Image Source: Pixabay
 

Asian equity markets traded mostly in positive territory, driven by the momentum from Friday's gains on Wall Street and boosted by stronger-than-expected Chinese Caixin Services and Composite PMI data. The Nikkei 225 outperformed, surging above the 32k handle for the first time since 1990, with exporters benefiting from a weaker currency. The Hang Seng and the Shanghai Composite edged up, supported by the positive Caixin PMI figures. However, gains were limited due to ongoing tensions between the US and China, as well as concerns expressed by China's Cabinet regarding the solidity of the economic recovery. Property stocks faced pressure, despite reports of a potential support package for the sector and efforts to strengthen the economy.

Following the announcement by OPEC+ regarding the extension of supply cuts until the end of 2024, oil prices advanced. Additionally, Saudi Arabia's commitment to further reducing oil supply by an additional 1 million barrels per day in July contributed to the upward movement in oil prices. The market responded to these developments as it anticipated a potential rebalancing of supply and demand dynamics in the oil market.

The May services PMI measure in the UK is expected to remain unchanged in the second reading from the initial 'flash estimate'. The initial print indicated that the service sector continued to experience expansion, but it also highlighted ongoing concerns about the effects of a tight employment market. The second reading for the aggregate services PMI in the Eurozone is anticipated to remain comfortably above the 50 mark, indicating a robust expansion in activity throughout May.

Stateside, with the US debt-ceiling crisis averted, attention now turns to the interest rate outlook, which remains uncertain across major economies such as the US, Eurozone, and UK. The upcoming monetary policy updates from the US Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) scheduled for the 14th, 15th, and 22nd, respectively, will be closely watched by the markets. Following a mixed US employment report on Friday, which showed higher-than-expected job growth but also an increase in the unemployment rate and a slight moderation in wage growth, the US interest rate outlook has become even more uncertain. The services ISM reading for May will provide another timely update of what is happening to activity ahead of the Fed’s policy announcement. It showed growth still running at a solid pace in April, albeit slower than in the first couple of months of the year. The Reserve Bank of Australia (RBA) is set to announce its latest policy decision tomorrow. After the surprise 25 basis point (bp) rate hike in May, the expectations are for the central bank to maintain interest rates at 3.85%. However, there is some uncertainty, as markets perceive it to be a close call, and some economists are forecasting another 25 bp increase. The decision will be closely watched by market participants to assess the RBA's stance on monetary policy.
 

CFTC Data As Of 02-06-23

• USD IMM net spec short pared in May 24-30 reporting period; $IDX +0.51%
• EUR$ long -8,011 contracts to +165,725; EUR$ -0.35% in period
• $JPY +0.88% in period, specs +15,533 contracts now -96,193
• GBP$ -0.05% in period, specs +1,646 contracts now long 13,235
• $CAD +0.74%, specs sell into USD rise +18,612 contracts short cut to 29,914
• AUD$ largest loss in period -1.41%, specs buy 4,955 on dip now -44,126
• BTC +2.04% in period, specs -706 contracts now long 187 (Source: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0650 (310M), 1.0675-85 (1.28BLN, 1.0690-00 (683M)
• 1.0730-35 (270M), 1.0740-50 (270M), 1.0760-75 (416M)
• 1.0800-10 (562M), 1.0815-20 (1.12BLN)
• USD/JPY: 138.20 (1.59BLN), 139.00 (552M), 139.50-60 (876M)
• 140.50 (260M), 141.00 (476M)
• USD/CHF: 0.9075 (260M)
• GBP/USD: 1.2375 (300M), 1.2410 (246M), 1.2500 (303M)
• 1.2585-90 (369M)
• AUD/USD: 0.6600 (226M), 0.6625-30 (641M)
• USD/CAD: 1.3430-40 (1.08BLN), 1.3550 (301M), 1.3580 (261M)
• 1.3700 (578M)
   

Overnight News of Note

• China's Services Activity Picks Up In May On Improved Demand
• China’s Targeted Stimulus Steps Raise Doubts About Rate Cuts
• US President Biden Signs Debt Limit Bill, Avoiding US Default
• ECB's Visco Says Falling Energy Prices Should Help Tame Inflation
• Majority Of EU Countries Against Network Fee Levy On Big Tech
• Turkey’s New FinMin Pledges Return To ‘Rational’ Economic Policy
• Asset Managers Join Hedge Funds In Boosting Yen-Short Positions
• Negative-Yielding Debt Bounces Back To Almost $2 Trillion On BoJ
• Oil Surges After Saudis Pledge Million-Barrel Cut At OPEC+ Meet
• Asian Shares Surge, Extending Global Rally And Defying Concerns
• Morgan Stanley Sees Shock 16% US Profit Drop Killing Stock Rally
• Big Banks Could Face 20% Boost To Capital Requirements
• Airbus Is Closing In On 500 Narrowbody Jet Order From India's Indigo

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4250

• Below 4240 opens 4190
• 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 bearish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2440

• Below 1.23 opens 1.2234
• Primary support  is 1.23
• Primary objective 1.2680
• 20 Day VWAP bullish, 5 Day VWAP bearish

(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 .6580

• Below .6490 opens .6450
• Primary resistance  is .6680
• Primary objective is .6450
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

• Below 26000 opens 25800
• Primary support 26000
• Primary objective is 34600
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

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