Daily Market Outlook - Thursday, Feb. 8
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Asian stocks exhibited a mixed performance following Wall Street's attainment of new record levels, with the S&P 500 nearing 5,000. The Nikkei 225 approached 37K handle driven by positive earnings reports, and SoftBank gained momentum after Arm Holdings' post-earnings surge. Meanwhile, the Hang Seng and Shanghai Composite showed mixed results, with tech weakness weighing on the Hang Seng, while the mainland gained ground despite soft inflation data. Notably, China replaced CSRC Chairman Yi Huiman with Wu Qing, colloquially known as the "Broker Butcher" for his stringent measures against traders.
Today, markets will closely monitor speeches from various central bank officials, with no major data releases scheduled. Major central banks, such as the US Fed and the Bank of England, have gradually shifted their policy stance from hawkish to more neutral positions, indicating potential interest rate cuts this year. However, they remain cautious about declaring victory over inflation prematurely and have pushed back against expectations for immediate rate reductions. The trajectory of monetary policy will depend on incoming data. In the US, recent strong economic indicators have diminished the likelihood of a March rate cut.
In the UK, Catherine Mann from the Bank of England, one of the two MPC members who voted for a hike at the last meeting, is set to speak on 'inflation dynamics and drivers'. Unlike the majority of the MPC, she maintains concerns about the tight labor market and persistent inflation.
ECB speakers today include Chief Economist Philip Lane, whose remarks will be closely scrutinized after Executive Board member Schnabel cautioned about a resilient labor market and sticky services inflation. While an April rate cut is plausible, a compromise may point towards June. ECB's Vujcic and Wunsch, considered more hawkish than Lane, are also scheduled to speak today.
Stateside, Fed's Barkin, a voting member this year, will speak twice, including at the Economic Club of New York. A series of Fed speakers yesterday reinforced the perspective that a rate cut in March is unlikely. Weekly jobless claims data are also due today; although initial claims have slightly increased recently, they remain historically low.
Overnight Newswire Updates of Note
- China PPI Dips In Jan For A 16th Month; CPI See Biggest Drop Since 2009
- BoJ’s Uchida: Won't Hike Rates Aggressively Upon Ending Negative Rates
- BoJ’s Shimizu: Accommodative Conditions To Stay Even If Neg Rates Are Abandoned
- PBoC Encourages Local Businesses To Accept Foreign Payment Cards
- Blinken: Hamas-Israel Deal Is Still Possible Even Though The Sides Remain Far Apart
- US Deficit To Soar To $2.6 Tln In 10 Years, Says Congressional Watchdog
- Bank Of Canada Officials Unsure When Rate Cuts Could Begin, Minutes Say
- Oil Edges Higher With Global Equities And Middle East In Focus
- Disney Q1 Profit Surprises Sending Shares Higher After Hours
- PayPal Guides For Q1 Revenue Growth After Q4 Beat
- McKesson Raises Annual Profit Forecast On Strong Demand For Specialty Medicines
(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: 1.0900 (EU1.32b), 1.0750 (EU1.03b), 1.0815 (EU1.1b)
- USD/JPY: 147.75 ($1.66b), 145.00 ($1.11b), 146.30 ($1.09b)
- AUD/USD: 0.6670 (AUD938.1m), 0.6705 (AUD923.7m), 0.7250 (AUD693.8m)
- USD/CNY: 6.9500 ($501.8m), 6.7100 ($500m)
- USD/BRL: 4.9000 ($510m), 5.4000 ($405.6m), 4.8400 ($400m)
- GBP/USD: 1.2600 (GBP435.7m), 1.2585 (GBP410m)
- NZD/USD: 0.6140 (NZD593.2m), 0.6050 (NZD370m)
- EUR/GBP: 0.8475 (EU800m), 0.8525 (EU415m), 0.8485 (EU320m)
- USD/KRW: 1310.00 ($500m), 1285.00 ($500m)
- USD/MXN: 17.05 ($320.9m), 17.20 ($300.7m)
- FX options are currently trading within familiar ranges, with implied volatility near 2-year lows. However, there are some pockets of premium and demand that could lead to increased volatility. The recent demand for USD has slowed, and there is anticipation for strong U.S. data and upcoming central bank policy announcements to act as catalysts for volatility. Additionally, JPY-related options are showing a bias towards volatility risk premium on BoJ policy meeting dates. There is also hope for central bank stimulus measures and uncertainty surrounding the Chinese new year holiday in USD/CNH option activity.
CFTC Data As Of 2/02/24
- USD bearish neutral -5,618
- CAD neutral neutral -178
- EUR bullish neutral 12,034
- GBP bullish neutral 2,711 218
- AUD bearish increasing -3,849
- NZD neutral neutral -64
- MXN bullish neutral 2,343
- CHF bearish neutral -566
- JPY bearish increasing -6,813
Technical & Trade Views
SP500 Bullish Above Bearish Below 4975
- Daily VWAP bullish
- Weekly VWAP bullish
- Below 4970 opens 4950
- Primary support 4840
- Primary objective is 4981 - Target Hit, New pattern Emerging
(Click on image to enlarge)
EURUSD Bullish Above Bearish Below 1.0830
- Daily VWAP bullish
- Weekly VWAP bearish
- Above 1.109 opens 1.10
- Primary resistance 1.0950
- Primary objective is 1.0650
(Click on image to enlarge)
GBPUSD Bullish Above Bearish Below 1.2660
- Daily VWAP bullish
- Weekly VWAP bearish
- Above 1.27 opens 1.2770
- Primary resistance is 1.2785
- Primary objective 1.2570 - Target Hit New Pattern Emerging
(Click on image to enlarge)
USDJPY Bullish Above Bearish Below 147.50
- Daily VWAP bullish
- Weekly VWAP bullish
- Below 146 opens 145.50
- Primary support 143.50
- Primary objective is 149.50
(Click on image to enlarge)
AUDUSD Bullish Above Bearish Below .6650
- Daily VWAP bearish
- Weekly VWAP bearish
- Below .6500 opens .6420
- Primary support .6525
- Primary objective is .6260
(Click on image to enlarge)
BTCUSD Bullish Above Bearish below 43850
- Daily VWAP bullish
- Weekly VWAP bullish
- Above 43600 opens 44700
- Primary resistance is 44700
- Primary objective is 44700 - Target Hit New Pattern Emerging
(Click on image to enlarge)
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