Image Source: Pixabay
 

Asian equity markets traded cautiously into month & quarter end, with modest gains against the backdrop of a higher yield environment. Market participants were digesting a series of data releases at the end of the quarter, including the latest official PMIs from China. The Nikkei 225 in Japan declined, impacted by mixed data such as disappointing Industrial Production and softer-than-expected Tokyo CPI. However, the losses were cushioned by recent currency movements, with USDJPY briefly reaching its highest level since November. The Hang Seng and the Shanghai Composite gained following the release of Chinese PMI data. While headline Manufacturing PMI matched estimates at 49.0, Non-Manufacturing PMI was slightly below expectations at 53.2 but still indicated a solid expansion.

In the UK, the June Lloyds Business Barometer revealed a rebound in business confidence after a dip in the previous month. The report showed increased optimism regarding both firms' trading prospects and the broader economy. Business sentiment improved in ten out of twelve UK regions and nations and across the four main sectors. Staffing expectations reached a one-year high, while firms' expectations for average pay growth also picked up compared to the beginning of the year. Wage and price expectations remained elevated relative to pre-pandemic levels.

For the Eurozone, today's June CPI data is expected to show a decrease in annual inflation to 5.5% from May's 6.1%, reaching its lowest level since January 2022. However, the "core" rate, which excludes volatile components, is anticipated to accelerate to 5.5% from 5.3%, suggesting that some inflationary pressures remain persistent.

In the US, recent data releases, such as the upward revision of Q1 GDP growth and lower-than-expected weekly unemployment claims, indicate that economic activity remains stronger than anticipated. The personal spending report for May, set to be released today, is expected to show slower growth compared to April but still indicative of overall growth in Q2. The report will also include the consumer expenditure deflator, the Federal Reserve's preferred inflation measure. Headline inflation is forecasted to experience a significant decline, while the core inflation rate is expected to remain unchanged at 4.7%, well above the Fed's target of 2%. Based on expectations, the Chicago Purchasing Managers' Index (PMI) for June is anticipated to show an improvement compared to the previous month. However, it is projected to remain below the threshold of 50.0 which would suggest ongoing challenges for the manufacturing sector in the region.
 

Citi Quants Month End Rebalancing Expectations

Citi has published its preliminary estimate for month-end FX rebalancing, indicating a preference for selling USD. According to their model, both hedge and asset FX rebalancing requirements align in this direction. The estimate suggests that negative flows from US equities will have a significant impact on equity rebalancing. It is worth noting that month-end flows typically influence FX markets in the days leading up to the end of the month.
 

CFTC Data As Of 23-06-23

• (USD net spec short grew in Jun 14-20 period; $IDX -0.76%
• EUR$ +1.15% in period, specs -7,173 contracts into strength, now +144,649
• $JPY +1.31% in period, JPY soft amid rate divergence, specs -3,680 contracts
• GBP$ +1.21%, specs get long ahead of CPI/BoE, +39,873 contracts now +46,608
• Specs guessed right higher CPI, +50bp BoE but GBP$ -150 pips from weeks high
• AUD$ +0.3% in period, specs +12,129 contracts on hawkish RBA, now -33.5k
• BTC +8.96%, specs 346 contracts into strength, halved long to +397 contractsSource: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0800 (837M), 1.0825 (280M), 1.0840 (320M), 1.0855 (573M)
• 1.0870-75 (600M), 1.0900 (1.4BLN), 1.0935-45 (2.2BLN), 1.0950-60 (1.1BLN)
• USD/CHF: 0.8850 (350M), 0.9100 (252M). GBP/USD: 1.2600 (360M)
• EUR/GBP: 0.8600 (320M), 0.8650 (580M). NZD/USD: 0.6175 (1.9BLN)
• AUD/USD: 0.6600 (640M), 0.6650 (785M), 0.6690-0.6700 (540M)
• AUD/NZD: 1.0900 (285M), 1.0940 (255M)
• USD/JPY: 143.90-144.00 (1.2BLN), 144.50 (677M)
   

Overnight News of Note

• Fed’s Bostic: Powell Sees More Urgency To Hike Than He Does
• US, Dutch Set To Hit China's Chipmakers With One-Two Punch
• China’s Growth Momentum Slows Further Amid Stimulus Calls
• Yen Weakens To 145 Per Dollar, Nears 2022 Intervention Level
• Japan Finance Minster Warn Against Excessive Yen Weakening
• Tokyo’s Inflation Jumps Up Again As Japanese Output Sputters
• ECB Hawks Take Aggressive Rates View After UK Inflation Rise
• UK Lloyds Business Confidence Rebounds To A 13-Month High
• JPMorgan Team Ditches Bullish Treasuries View On Data Beats
• Brent Oil Set For Record Quarterly Losses Run As Demand Lags
• Apple Stock Has Another 30% Upside, Citi Says New Buy Rating
• Nike Shows Sales Gains While Profit Fall Just Short Of Estimates

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4370

• Below 4360 opens 4330
• Primary support is 4300
• Primary objective is 4580
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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 bearish

(Click on image to enlarge)

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 bearish

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 143.50 Target Hit, New Pattern Emerging 

• Below 143 opens 142.30
• Primary support  is 141
• Primary objective is 145.50
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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 bearish

(Click on image to enlarge)

BTCUSD Intraday Bullish Above Bearish below 29500 

• Below 28000 opens 26900
• Primary resistance is 27400
• Primary objective is 32750
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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