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Asian equity markets traded higher as market participants reacted to the softer-than-expected US inflation data. This development bolstered global risk appetite and led to a reversal in money market pricing for a potential interest rate hike by the US Federal Reserve beyond July. The positive sentiment prevailed, despite weaker-than-expected Chinese trade data, which failed to dampen the overall market spirit. The Nikkei 225 reclaimed the 32K handle at the market opening. The release of the US Consumer Price Index (CPI) data provided a positive catalyst for stocks in Japan and contributed to the upward movement. Both the Hang Seng Index in Hong Kong and the Shanghai Composite Index in mainland China saw gains. The Hang Seng outperformed due to strength in the technology sector, following Chinese Premier Li's meetings with several Hong Kong-listed tech giants. Premier Li endorsed the platform economy and pledged additional support for the tech sector. Meanwhile, gains in the mainland were somewhat limited due to the release of Chinese trade data that fell short of expectations. Overall, the softer US inflation data and the supportive measures for the tech sector in Hong Kong provided a positive backdrop for stock markets in the Asia-Pacific region.

In the Eurozone, the industrial production data for May is anticipated to show a modest monthly increase of around 0.3%. However, it is expected that output will remain below levels observed earlier in the year, confirming the slowdown in activity within the sector. Of particular interest for investors will be the release of the minutes from the European Central Bank's (ECB) June meeting, during which it decided to raise interest rates by 25bps, reaching the highest level in over two decades. The minutes are likely to reinforce the strong indications that the ECB is not finished with its tightening measures. Another rate hike in July appears highly probable, although there may be less consensus among policymakers regarding future moves beyond that.

Stateside, this afternoon will see the release of the producer price figures for June, following yesterday's softer-than-expected Consumer Price Index (CPI) data. These figures will be closely watched for any signs of further moderation in inflation pressures within the supply chain. Expect both the headline and core measures (excluding food and energy) to show monthly increases resulting in lower annual rates of approximately 0.5% and 2.7%, respectively. Additionally, the weekly initial unemployment claims data will provide insights into the state of the labor market. Federal Reserve officials Daly (2024 voter) and Waller (voter) are also scheduled to make appearances, adding to the overall market focus.
 

CFTC Data As Of 07-07-23

• USD net spec short pared in Jun 28-Jul 3 period, $IDX +0.58% in period
• EUR$ -0.77% in period, specs -2,191 contracts into dip, now +142,837
• $JPY +0.3% in period, specs -5,050 contracts on diverging rates now -117,920
• GBP$ -0.29%, specs -1,729 contracts, now +50,265; less-dovish Fed lifts USD
• $CAD +0.21% specs +7,374 contracts flip position to +4,527
• AUD$ +0.09% in period, specs -5,158 contracts now -44,582
• BTC +0.5% in period specs +18 contracts now short 2,076 contracts(Source: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.1050-60 (1BLN), 1.1080 (1.3BLN), 1.1100 (356M),
• 1.1110-15 (1BLN), 1.1120-25 (1.1BLN), 1.1160 (527M)
• USD/CHF: 0.8650 (205M), 0.8675-80 (380M)
• GBP/USD: 1.2850 (545M), 1.2875 (510M), 1.2885 (220M), 1.2925 (225M)
• EUR/GBP: 0.8470 (228M), 0.87595 (220M)
• USD/CAD: 1.3200-10 (908M), 1.3295-1.3300 (701M)
• AUD/USD: 0.6780-85 (720M), 0.6800 (1.5BLN)
• USD/JPY: 138.75 (813M), 138.95 (360M), 139.20-25 (350M), 140.50-55 (560M)
• AUD/JPY: 94.40 (243M)
   

Overnight News of Note

• NZ Manufacturing Sector Continued To Contract In June
• China’s H1 Foreign Trade Volume Grows 2.1% Y/Y
• BoK’s Rhee Keeps Hawkish Bias After Holding Rates
• China Expected To Stabilise Growth With Policy Mix In H2
• Fed Set To Raise Rates In July Despite Inflation Slowdown
• Dollar Takes A Beating As Traders See US Rates Peaking
• Pound Rises To 15-Mth High Against Dollar As US Inflation Slows
• Oil Prices Rise In Early Trade As US Inflation Cools
• Disney Extends CEO Iger’s Contract Another Two Years To 2026
• Sony Dives Into 'Extended Reality' With $2 Bln R&D War Chest
• FTC To Appeal Decision To Let Microsoft Activision Deal Go Ahead
• McDonald’s China Owners Carlyle, Trustar Plan $4 Bln Exit
• Apple Store Union Accuses Company Of Negotiating In Bad Faith

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4460

• Below 4440 opens 4400
• Primary support is 4330
• Primary objective is 4500
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Intraday Bullish Above Bearsih Below 1.1050

• Below 1.0950 opens 1.09
• Primary support is 1.0830
• Primary objective is 1.12
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

GBPUSD: Intraday Bullish Above Bearish Below 1.2850

• Below 1.2830 opens 1.2710
• Primary support  is 1.26
• Primary objective 1.3128
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 141 - Target Hit, New Pattern Emerging

• Above 141.15 opens 141.80
• Primary resistance 142
• Primary objective is 137.70
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

AUDUSD Intraday Bullish Above Bearish Below .6750

• Below .6595 opens .6550
• Primary support  is .6448
• Primary objective is .7000
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Intraday Bullish Above Bearish below 30000 

• Below 29400 opens 28600
• Primary support  is 28400
• Primary objective is 32750
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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