Daily Market Outlook, October 7, 2024
Munnelly’s Macro Minute…
"US Exceptionalism Narritive Gains Momentum Ahead Of Inflations Data”
From concerns about a U.S. economic "hard landing", the discussion has shifted to the potential for a so-called "no landing", where the labour market remains robust even as inflation eases.
The narrative is so compelling that it has completely absorbed the attention of traders and investors, even as Israeli bombs fell in Gaza and Lebanon, with Monday marking one year since the Hamas attack that triggered war.
Asian stocks picked up where Wall Street had left off, and Japan's Nikkei led the charge with a 2% surge, receiving additional support from a significantly weaker yen. The U.S. exceptionalism narrative, which had been on shaky ground last month, is standing tall – and the mighty dollar is straddling its shoulders.
The upcoming week in financial markets will be shaped by inflation data from the world's two largest economies, the Reserve Bank of New Zealand's rate decision, speeches by Federal Reserve officials, Middle East tensions, and expectations of further Chinese stimulus measures. The U.S. faces another busy week for data, including September CPI and PPI, trade, weekly jobless claims, and preliminary October University of Michigan consumer sentiment. At least 13 Federal Reserve speakers will provide their opinions on the U.S. economy and interest rates, and markets will also sift through the Fed's September meeting minutes. China's markets reopen on Tuesday, and investors are anticipating further stimulus measures from Beijing. The RBNZ meets on Wednesday, and markets are nearly 100% priced for a half-point cut to the 5.25% cash rate. The euro zone has a light data schedule, while the UK's Bank of England Monetary Policy Report hearings before parliament on Thursday may create volatility. Japan has a quiet calendar, with PPI, trade, and current account data as the main releases.
There will be a flurry of central bank speakers on Monday. ECB chief economist Philip Lane and board member Piero Cipollone will both give speeches in Frankfurt, and peer Jose Luis Escriva will speak in Madrid. There is also a Eurogroup meeting in Luxembourg, with Lagarde in attendance. In the United States, we'll hear Fedspeak from Governor Michelle Bowman and three regional heads: Minneapolis' Neel Kashkari, Atlanta's Raphael Bostic, and St. Louis' Alberto Musalem. Chicago Fed President Austan Goolsbee had already commented on the jobs data on Friday, calling the figures "superb" and giving the Fed "both time and runway to figure out where the settling point is", though he added that rates still need to come down "a lot" from here.
Overnight Newswire Updates of Note
Overnight Newswire Updates of Note
UK Broadcasters Strike Amazon Streaming Deal
China Officials To Outline Growth Plan Tuesday
BoJ Rate Hike Plans Hit Political Snag
Japan’s FX Diplomat Warns On Yen Speculation
Economist: RBA Rate Cuts Likely Before Election
RBNZ Shadow Board Split On Rate Cut Size
ECB’s Villeroy: Oct Rate Cut Likely Amid Low Inflation
BoE Chief Economist Urges Caution On Rate Cuts
BoE May Derail Labour’s Spending Plans
REC: UK Pay Growth Slowest Since Feb 2021
Starboard Value Takes $1B Stake In Pfizer
Rio Tinto Seeks $4B Arcadium Lithium Deal
ASX Lifted By Oil Bounce Amid Middle East Tensions
Gold Slips, US Jobs Data Fuels Smaller Rate Cut Bets
Israel Plans Response To Iran Attack
(Sourced from reliable financial news outlets)
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FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EURUSD: 1.0960-70 (1.5BLN), 1.1000 (3.4BLN), 1.1040-50 (1BLN)
1.1070-80 (803M), 1.1100 (1.6BLN)
USD/CHF: 0.8275 (1.4BLN), 0.8400 (700M), 0.8450 (570M), 0.8575 (706M)
0.8675 (630M)
EUR/GBP: 0.8410-15 (587M)
AUD/USD: 0.6820 (375M), 0.6835 (452M), 0.6850 (1.6BLN), 0.6880 (326M)
USD/CAD: 1.3500-10 (2BLN), 1.3530-40 (433M), 1.3540-45 (776M)
1.3555 (400M), 1.3580 (600M), 1.3595-1.3600 (1.2BLN)
USD/JPY: 145.00 (536M), 146.00 (776M), 146.25 (929M), 146.50 (1.3BLN)
147.00 (364M), 148.00 (1BLN)
EUR/JPY: 166.45 (1BLN). AUD/JPY: 99.50 (305M)
CFTC Data As Of 27/9/24
Euro net long position is 55,327 contracts
Japanese Yen net long position is 56,772 contracts
Swiss Franc posts net short position of -22,854 contracts
British Pound net long position is 93,765 contracts
Bitcoin net short position is -1,684 contracts
Equity fund managers cut S&P 500 CME net long position by 19,566 contracts to 1,047,707
Equity fund speculators trim S&P 500 CME net short position by 26,358 contracts to 302,277
Speculators increase CBOT US 10-year Treasury futures net short position by 118,611 contracts to 1,143,889
Technical & Trade Views
SP500 Bullish Above Bearish Below 5735
Daily VWAP bearish
Weekly VWAP bullish
Below 5720 opens 5660
Primary support 5575
Primary objective 5820
EURUSD Bullish Above Bearish Below 1.1180
Daily VWAP bearish
Weekly VWAP bearish
Above 1.1030 opens 1.1120
Primary support 1.09
Primary objective 1.1250
GBPUSD Bullish Above Bearish Below 1.3230
Daily VWAP bearish
Weekly VWAP bullish
Below 1.31 opens 1.29
Primary support is 1.29
Primary objective 1.29
USDJPY Bullish Above Bearish Below 142.50
Daily VWAP bullish
Weekly VWAP bearish
Above 141.50 opens 138
Primary resistance 148
Primary objective is 148.38 - TARGET HIT NEW PATTERN EMERGING
XAUUSD Bullish Above Bearish Below 2645
Daily VWAP bearish
Weekly VWAP bullish
Below 2600 opens 2550
Primary support 2550
Primary objective is 2720
BTCUSD Bullish Above Bearish Below 60000
Daily VWAP bearish
Weekly VWAP bullish
Below 57000 opens 52000
Primary support is 500000
Primary objective is 700000
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Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!