Asian equity markets traded in negative territory overnight as investors reacted to the losses on Wall Street from Friday. Market sentiment was also tempered as participants absorbed the outcome of US-China talks, and with US markets closed on Monday in observance of Juneteenth.

Freepik

The Nikkei 225 remained subdued and breached earlier support around the 33.5K handle. The Hang Seng and Shanghai Comp also declined as concerns over China's economic growth persisted, further exacerbated by downward revisions of Chinese GDP forecasts for 2023 by institutions such as Goldman Sachs, Nomura, and UBS. Additionally, market participants digested the meeting between US Secretary of State Blinken and Chinese Foreign Minister Qin in Beijing, described as candid, substantive, and constructive, although no significant breakthroughs were reported apart from agreeing to schedule a reciprocal visit at a suitable time.

Today’s data docket is relatively quiet in terms of major data releases, but several European Central Bank (ECB) policymakers are scheduled to deliver speeches. In last week's policy meeting, the ECB raised interest rates by 25 basis points to 3.5% for the deposit rate, marking the eighth consecutive increase in monetary policy meetings. President Lagarde emphazised that there is still progress to be made and clarified that, unlike the US Federal Reserve, the ECB is not taking a pause in its tightening measures. The latest economic forecasts from the ECB indicate higher underlying inflation pressures, primarily driven by a stronger employment market and wage pressures. This suggests a high likelihood of another rate hike at the next ECB meeting in July. However, there remains uncertainty about the extent to which rates may rise in the Eurozone. While both the Fed and the ECB depend on data for their decisions, market sentiment seems to lean towards more conviction in the ECB's tightening stance. Consequently, today's speeches by Simkus (09:00 BST), Lane (12:00), Schnabel (12:40), Villeroy (14:00), and de Guindos (19:00) will be closely monitored by market participants, seeking hints about the potential trajectory of euro interest rates based on individual rate-setting committee members' comments.

Stateside, there are no significant events or central bank speakers to note. However, the NAHB housebuilders survey for June will provide insights into the current impact of higher interest rates on sentiment within the housing market. The headline survey measure is expected to show a modest increase from 50 to 51, supported by a robust labor market and low inventory levels that continue to drive activity.

CFTC Data As Of 16-06-23

• MM net spec USD short dipped in Jun 7-13 period, $IDX -0.75%

• EUR$ +0.94% in period, specs -6,599 contracts now +151,822

• $JPY +0.48% in period, specs +841 contracts now -103,976

• GBP$ +1.54% in period, specs -5,749 contracts now +6,735

• AUD$ +1.45%, specs -5,277 contracts now -61,745; $CAD -0.63% specs +1,661

• BTC -4.1% in period specs -26 contracts now long 743 contracts

• Positioning data pre-Fed, ECB, BoJ meetings, no surprises by central banks

• Post-meetings Fed pause weighed on USD vs EUR, GBP; JPY tumbles on ultra-soft BoJ guidance(Source: Reuters)

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0725-35 (877M), 1.0770-75 (368M)

• 1.0825-30 (502M), 1.0840-50 (1.07BLN), 1.0900 (934M)

• USD/JPY: 140.75 (339M),

• AUD/USD: 0.6700 (275M), 0.6735-45 (371M)

• NZD/USD: 0.6280 (379M)

• USD/CAD: 1.3225 (200M), 1.3320-30 (437M)

Overnight News of Note

• Blinken To Wrap Up Rare Visit To China, May Meet Xi Jinping

• China State Council Mulls ‘Various Macroeconomic Policies’ To Boost Demand

• Australia To Spend $1.4 Bln To Address Housing Affordability

• Japan PM Kishida’s Support Slides, Clouding Election Prospects

• 'Russia Sees No Chance Of Extending Ukraine Grain Deal'

• China Tech, Yuan Fall As Stimulus Hopes Unanswered

• Ford Chairman Says US Can’t Yet Compete Against China With EVs

• Boeing Poised To Hike 737 Output ‘Soon’ As Tail Glitch Fades

• AstraZeneca Drafts Plan To Spin Off China Business Amid Tensions

• Binance.US Reaches Agreement With SEC To Avoid Full Asset Freeze

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4395 

• Below 4370 opens 4340

• Primary support is 4300

• Primary objective is 4580

• 20 Day VWAP bullish, 5 Day VWAP bullish

More By This Author: