Asian Markets: Markets in the region are cautious ahead of key US data releases. The number of Fed rate cuts discounted by markets has fallen to three, equaling the signal provided in policymakers’ 'dot plot' of interest rate expectations. In December, Japan's leading index rose to 110.2 from 108.1 in November, which was higher than the initial estimate of 110.0. This was the highest reading since October 2022. The coincident index also improved to 115.9 in December from 114.6, while the lagging index moderately rose to 105.9 from 105.6. The Reserve Bank of New Zealand left interest rates unchanged, while Australia's January CPI was weaker than forecast.

UK Economy: No UK data releases today. Markets noted the decrease in UK shop price inflation to 2.5% in February, the lowest in two years. Potential impacts on supply costs from the Red Sea commercial ship attack will be monitored. Tomorrow, the latest Lloyds Business Barometer will be released, reflecting potential changes in business confidence.

Bank of England: BoE MPC member Mann is scheduled to speak today, one of the two members who voted for a hike at the last meeting.

Eurozone Economic Confidence: This morning's Eurozone economic confidence report for February is expected to show a slight improvement, with the overall economic confidence index rising to 96.6 from 96.2, indicating a slightly improved outlook.

US Economic Focus: Today's key focus is on the second reading for US GDP growth in Q4 2023, expected to remain unchanged from the advance estimate of 3.3% annualized growth. Markets are also eyeing tomorrow’s PCE deflator and other indicators of economic activity, with expectations that growth will slow in Q1 but remain relatively robust compared to Europe. The latest data may support Fed policymakers’ intentions to proceed cautiously in adjusting policy.

US Political Scene: Risks of a partial US government shutdown are being monitored, though Congressional leaders express confidence in reaching a deal.

Overnight Newswire Updates of Note

• New Zealand Keeps Cash Rate On Hold, Softens Threat Of Hike

• BoJ’s Shimizu: Likelihood Of Infl Target Achievement Still Not Sufficiently High

• HK Ditches All Property Curbs In Sweeping Move To Boost Ailing Market

• Australia Inflation Steady In Jan, Supporting RBA Case To Cut Interest Rates

• US Lawmakers See Path Forward On Shutdown After Meeting With Biden

• Fed's Bowman Reiterates That It's Too Soon To Cut Interest Rates

• WH’s Kirby: Israel, Hamas Negotiations Continue Without Deal

• Apple Cancels Work On Electric Car, Ending Decadelong Effort

• Intel Aims To Deliver Chips For 100 Mln AI PCs By 2025

• Warner Bros. Discovery Halts Merger Talks With Paramount Global

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

FX Options Expiries For 10am New York Cut 

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

• EUR/USD: 1.0865 (EU3.24b), 1.0850 (EU2.17b), 1.0650 (EU1.47b)

• USD/JPY: 151.00 ($1.95b), 149.00 ($1.15b), 147.00 ($850m)

• AUD/USD: 0.5870 (AUD780m), 0.6450 (AUD300m)

• USD/CAD: 1.3725 ($769.4m), 1.3570 ($600.2m), 1.3550 ($343m)

• USD/CNY: 7.1450 ($603m), 7.2000 ($354.2m)

• USD/BRL: 4.8000 ($442m)

• USD/MXN: 16.82 ($300m)

• NZD/USD: 0.6070 (NZD350m)

• Credit Agricole’s month-end rebalancing model indicates that there will likely be moderate USD selling across the board, with the strongest sell signal for USD vs CAD and AUD. Our corporate flow model suggests EUR selling at the end of the month. Therefore, we are using the signals from the standalone month-end rebalancing model for our combined strategy. They have entered a trade to sell the USD against a weighted basket of G10 currencies and intend to hold the position until 29 February at 17:00 GMT, unless stopped out of the trade.

CFTC Data As Of 20/02/24

• Japanese Yen net short position is -120,778 contracts.

• British Pound net long position is 46,312 contracts.

• Euro net long position is 68,016 contracts

• bitcoin net short position is -2,098 contracts.

• Swiss Franc posts net short position of -9,923 contracts.

• Equity Fund managers raise S&P 500 CME net long position by 17.027 contracts to 947,280.

• Equity fund speculators increase S&P 500 CME net short position by 35.358 contracts to 419,832.

Technical & Trade Views

SP500 Bullish Above Bearish Below 5040

• Daily VWAP bullish

• Weekly VWAP bullish

• Below 5030 opens 5000

• Primary support 4940

• Primary objective is 5120

(Click on image to enlarge)

EURUSD Bullish Above Bearish Below 1.08

• Daily VWAP bullish

• Weekly VWAP bullish

• Above 1.0880 opens 1.0950

• Primary resistance 1.0950

• Primary objective is 1.0950

(Click on image to enlarge)

GBPUSD Bullish Above Bearish Below 1.2683

• Daily VWAP bearish

• Weekly VWAP bullish

• Below 1.26 opens 1.2550

• Primary resistance  is 1.2785

• Primary objective 1.2830

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 149.50

• Daily VWAP bullish

• Weekly VWAP bullish

• Below 149.50 opens 148.70

• Primary support 145.85

• Primary objective is 152

AUDUSD Bullish Above Bearish Below .6590

• Daily VWAP bearish

• Weekly VWAP bearish

• Below .6500 opens .6440

• Primary support .6440

• Primary objective is .6700

(Click on image to enlarge)

BTCUSD Bullish Above Bearish below 53000

• Daily VWAP bullish

• Weekly VWAP bullish

• Below 50000 opens 49000

• Primary support  is 49000

• Primary objective is 60000

(Click on image to enlarge)

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