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Asian equity markets traded with a mixed tone as the region approached a week filled with significant risk events, including major central bank meetings and data releases. The Nikkei 225 initially displayed strong performance, advancing and testing the 32,500 handle as market participants anticipated that the Bank of Japan (BoJ) would maintain its accommodative policy later in the week. BoJ officials reportedly see little need to adjust the Yield Curve Control (YCC) program, given the improved functioning of the bond market and the smooth yield curve. Additionally, the latest Producer Price Index (PPI) data came in softer than expected, showing a fifth consecutive monthly easing in wholesale inflation. This further supports the case for the BoJ to refrain from making any policy adjustments. The Hang Seng and Shanghai Composite remained subdued due to weakness in the healthcare and property sectors. The property sector was particularly pressured following a warning from Goldman Sachs. However, losses were mitigated by expectations of potential rate cuts by the People's Bank of China (PBoC) to support the economy. Several banks had already reduced their deposit rates, and PBoC Governor Yi's comments last week, indicating room for policy adjustment and a commitment to targeted and forceful monetary policy, also provided support.

Today's data docket is a remarkably quiet start to what is expected to be an eventful week, as there are no significant data releases or public events on the agenda. Later in the day, Ms Mann, an external member of the Bank of England's Monetary Policy Committee, is scheduled to speak. However, due to the event being held under Chatham House Rules, the likelihood of her comments being made public is low.

Nevertheless, the remainder of the week promises to bring plenty of market-moving events. Policy updates from the US Federal Reserve (Fed) and the European Central Bank (ECB), along with key data releases in the UK and the US, will provide substantial material for market participants to analyze. The Fed's policy decision is expected on Wednesday, closely followed by the ECB's decision on Thursday. These meetings come shortly after surprising rate hikes by the Bank of Canada and the Reserve Bank of Australia last week, both of which increased rates by 25 basis points to 4.75% and 4.10%, respectively. Market consensus, as per Bloomberg, had projected no changes in rates from these central banks. Recent US data has presented a mixed picture, with monthly payroll data indicating a tight employment market, but other indicators suggesting a softening economy as previous interest rate hikes take effect. As a result, it is anticipated that the Fed will likely take a pause and maintain rates at the range of 5.00-5.25%.

On the other hand, the ECB is widely expected to raise rates by another 25 basis points, resulting in a total increase of 400 basis points since last summer. President Lagarde has expressed the view that there is still "more ground to cover" in order to bring inflation lower.
 

CFTC Data As Of 02-06-23

• USD net spec short in May 31-Jun 5 period, $IDX +0.08% in period
• Rates key driver of CCY moves, marts on edge ahead of Fed, ECB next wk
• EUR$ -0.36% in period specs -7,304 contracts long cut to 158,421 contracts
• $JPY -0.1% in period large short grew by 8,624 contracts, spec -104,817
• GBP$ +0.09%, specs -751 contracts long 12,484; GBP eyes 23 highs abv 1.26
• AUD$ +2.39% in period on hawkish RBA, specs -12,342 into rise now -56,468
• $CAD -1.45%, CAD bid on exp'd BoC hike; specs -8,415 now short 38,329 contract
• BTC -2.96% in period, specs buy 582 contracts on dip now long 769 (Source: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0710-20 (813M), 1.0735-40 (668M), 1.0790-1.0800 (1BLN)
• 1.0860 (620M)
• USD/CHF: 0.8995-0.9010 (1BLN). USD/CAD: 1.3300 (482M), 1.3330-40 (350M)
• USD/JPY: 139.50-60 (740M) , 140.00 (380M)
   

Overnight News of Note

• Japan's Wholesale Inflation Eases For 5th Straight Month In May
• UK Forecasters See Stronger Growth And Less Risk Of Recession
• BoE’s Catherine Mann Says UK Government Needs Longer-Term Agenda
• Dollar Steady Monday, With Fed Pause Eyed In Busy C.Bank Week
• Hedge Fund Bond Bears Are Relentlessly Shorting Treasuries
• Oil Holds Losses Amid Demand Woes As Goldman Cuts Outlook Again
• Saudi Energy Min: OPEC+ Working Against 'Uncertainties And Sentiment'
• Goldman Sachs Slashes Brent Outlook To Below $90 By Year-End
• Asia Shares Near Month High Ahead Of C.Bank Meetings
• Goldman Sachs Ups Year-End S&P 500 Price Target To 4,500

• UBS Sets ‘Red Lines’ For Credit Suisse Staff After Takeover Completion

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4300

• Below 4260 opens 4220
• Primary support is 4160
• Primary objective is 4384
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearsih Below 1.0750

• Above 1.0765 opens 1.0840
• Primary resistance is 1.0840
• Primary objective is 1.0840
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.25

• Below 1.2490 opens 1.2440
• Primary support  is 1.2430
• Primary objective 1.2680
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

USDJPY Bias: Bullish Above Bearish Below 139.60

• Below 139.50 opens 138.90
• Primary support  is 137.40
• Primary objective is 141
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

AUDUSD Bias:Intraday Bullish Above Bearish Below .6660

• Below .6650 opens .6610
• Primary support  is .6600
• Primary objective is .6818
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

• Below 2500 opens 24200
• Primary support is  25300
• Primary objective is 27500
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

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