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Asian equity markets were a mixed bad overnight following the negative sentiment from Wall Street, particularly from the Nasdaq 100, which had its second-worst day of the year due to tech earnings disappointment and rising yields, weighing on investor sentiment.The Nikkei 225 also started the day with a slump but recovered slightly as participants digested somewhat ambiguous CPI data. The data mostly met expectations but showed a slight acceleration in both headline and core inflation. Meanwhile, the Hang Seng rose modestly and the Shanghai Composite remained flat. These indices were supported by further efforts from China to boost the economy. The NDRC released policies aimed at stimulating electronics products consumption and promoting automobile consumption, helping to maintain positive sentiment in the region.

Next week will be significant for central bank meetings, with the U.S. Federal Reserve, European Central Bank (ECB), and Bank of Japan (BoJ) all scheduled to meet. Investors will closely watch the outcomes of these meetings, especially in the context of potential policy tweaks. There is speculation that the BoJ may make imminent policy adjustments during its meeting. Inflation in Japan remained above the central bank's target of 2% for the 15th consecutive month in June. However, the inflation gains matched a median market forecast, suggesting that the central bank's efforts to achieve sustained inflation may still face challenges. As central banks play a crucial role in shaping economic policies and financial markets, the outcomes of these meetings are expected to have an impact on global investor sentiment and market dynamics.
 

CFTC Data As Of 14-07-23

• USD net spec short fell a touch in the Jul 5-11 period as $IDX slid 1.37%
• Fairly serious moves among majors w/hardly any position changes
• Suggest a fair amount of position replacement as specs were getting stopped
• EUR$ +1.2% in period, specs -2,675 contracts into strength now +140,162
• $JPY -2.84% in period after breaching 145 last wk, specs buy 738 contracts
• GBP$ +1.73% as BoE seen a cointoss for +50bp Aug 3, specs +7,798 now +58,063
• CHF specs relatively active -4,503 contracts now short 7,907
• $CAD +0.06%, Aussie -0.06% specs sell less than 1k contracts
• BTC fell a scant 0.74%, specs +221 on dip now short 1,855 contracts(Source: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.1100 (581M), 1.1150 (525M), 1.1175-80 (354M), 1.1200-05 (627M)
• USD/CHF: 0.8625 (200M), 0.8715 (300M). GBP/USD: 1.2970 (277M)
• EUR/GBP: 0.8600 (651M), 0.8640 (200M), 0.8695-0.8700 (551M)
• AUD/USD: 0.6700 (862M). AUD/NZD: 1.0900 (1BLN)
• USD/CAD: 1.3145-55 (1.1BLN)
• USD/JPY: 140.00 (608M), 140.50 (439M). EUR/JPY: 154.00 (300M)
   

Options Market Positioning

The demand for U.S. dollar put options has weakened, and foreign exchange (FX) implied volatility has reached its peak for the time being as the dollar experiences a mild recovery. However, the options market is anticipating increased FX volatility around the July 26 Federal Open Market Committee (FOMC) policy decision. Even though markets are pricing in a final 25bps interest rate hike in the current cycle, related implied volatility gains are not ruling out the possibility of heightened FX volatility. For EUR/USD, the 1.13 barriers seem secure as demand for topside strike options decreases, and premiums for EUR put/USD call options show some recovery. In USD/JPY, there is interest in a large 140.00 strike before Thursday's 10 am New York cut, but further gains may be challenging until after Friday's Japanese CPI release. The one-week expiry will also include the Bank of Japan's (BoJ) policy announcement on July 28. Unless there is a significant CPI beat, any implied volatility gains related to the BoJ's dovish rhetoric might be seen as opportunities to sell.

Overnight Newswire Updates of Note

• Asian Shares Fall After US Tech Falters, Dollar And Yields Hold Gains
• Japan’s Inflation Speeds Up As BoJ Prepares To Update Price View
• BoJ Won't Tweak YCC In July, Say 77% Of Economists - RTRS Poll
• Japan Bond Investors See Turbulence That Defies Ueda’s View
• China’s Backing Will Ease Pressure For Yuan To Drop, Report Says
• China Lending Rate May Drop Further In Q3 If PBoC Cuts RRR - Paper
• ECB’s High-For-Longer Rate Plan Fails To Convince Economists
• US Pres Biden Creates Debt-Limit Team To Find Ways Of Ending Standoffs
• Dollar Firms, Yen Steady After Japan Inflation Holds Above BoJ Target
• Oil Heads For Fourth Weekly Advance As Liquidity Declines
• Asia Stocks Mixed As Tech Drops On TSMC, Hong Kong Gains
• Nasdaq 100 Reshuffle Adds Twist To $2.4 Trillion Options Event
• TSMC Falls Most In Five Months After Outlook Cut, Arizona Delay
• Capital One Financial Beats Profit Estimates On Higher Interest Income

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

Technical & Trade Views

SP500 Intraday Bullish Above Bearish Below 4530

• Below 4520 opens 4460
• Primary support is 4370
• Primary objective is 4630
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Intraday Bullish Above Bearsih Below 1.12

• Below 1.1150 opens 1.1050
• Primary support is 1.10
• Primary objective is 1.13
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

GBPUSD: Intraday Bullish Above Bearish Below 1.2850 

• Below 1.2830 opens 1.2710
• Primary support  is 1.26
• Primary objective 1.3850
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 139.60

• Above 139.60 opens 141.80
• Primary resistance 142
• Primary objective is 136.20
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

AUDUSD Intraday Bullish Above Bearish Below .6800

• Below .6795 opens .6750
• Primary support  is .6448
• Primary objective is .7000
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

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 bearish

(Click on image to enlarge)

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