Daily Market Outlook - Monday, May 15

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Asian equities are starting the week on the front foot with most major indices in the green, mirroring the positive sentiment seen in US and European futures, as the mood music around negotiations aimed at preventing a US debt default continued over the weekend. The Turkish elections appeared poised for a second-round run-off between President Erdogan and his primary contender, Kilicdaroglu, as neither candidate seemed poised to surpass the 50% threshold required for an outright victory.

No significant data releases are expected in the UK, investors will be paying attention to the remarks of Huw Pill, the Chief Economist of the Bank of England. Pill is scheduled to participate in an online event to provide insights into the specifics of the May Monetary Policy Report. Following last week's policy announcement, where the Monetary Policy Committee (MPC) raised interest rates by an additional 25 basis points to 4.50%, Pill commented that although inflation was showing signs of decline, the continued presence of elevated inflationary pressures could potentially lead to further tightening measures.

After a series of central bank meetings in recent weeks, the upcoming week is anticipated to be relatively quiet in terms of major data events. However, several data releases are expected to offer valuable insights into future monetary policy decisions. In the Eurozone, it is projected that industrial production experienced a significant decline in March, following two consecutive months of growth earlier in the quarter. The data already released for countries such as France, Germany, Italy, and Ireland indicate a similar trend, with Ireland witnessing a substantial month-on-month decrease of 26.4%. Despite the expected contraction, it would still result in an overall increase in Eurozone industrial output for the first quarter.

Stateside, investors will focus on the Empire State manufacturing survey for May; it is expected to indicate a return to contractionary territory based on forecasts. This outcome would imply that the positive reading seen in April was a temporary anomaly. Several representatives from the Federal Reserve, namely Bostic, Goolsbee, Kashkari, and Cook, are scheduled to deliver speeches. Market participants will closely observe these speeches for any indications that they support the possibility of the Fed pausing interest rate hikes at the coming June meeting.

FX Options Expiries For 10am New York Cut 

(In bold represent larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.0880-90 (500M) 1.0900-05 (585M), 1.1000 (830M)
  • GBP/USD: 1.2390-1.2400 (631M), 1.2440 (373M), 1.2495-1.2510 (436M)
  • 1.2600 (308M). EUR/GBP: 0.8635-45 (300M), 0.8735 (300M), 0.8830 (300M)
  • AUD/USD: 0.6700 (243M), 0.6725 (360M).
  • USD/CAD: 1.3500-05 (922M), 1.3250 (377M), 1.3550 (454M)
  • AUD/JPY: 90.00 (345M). 
  • EUR/JPY: 146.20 (404M), 150.50 (486M)

CFTC Data As Of 02/05/2023

  • USD net spec short position grew in May 3-9 period; $IDX -0.24$
  • EUR$ -0.38% in period, specs +5,933 contracts now long 179,422
  • Net EUR long position highest since Oct 2020, was +212k in Aug 2020
  • $JPY -0.96% in period, specs +7,309 contracts yen short pared to -61,015
  • GBP$ +1.2%, trade to new 2023 high; specs buy 3,463 contracts now long 4,528
  • $CAD -1.77%, specs cut CAD short +7,833 contracts; AUD$ +1.52%, specs -4,183
  • BTC -3.62% in period, specs buy dip add 255 contracts now long 423 (Source RTRS)

Overnight News of Note

  • President Biden Expects To Meet Lawmakers Tuesday For Debt Talks
  • EU And US To Pledge Joint Action Over China Coercion Concerns
  • ECB’s De Guindos: Tighter ECB Policy Could Push Up Bad Debt Levels
  • Macron Wants To Keep Cutting Taxes Despite Deficit Warnings
  • BoE To Water Down Rules For Lenders To Boost Britain’s Competitiveness
  • PBoC Extends Cash Support In May After Credit Growth Slumped
  • Japan's Wholesale Inflation Slows, May Ease Pressure On BoJ
  • NAB Expecting Another Australian Rate Rise In July To 4.1%
  • Dollar Hits 5-Week High On Inflation Worries; Lira Drops, Baht Soars
  • Funds Take Record Short Position Across US Treasuries Curve
  • Fresh Gilt-Sale Blockbuster Is Coming As UK Lures Pension Funds
  • Oil Drops For A Fourth Day As Concerns Over Demand Persist
  • G7 And European Union To Ban Restart Of Russian Gas Pipelines
  • ONEOK To Buy Magellan Midstream Partners In Deal Valued At $18.8 Billion
  • Australian Gold Miner Newcrest Backs Newmont's $17.8 Billion Offer
  • Turkey Faces Runoff; President Tayyip Erdogan Leads Vote Count

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4100

  • Below 4090 opens 4040
  • Primary support is 4000
  • Primary objective is 4207
  • 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearish below 1.09

  • Below 1.09 opens 1.08
  • Primary support  is 1.07
  • Primary objective is 1.1128
  • 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish below 1.25

  • Below 1.2475 opens 1.24
  • Primary support  is 1.2350
  • Primary objective 1.2750
  • 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

USDJPY Bias: Intraday Bullish above Bearish Below 134

  • Below 133.90 opens 133
  • Primary support  is 133
  • Primary objective is 138.80
  • 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

AUDUSD Bias: Intraday Bullish Above Bearish below .6720

  • Below .6710 opens .6670
  • Primary support  is .6640
  • Primary objective is .6826
  • 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

BTCUSD Intraday Bias: Bullish Above Bearish below 28300 - Target Hit - New Pattern

  • Primary resistance 30000
  • Primary objective is 26000
  • Below 26000 opens 25800
  • 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to ...

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