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Asian equity markets displayed a mixed performance as a series of earnings reports and the latest PMI data influenced trading, all within a relatively narrow price range as the Jackson Hole Symposium drew nearer. The Nikkei 225 started with initial losses but managed to recover, trading flat as it approached the 32K handle. This came after the release of somewhat mixed PMI figures. However, the market's upward movement was limited due to ongoing concerns, including Japan facing criticism from China and Hong Kong over its plan to release water from the Fukushima nuclear plant. Meanwhile, the Hang Seng index saw a modest increase, while the Shanghai Composite declined under 1%. Hong Kong's trading exhibited indecision, while the mainland market remained subdued. This could be attributed to the release of several earnings reports and the anticipation surrounding the forthcoming results from major Chinese banks.

Overnight, US Treasury yields have retreated from recent highs. The key data point for the day is the August flash PMI surveys, especially in the UK and the Eurozone, which will offer valuable insights into economic activity during the middle of the third quarter. Survey results suggest that the economic momentum seen in earlier quarters has waned, with the manufacturing sector grappling with decreased demand. The services sector, while previously rebounding, is now showing signs of cooling, possibly influenced by higher interest rates and ongoing cost-of-living pressures. The manufacturing weakness is also contributing to declines in input and output prices. However, policymakers note that the services PMI price indices are still above their long-term averages. Looking ahead, further economic softening in August for both the UK and Eurozone is expected. Projections indicate that the UK manufacturing PMI will drop from 45.3 to 44.0, indicating a more pronounced contraction. The UK services PMI is also expected to decline from 51.5 to 50.8, remaining just above the 50-point threshold that distinguishes growth from contraction. The composite PMI, which encompasses both manufacturing and services output, is predicted to decrease from 50.8 to 49.8. As for the Eurozone, a slight dip is projected in the manufacturing PMI from 42.7 to 42.5, indicating an accelerated pace of contraction. The Eurozone services PMI is expected to marginally decrease from 50.9 to 50.8. Furthermore, the Eurozone's flash consumer confidence data for August is on the docket and might reveal an improvement in contrast to the recent decline in business sentiment.

Stateside, the flash PMI typically doesn't attract as much attention as its European counterparts. Additionally, US new home sales data is scheduled for release today. Market attention is also on the potential adjustments to historical monthly US nonfarm payrolls figures. The Bureau of Labor Statistics is preparing to release preliminary benchmark revisions to its establishment survey. While there is speculation that recent job growth might have been overstated, any revisions are unlikely to significantly alter the overall economic landscape or have a substantial impact on the markets.
 

FX Positioning & Sentiment 

The recent strengthening of the USD and the weakening of CNH have contributed to supporting implied volatility in FX options. However, the absence of realised volatility in the FX markets suggests that current levels are favourable for selling. Selling short volatility trades would be advantageous if the current stable conditions in the G10 FX major currency pairs persist. Market participants might be awaiting the speech by the U.S. Federal Reserve Chairman at the Jackson Hole Symposium on Friday before making significant moves. The AUD/USD pair is experiencing challenges, particularly in conjunction with the decline of China's yuan. Traders taking bearish positions could benefit from holding long AUD puts, capitalising on the anticipated downward movement of the Australian dollar against the US dollar.
 

CFTC Data As Of 15-08-23

• Friday's IMM data release showed USD short grew by 0.55bn in Aug 9-15 period
• Current Aug 16-22 reporting period will not include Jackson Hole Symposium
• Data released 25 Aug likely to be mooted by J-Hole comments by Powell, et al
• EUR$ -0.45% in prior period; -0.7% in new may stall EUR buying
• Slow glbl growth tempers hawkish ECB outlook after China cut, lwr German PPI
• $JPY +0.33% in new period, expect USD buying amid widening US-JP rate view
• GBP$ +0.43% since Aug 16; UK CPI well-above target to keep BoE in hike mode
• AUD, CAD big sellers in prior period on China slowdown short likely to keep growing amid less-dovish Fed view (Source: Reuters)
   

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0800 (2.1BLN), 1.0815 (550M), 1.0825-30 (1.5BLN)
• 1.0835-40(650M), 1.0850-55 (757M), 1.0900 (546M), 1.0980-90 (1.4BLN)
• USD/CHF: 0.8810 (200M), 0.8825 (328M)
• USD/JPY: 145.00 (1.6BLN). 145.50 (320M)
• GBP/USD: 1.2640 (348M), 1.2775 (266M), 1.2850 (676M), 1.2950 (593M)
• EUR/GBP: 0.8550 (335M), 0.8725 (251M), 0.8250 (235M)
• AUD/USD: 0.6350 (430M), 0.6400 (270M), 0.6530 (620M)
• NZD/USD: 0.6000 (790M), 0.6100 (741M)
   

Overnight Newswire Updates of Note

• Global Stocks Head For Worst Month In Nearly A Year
• Traders Dial Back Expected Fed Rate Cuts As Recession Risks Ease
• RBNZ Chief Economist Conway: ‘Mindful’ Of Kiwi Dollar Drop
• New Zealand Retail Sales Slump Poses Downside Risk For GDP
• China Should Give Developers More Room To Lower Prices - Securities Times
• UK Chancellor ‘Still Likely To Miss Debt Target’ Despite Record Tax Take
• US Dollar Hovers Near Two-Month High Wednesday, Yen Near 146/Dlr
• Chinese State Banks Sold Dollars To Support Yuan, Traders Say
• European Crypto ETP Inflows Rise After BlackRock Bitcoin Filing
• T-Bill Yields To Climb Further With Foreign Money Steering Clear
• Oil Holds Two-Day Loss On Demand Woes Before US Stockpile Data
• Iran Aims to Boost Oil Output, Complicating OPEC+ And US Efforts
• LNG Strikes In Australia Loom If No Progress In Talks Wednesday
• Asian Stocks Mixed As China Rebound Fizzles Out Wednesday
• China Institutional Investors Should Stabilise Sentiment - Securities Daily

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

Technical & Trade Views

SP500 Intraday Bullish Above Bearish Below 450

• Above 4450 opens 4475
• Primary resistance  is 4510
• Primary objective is 4335
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Intraday Bullish Above Bearsih Below 1.0860

• Below 1.830 opens 1.0780
• Primary support is 1.830
• Primary objective is 1.07
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

GBPUSD: Intraday Bullish Above Bearish Below 1.28

• Below 1.2680 opens 1.2620
• Primary support  is 1.2590
• Primary objective 1.3850
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 145

• Below 144.90 opens 143.90
• Primary support 141.90
• Primary objective is 147.20
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

AUDUSD Intraday Bullish Above Bearish Below .6450

• Above .6500 opens .6600
• Primary resistance  is .6670
• Primary objective is .6200
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Intraday Bullish Above Bearish below 27000

• Above 29000 opens 30000
• Primary resistance  is 28750
• Primary objective is 24757
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

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