Image Source: Pixabay
 

Asian equity markets maintained a muted tone overnight, mostly in the red after a lacklustre handover from Wall Street, where Fed officials comments were deemed more hawkish than expected. While Fed’s Williams ceded he would consider a pause in the rate cycle at the next meeting, he was keen to confirm that he did not see the case for rate cuts this year as markets are currently predicting. The Debt ceiling debate continues without any meaningful developments in discussions after another round of deadlock, with negotiations set to resume on Friday.

With a distinct lack of tier-one data on the docket for both UK and European investors, the data catalyst for today will be in the US session with US Consumer Price Inflation. Markets are expecting to see a small uptick in the headline print on a month-over-month basis to 0.4% snapping the nine months of declines, while the annualized metric is expected to maintain its 5% level, however, there is a view that core inflation ex-food and energy, could see a small downtick from 5.6% to 5.5%. As the major macro driver of the day, Goldman Sachs believes that any deviation from market expectations could have volatility implications for the markets with the benchmark SP500 likely to see at least a 0.5% gain on the day on any headline print sub 5%, while any upside surprise above 5.9% would see the market sell-off by at least 2%. Markets are favoring a Fed pause at the June meeting and today's data will be eyed as to further confirmation of that pause or the need for a rapid repricing, bringing another Fed increase back into play, further out markets are pricing in 63pbs of rate cuts by the end of 2023, this would suggest at least two 25bps cuts in the fourth quarter.
 

FX Options Expiries For 10 am New York Cut 

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

• EUR/USD: 1.0900 (321M), 1.0950 (331M), 1.100 (527M), 1.1050 (825M)
• 1.1070 (1.1BLN), 1.1100 (649M), 1.1150 (800M)
• USD/CHF: 0.8860 (250M), 0.9010-20 (464M)
• EUR/CHF: 0.9840 (200M), 0.9855-65 (500M)
• AUD/USD: 0.6900 (3BLN). 
• USD/CAD: 1.3350 (284M), 1.3450 (711M), 1.3600 (785M)
• USD/JPY: 134.50 (405M), 135.45 (600M) . EUR/JPY: 146.65 (300M)
   

CFTC Data As Of 02/05/2023

• USD spec net short cut in Apr 26-May 2 period, $IDX +0.11%
• EUR$ +0.36% in period, specs +4,089 contract now +173,489 ahead of ECB hike
• $JPY +1.98%, specs +420 contract, now -68,324; Fed rate path uncertain
• GBP$ +0.43%, specs -4,774 contracts now +1,065, sellers into strength
• AUD$ +0.54% spec short grows by 5,548; $CAD 0.04% spec short grows to 50,096
• AUD, CAD under pressure amid global growth concerns, oil hit hard in period
• BTC +2.56% in period flips to positive as specs buy 461 contracts on dip early in period (Source RTRS)
   

Overnight News of Note

• Asia Markets Fall As Investors Await Key U.S. Inflation Numbers
• Biden, McCarthy Divided Over Debt Ceiling But Still Talking
• Wall Street Leaders Warn Of ‘Unthinkable’ Fallout If US Defaults
• Williams Says Fed Is Data Dependent, Leaves Door Open To Pause
• ECB Must Do More To Return Inflation To 2%, Schnabel Says
• Sharp Fall In Recruitment Of UK Permanent Staff In April, Report Finds
• BoJ’s Ueda Says Too Early To Talk About Addressing ETF Holdings
• China’s GDP Growth To Pick Up In Q2 On Policy Support - Paper
• Dollar Softer As US Debt Ceiling Crisis Unresolved, Inflation Data Eyed
• Jane Street, Jump Pull Back Crypto Trading Amid US Crackdown
• Option Traders Doubt Fed Cuts As Hedge Funds Boost Futures Short
• Goldman Says Yields Biased Higher Despite End Of Tightening
• Oil Prices Edge Lower After Surprise Build In U.S. Crude, Gasoline
• Russia Says Its Oil Output Cuts Almost Hit Pledged Goal In April
• Asian Stocks Decline Wednesday Ahead Of US Inflation Data
• Stocks Will Rally If Inflation Data Is Soft, Goldman And JPMorgan Say
• Airbnb’s Bookings Rise Amid Strong Travel Demand
• Occidental Petroleum Misses Quarterly Profit Estimates

(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 1.0940

• Below 1.0935 opens 1.0890
• 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 1.2560

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

(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 .6750

• Below .6730 opens .6690
• Primary support  is .6640
• Primary objective is .6826
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Intraday Bias: Bullish Above Bearish below 29300

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

(Click on image to enlarge)

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