. The CBI measure of retail activity has shown improvement after a weak performance in January. Additionally, GFK's consumer confidence measure has been gradually increasing for four consecutive months. Jonathan Haskel (Hawkish), an external member of the Bank of England's (BoE) Monetary Policy Committee, is slated to deliver a speech on international inflation developments at an event in Washington. His speech is expected to focus on the global landscape of inflation, examining trends and developments in different countries and regions. 

Stateside, Q1 GDP is a second estimate and it is not anticipated to have significant revisions from the initial release. The first release indicated that the economy was still growing, albeit at a slower pace compared to the fourth quarter of 2022. Weekly initial jobless claims will be on watch, while there was a decline in jobless claims last week, it is worth noting that these claims have shown an overall uptick in recent releases. Investors will parse comments from Fed's Barkin, who is a non-voting member, speaking in Virginia. Fed's Collins, another non-voting member of the Federal Reserve with a neutral stance, is scheduled to speak at the Rhode Island Community College.


FX Options Expiries For 10am New York Cut 

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

  • EUR/USD: 1.0765 (1BLN), 1.0790-1.0800 (440M), 1.0830-40 (737M)

  • USD/CHF: 0.8950 (680M), 0.9030 (465M) , 0.9105 (350M), 0.9125 (252M)

  • GBP/USD: 1.2300 (380M), 1.2400 (270M), 1.2420-25 (202M)

  • EUR/GBP: 0.8700 (219M) . AUD/NZD: 1.0500 (400M) , 1.0750 (214M)

  • USD/CAD: 1.3600 (814M)

  • USD/JPY: 138.10 (838M) , 138.50-55 (660M), 139.00 (258M), 139.50 (850M)


CFTC Data As Of 12/05/2023

  • IMM net USD short grew in May 10-16 period, specs sell into 0.8% $IDX rise

  • EUR$ fell 0.93% in period, specs bottom-fish +7,667 contracts now +187,089

  • EUR position remains elephant in room, for now holds w/in 1.07-1.11 range

  • A break out of EUR/USD's 1.07-1.11 range may see protracted move

  • $JPY rose 0.88% in period , spec -3,776 contracts short grows to -64,791

  • GBP$ -1.05% in period, specs buy weakness +8,065 contract now +12,593

  • AUD$ -1.66% in period. Specs -4,401 contracts now short 53,594

  • BTC -2.88% in period, specs buy dip add 588 contracts now long 1,011(Source RTRS)


Overnight News of Note

  • Fitch Places United States' 'AAA' On Rating Watch Negative

  • White House: Fitch Report More Evidence Default Not Option

  • Fed Officials Were Divided Over June Rate Pause - Minutes

  • Fed Bostic: Best Case Is Fed Won’t Mull Rate Cut Till Well Into 2024

  • ECB Must Still Raise Interest-Rates More, Vasle Tells Delo

  • Bank Of Korea Holds Rate Third Time In Row As Growth Risks Mount

  • Traders Ramp Up Bets On Japan Inflation To Highest This Year

  • RBNZ Governor Orr Says Confident In Restrictiveness Of Interest Rates

  • Dollar Ascendant Amid Resilient US Economy, Haven Demand

  • Trader Bets On June Fed Rate Hike Mount Despite Debt-Limit Paralysis

  • Oil Prices Fall On US Debt Uncertainty, Gold Listless Thursday

  • Asian Stocks Sink Thursday On US Debt Ceiling Jitters

  • Nvidia Forecasts Second-Quarter Revenue Above Estimates

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


Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4115 

  • Below 4100 opens 4050

  • Primary support is 4000

  • Primary objective is 4230

  • 20 Day VWAP bullish, 5 Day VWAP bearish

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EURUSD Bias: Intraday Bullish Above Bearish below 1.0860

  • Below 1.0790 opens 1.0740

  • Primary support  is 1.07

  • Primary objective is 1.1128

  • 20 Day VWAP bearish, 5 Day VWAP bearish

    (Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish below 1.2430

  • Below 1.2370  opens 1.2310

  • Primary resistance  is 1.2540

  • Primary objective 1.23

  • 20 Day VWAP bearish, 5 Day VWAP bearish

    (Click on image to enlarge)

USDJPY Bias: Intraday Bullish above Bearish Below 137.50

  • Below 137.40 opens 136.10

  • Primary support  is 133

  • Primary objective is 140

  • 20 Day VWAP bearish, 5 Day VWAP bullish

    (Click on image to enlarge)

AUDUSD Bias: Intraday Bullish Above Bearish below .6650

  • Below .6620 opens .6550

  • Primary resistance  is .6680

  • Primary objective is .6500

  • 20 Day VWAP bearish, 5 Day VWAP bearish

    (Click on image to enlarge)

BTCUSD Intraday Bias: Bullish Above Bearish below 26000

  • Below 26000 opens 25800

  • Primary support 26000

  • Primary objective is 34600

  • 20 Day VWAP bullish, 5 Day VWAP bearish

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