Most Asian equity markets experienced a decline in the absence of guidance from Wall Street, as the Juneteenth holiday and the People's Bank of China's (PBoC) reduction in benchmark lending rates influenced market sentiment.

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The release of Reserve Bank of Australia (RBA) Minutes from the June meeting, which indicated a delicate balance between a 25bps hike and maintaining steady rates, influenced market dynamics. Currently, money markets are leaning towards unchanged rates for the next month. The Nikkei 225 index faced a slight decrease of 0.2%, although losses were limited as the index remained above the 33k handle. Several major Japanese trading houses, supported by Berkshire Hathaway's increased stake in five of them, were among the top performers. On the other hand, the Hang Seng index and the Shanghai Composite index declined despite the PBoC's efforts to boost liquidity and reduce the benchmark Loan Prime Rates by 10bps. While a 1-year LPR reduction was widely anticipated following similar cuts to short-term funding rates, the market was disappointed by the absence of a deeper 15bps cut for the 5-year LPR, which serves as a reference for mortgages. As a result, Hong Kong-listed mainland developers experienced pressure.

For UK investors the next twenty-four hours centers around the release of UK CPI inflation early tomorrow at 07:00 BST, which precedes the Bank of England's policy announcement at midday on Thursday. Markets expect a slight decrease in headline inflation from 8.7% to 8.4% in May. Regardless of the specific figure, the outcome will underscore the relative persistence of UK inflation compared to other regions such as the US (4.0%) and the Eurozone (6.1%). Policymakers are particularly concerned about the upward trend in UK core inflation, which excludes energy and food and predominantly consists of services prices. Last week's unexpected rise in wage growth only adds to these concerns. Consequently, it is widely expected that the Bank of England will raise interest rates by 0.25% to 4.75% this week, with financial markets anticipating further hikes later in the year.

Today, there is no significant data on the docket for the UK or the Eurozone. However, there are several speeches by European Central Bank (ECB) officials following their decision last week to raise interest rates by 25 basis points. ECB President Lagarde has strongly indicated the likelihood of another hike next month, while there is some debate regarding the possibility of a further rate increase in September.

Stateside, investor attention will be drawn to housing data today, specifically housing starts and building permits, ahead of Fed Chair Powell's semi-annual testimony to Congress Wednesday. His comments will provide additional insights into the Fed's decision to skip a rate hike last week and offer further discussions on the prospects of Fed policy, including the conditions necessary to support or dismiss the policymakers' "dot plot" projections, which currently indicate expectations of 50bps of additional hikes in the second half of the year.

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 c.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: 1.0775-85 (1BLN), 1.0800-10 (380M), 1.0815-25 (309M)

• 1.0830 (275M), 1.0840-50 (353M), 1.0980 (401M), 1.1000 (934M)

• USD/JPY: 140.65-75 (914M), 141.00 (1.82BLN), 141.50 (991M),

• 141.75-80 (505M), 142.00 (1.96BLN), 142.25 (250M), 142.50 (250M)

• USD/CHF: 0.8850-60 (380M), 0.8875 (250M), 0.8950 (942M)

• 0.9100 (526M)

• GBP/USD: 1.2575 (2.1BLN). EUR/GBP: 0.8565-75 (375M

• AUD/USD: 0.6740-45 (451M), 0.6760 (308M), 0.6775 (675M)

• 0.6900 (365M)

• NZD/USD: 0.6120 (310M). USD/ZAR: 18.15 (230M)

• EUR/NOK: 11.66 (325M)

• USD/CAD: 1.3230 (220M), 1.3270-75 (644M), 1.3350-55 (440M)

Overnight News of Note

• Asia Markets Mixed As China Cuts Key Lending Rates

• Chinese Banks Disappoint With Modest Cut To Five-Year Rate

• Dollar Buoyant; Yuan Wobbles After China Cuts Lending Benchmarks

• RBA: Arguments Between Rate Hike, Rate Pause `Finely Balanced’

• RBA’s Bullock: Jobless Rate Will Lift To Help Bring Down Inflation

• Japan FinMin Says No Change In FX Policy After US Report

• NZ Announces Banking Inquiry Amid Profit Concerns

• Blinken Says US 'Does Not Support Taiwan Independence' During China Visit

• Biden Says US-China Relations Are On The 'Right Trail'

• Biden Says Threat Of Putin Using Tactical Nuclear Weapons Is 'Real'

• ECB’s Guindos Says Slowdown In Core Inflation May Be Limited

• ECB’s Stournaras Says Hikes May End In 2023, Warns On Recession

• SoftBank's Son Says He Is 'Heavy User' Of ChatGPT

• Warren Buffett's Big Bet On Japan Trading Firms Helps Push Analyst Targets Up

• US Lawmakers To Press Auto CEOs Over China Supply Chains

(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

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