Daily Market Outlook, June 06, 2023

Munnelly’s Market Commentary… 

Asian equity markets had a mixed trading session overnight, with price action mostly range bound. The subdued performance on the Wall Street, where investors "sold the news" following Apple's headset announcement, coupled with weak data releases, contributed to the clouded sentiment, ISM Services data has prompted speculation that the Federal Reserve will maintain its current interest rate levels at the upcoming June policy meeting. Market expectations currently indicate a high likelihood of an unchanged decision on June 14th, with a 70% probability.The Reserve Bank of Australia (RBA) surprised the market with a 25bps rate hike, raising the Cash Rate Target to 4.10%, while also keeping the possibility of additional policy tightening on the table, the latest rate rise accounts for the 12th increase in the last 13 board meetings.

Initially, the Nikkei 225 (+0.6%) faced pressure due to disappointing data on Household Spending and Labour Earnings. The index briefly slipped below the psychological level of 32k handle but found support and staged a recovery as investors bought the dip.

Later this morning, the Eurozone retail sales data for April will be released, with expectations of a modest month-on-month increase of 0.2% following the 1.2% decline in March. Retail sales in the Eurozone have shown weakness, experiencing a fifth consecutive quarterly fall in Q1. Despite this, the European Central Bank (ECB) remains poised to raise interest rates next week as policymakers prioritise addressing inflation concerns. The release of the ECB's consumer expectations survey this morning will attract attention, as the previous release indicated a reversal in the downward trend of inflation expectations, which might have been a concern for more hawkish rate-setters.

There are no significant Stateside econ releases scheduled for today. However, on early Wednesday, the market will focus on the release of Chinese trade data, which will be analysed for signs of domestic demand strength and the impact of global demand on export growth. Concerns have been growing about the potential slowdown of China's recovery. Additionally, Australian Q1 GDP figures will be released early tomorrow, with expectations of a slowdown to 0.3% quarter-on-quarter growth compared to 0.5% in Q4.

CFTC Data As Of 02-06-23

  • USD IMM net spec short pared in May 24-30 reporting period; $IDX +0.51%

  • EUR$ long -8,011 contracts to +165,725; EUR$ -0.35% in period

  • $JPY +0.88% in period, specs +15,533 contracts now -96,193

  • GBP$ -0.05% in period, specs +1,646 contracts now long 13,235

  • $CAD +0.74%, specs sell into USD rise +18,612 contracts short cut to 29,914

  • AUD$ largest loss in period -1.41%, specs buy 4,955 on dip now -44,126

  • BTC +2.04% in period, specs -706 contracts now long 187 (Source: Reuters)

FX Options Expiries For 10am New York Cut

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

  • EUR/USD: 1.0675-85 (660M), 1.0695-00 (1BLN), 1.0740-45 (2.9BLN)

  • 1.0775-85 (500M)

  • USD/JPY: 139.05 (405M), 140.00 (1.6BLN), 140.50-60 (687M)

  • AUD/USD: 0.6645-50 (673M), 6695-05 (303M)

  • USD/CAD: 1.3365 (500M), 1.3600-10 (600M)

Overnight News of Note

  • Australia Unexpectedly Raises Key Rate To Tackle Elevated Prices

  • China, US Talks In Beijing Strike Upbeat Tone But Risks Remain

  • China Likely To Cut RRR, Interest Rates In Second Half

  • Japan Real Pay Falls For 13th Month In Challenge For Kishida

  • Australia's Current Account Surplus Widens In Q1, Small Drag On GDP

  • UK Consumers Slow Spending In May As Rising Food Costs Bite

  • Markets Brace For Deluge Of Tsy Bill Supply After US Debt Deal

  • Oil Dips As Optimism Over Saudi-Led Production Cut Fades Fast

  • Aussie Dollar Jumps On RBA Rate Hike; Asian Stocks Rise

  • Apple Debuts $3,499 Vision Pro Headset In Test Of Marketing

  • S&P Upgrade NVIDIA To ‘A+’ From ‘A’; Outlook Stable

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4250

  • Below 4240 opens 4190

  • Primary support is 4160

  • Primary objective is 4384

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearsih Below 1.0750

  • Above 1.0765 opens 1.0840

  • Primary resistance is 1.0840

  • Primary objective is 1.0840

  • 20 Day VWAP bearish, 5 Day VWAP bearish

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2440

  • Below 1.23 opens 1.2234

  • Primary support  is 1.23

  • Primary objective 1.2680

  • 20 Day VWAP bearish, 5 Day VWAP bearish

USDJPY Bias: Bullish Above Bearish Below 139.60

  • Below 139.50 opens 138.90

  • Primary support  is 137.40

  • Primary objective is 141

  • 20 Day VWAP bullish, 5 Day VWAP bearish

AUDUSD Bias:Intraday Bullish Above Bearish Below .6580

  • Below .6490 opens .6450

  • Primary resistance  is .6680

  • Primary objective is .6450

  • 20 Day VWAP bearish, 5 Day VWAP bullish

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

  • Below 26000 opens 25000

  • Primary resistance  27500

  • Primary objective is 25000

  • 20 Day VWAP bearish, 5 Day VWAP bearish