Munnelly’s Market Minute… 

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In Asia, stocks experienced a gradual decline following a quiet start, influenced by post-data market volatility in the US and the absence of Japanese participants due to Respect for the Aged Day. The markets are eagerly anticipating key inflation data releases later this week. The Hang Seng and Shanghai Composite were under pressure due to concerns about shadow banking and geopolitical frictions. Hong Kong's losses were exacerbated by selling in the tech sector, while China Evergrande New Energy Vehicle shares slumped after its vice chairman's arrest.

Last week, financial markets adjusted their expectations for interest rate cuts by major central banks this year, scaling back somewhat due to signs of more robust economic activity in key developed economies. The UK services Purchasing Managers' Index (PMI) showed stronger-than-expected activity, while Eurozone Consumer Price Index (CPI) inflation increased in December. However, core inflation declined, reinforcing the European Central Bank's cautious stance on rate cuts. The December US labor market report exceeded expectations, with employment outpacing forecasts and wage growth unexpectedly accelerating.While markets have postponed earlier expectations for Q1 rate cuts, they still anticipate significant cuts throughout the year. In the US, the first cut is now projected for May, with over 125 basis points of cuts anticipated by 2024. Similar expectations exist for the Eurozone. For the UK, the first cut is fully priced for June, with just under 125 basis points of cuts anticipated for the year.

Today's economic calendar lacks tier one data on the docket, no major releases are scheduled for the UK, but early tomorrow morning, the British Retail Consortium (BRC) will release its update on December retail activity. Footfall data from retail outlets suggest that damp weather kept shoppers away in December. In the Eurozone markets will see the release of several confidence measures. 

Stateside, the New York Federal Reserve will publish its monthly report on consumer expectations before the release of this week's Consumer Price Index (CPI) data on Thursday, the U.S. December CPI is expected to increase by 0.2% monthly, as per a Reuters poll, up from 0.1% in November. Additionally, the core CPI is anticipated to remain unchanged at 0.3%, the same as in November. Fed policymaker Bostic is scheduled to share his views on the outlook for the US economy. His comments will offer insight into his thoughts on the possibility of interest rate cuts this year. 

Overnight Newswire Updates of Note

• Fed Revives Investors’ Hopes Of End To ‘Quantitative Tightening’

• Congress Leaders Reach Deal On Spending Levels In Step To Averting Shutdown

• China Sanctions 5 US Defense Industry Companies On Taiwan Arm Sales

• UK labor Market Firms After Recent Slowdown - REC Survey

• US Dollar Holds Ground Monday As US Inflation Data Looms

• Bitcoin ETF Hopefuls Eye This Week For Long-Awaited SEC Greenlight

• Bond Traders Seize On 4% Yields Confident Fed Rate Cuts Coming

• Oil Drops As Saudi Pricing Cuts Counter Middle East Supply Risks

• Saudi Arabia Cuts Oil Prices To Asia As Market Weakness Persists

• Asia Stocks Dragged Down By China Share Selloff Monday

• Samsung Set For Smallest Profit Drop In 6 Quarters On Chip Rebound

• Goldman Says S&P500 Earnings Forecast Could Rise Further

• Largest US Banks Set To Log Sharp Rise In Bad Loans This Week

• Boeing Faces Scrutiny Over 737 Max Planes After Alaska Airlines Blowout

• Jefferies Analysts: iPhone Sales In China To Fall Double Digits

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

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0875 (400M), 1.0950 (645M), 1.06975 (406M)

• 1.1045-50 (309M)

• USD/JPY: 143.50 (225M), 144.00 (280M), 144.50 (510M)

• EUR/JPY: 156.00 (450M)

• GBP/USD: 1.2665-75 (350M),

• EUR/GBP: 0.8500-05 (410M), 0.8650 (300M), 0.8720-25 (272M)

• AUD/USD: 0.6500 (658M), 0.6620 (400M), 0.6640-50 (822M)

• 0.6700 (205M), 0.6725 (633M), 0.6800 (279M), 0.6840 (708M)

• USD/CAD: 1.3350 (301M)

CFTC Data As Of 05/01/24

• USD bearish increasing-1,674

• CAD bearish decreasing +1,045

• EUR bullish neutral +138

• GBP bullish neutral  +78

• AUD bearish decreasing +601

• NZD neutral neutral +198

• CHF bearish increasing -262

• JPY bearish neutral -157

Technical & Trade Views

SP500 Bullish Above Bearish Below 4730

• Daily VWAP bearish

• Weekly VWAP bearish

• Above 4730 opens 4755

• Primary support 4600

• Primary objective is 4611

EURUSD Bullish Above Bearish Below 1.1000

• Daily VWAP bullish

• Weekly VWAP bullish

• Above 1.1030 opens 1.1130

• Primary resistance 1.1130

• Primary objective is 1.0850

GBPUSD Bullish Above Bearish Below 1.27

• Daily VWAP bullish

• Weekly VWAP bearish

• Above 1.2710 opens 1.2820

• Primary resistance  is 1.2820

• Primary objective 1.2550

USDJPY Bullish Above Bearish Below 144.40

• Daily VWAP bullish

• Weekly VWAP bullish

• Above 144 opens 146.50

• Primary resistance 146.50

• Primary objective is 146.50

AUDUSD Bullish Above Bearish Below .6750

• Daily VWAP bearish

• Weekly VWAP bearish

• Below .6660 opens .6550

• Primary support .6525

• Primary objective is .6933

BTCUSD Bullish Above Bearish below 44000

• Daily VWAP bearish

• Weekly VWAP bullish

• Above 45000 opens 47000

• Primary support  is 40000

• Primary objective is 47000

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