Daily Market Outlook, October 9, 2024
Munnelly’s Macro Minute…
"Chinese Markets Post Pandemic Scale Losses As Stimulus Hopes Subside”
China's soaring stock market experienced a sharp decline on Wednesday, as disappointment over the lack of follow-through on stimulus promises triggered a rapid repricing lower in the spectacular stimulus inspired rally. The Shanghai Composite fell more than 6% with the CSI300 printing losses of more than 7%, marking its largest slump since the pandemic collapse of February 2020. The bounce in Hong Kong was quickly reversed, and metals and other commodities, as well as China proxies like the Australian dollar, were all on the slide. China watchers suggest that the National Development and Reform Commission's news conference was not the platform for a substantial policy announcement, however, the chance to reassure markets has been lost for now, and the rally is unlikely to continue unless authorities provide investors with substantial financial support.
The Chinese government has scheduled a briefing on fiscal policy for Saturday, following the ongoing negative market reaction to the previous announcement that only brought forward $28 billion in fiscal spending from next year to this year. This upcoming briefing has become a high-profile event, as a lack of substantial fiscal support to complement recent monetary policy measures could further undermine the recent rally in Chinese equities.
US stock futures also slumped in response to a story implying the US Justice Department was considering dissolving Google. Ten-year Treasury rates continued to rotate around the 4% level ahead of the FOMC minutes release later today. The FOMC minutes from the September meeting may not provide much new information, as Fed officials have been vocal in recent days about the positive implications of last week's robust job market data for the economy.
Overnight Newswire Updates of Note
Ex-BoJ Official: January Rate Hike Likely
RBA Boosts Risk Assessment On Tools
RBNZ Cuts Rates 50bps For Second Time
Fed’s Jefferson: Rate Cut For Jobs
Boston Fed’s Collins: Data-based Rate Cuts
Dollar Steady Before Fed Minutes, Kiwi Falls
Short Treasury Bets Fade As Rate Cut Hopes Drop
ECB’s Stournaras Sees Likely Case For More Easing
Tax Concerns Hit UK Business Confidence
Oil Holds China Drop, Eyes Middle East
US DoJ Weighs Google Breakup
Boeing Withdraws Offer As Talks Fail
Mizuho Buys Safe Assets For Soft Landing Risks
(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)
EUR/USD: 1.0870-75 (425M), 1.0900-10 (800M) 1.0950-55 (566M)
1.0965-75 (496M), 1.1000-10 (1.175BLN), 1.1050-60 (711M)
1.1070-75 (264M), 1.1100 (293M), 1.1120 (298M)
USD/CHF: 0.8515-25 (930M), 0.8575 (319M)
EUR/SEK: 11.2530 (300M)
EUR/GBP: 0.8335 (338M), 0.8430 (544M), 0.8445-50 (300M)
AUD/USD: 0.6625 (648M), 0.6660-65 (346M), 0.6750 (257M)
0.6765-75 (427M), 0.6800 (207M)
NZD/USD: 0.6050-60 (1.2BLN), 0.6160 (434M), 0.6175-85 (633M)
0.6200 (200M), 0.6250 (817M)
USD/CAD: 1.3535-40 (791M), 1.3550 (604M, 1.3700 (435M)
USD/JPY: 144.75 (1.7BLN) 146.00 (654M) 147.00 (1.9BLN), 147.35-50 (1.58BLN)
149.00-15 (742M), 149.30-40 (421M), 150.00 (557M), 150.20 (496M)
EUR/JPY: 161.40 (276M), 163.50 (401M)
CFTC Data As Of 4/10/24
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 bullish
Weekly VWAP bullish
Below 5720 opens 5660
Primary support 5575
Primary objective 5820
EURUSD Bullish Above Bearish Below 1.11
Daily VWAP bearish
Weekly VWAP bearish
Above 1.1030 opens 1.1120
Primary support 1.0850
Primary objective 1.0850
GBPUSD Bullish Above Bearish Below 1.3230
Daily VWAP bearish
Weekly VWAP bearish
Below 1.31 opens 1.29
Primary support is 1.29
Primary objective 1.29
USDJPY Bullish Above Bearish Below 144
Daily VWAP bullish
Weekly VWAP bullish
Below 141.50 opens 138
Primary resistance 152
Primary objective is 152
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!