Daily Market Outlook, May 9, 2023

Asian equity markets traded with a mixed tone overnight after a subdued handover from Wall Street, the much anticipated Senior Loan Officers Opinion data suggested that the banking turmoil in the US had impacted credit conditions Stateside with the appetite for credit receding as loan demand declined in the aftermath of the SBV failure. The Nikkei was once again the standout performer overnight as the Japanese benchmark reclaimed the 29k handle, as rhetoric from BoJ Chief Ueda continued to point towards extensive policy review as opposed to immediate action on the banks yield curve control strategy. Chinese data overnight surprised to the downside as further concerns regarding the reopening narrative emerged, while export data exceeded expectations a sharp fall off in import data highlighted fears around consumer demand.

With the UK markets reopening after the bank holiday coronation celebrations the focus for UK investors is squarely on Thursday’s Bank of England policy update with lasts weeks central bank action from the Fed and ECB doing little to suggest any policy reversion in developed economies, the UK central bank policy announcement comes a day ahead of the UK GDP release Friday, it is expected that the UK data will confirm that the economy has once again narrowly avoided contraction. With no European tier one economic data today investors will parse comments from European Central Bank speakers, especially remarks from ECB chief economist Lane. 

Stateside the focus for investors will be on tomorrow’s inflation data, the only economic data of note today is the US NFIB small business optimism survey, with yesterday’s loan officer report suggesting that credit conditions specifically in the business sector are declining, today’s report will be eyed for further confirmation of a retreat in sentiment. With the central bank blackout period finished markets will also parse comments from Fed officials Jefferson and Willimas for further colour on the committee's support for last week's rate increase and any hints as to the future glide path for US interest rates.

FX Options Expiries For 10am New York Cut

(In bold represent larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.0950 (464M), 1.0975 (561M), 1.0990-1.1000 (534M)

  • 1.1025-30 (934M), 1.1100-05 (401M), 1.1115-25 (1.1BLN)

  • GBP/USD: 1.2455 (229M), 1.2550 (404M), 1.2700 (200M)

  • EUR/GBP: 0.8850 (453M)

  • AUD/USD: 0.6750-55 (661M), 0.6775 (289M), 0.6825 (426M)

  • NZD/USD: 0.6200 (533M)

  • USD/CAD: 1.3430 (526M), 1.3500 (400M)

  • USD/JPY: 135.00 (1BLN), 135.50 (400M)

CFTC Data As Of 02/05/2023

  • USD spec net short cut in Apr 26-May 2 period, $IDX +0.11%

  • EUR$ +0.36% in period, specs +4,089 contract now +173,489 ahead of ECB hike

  • $JPY +1.98%, specs +420 contract, now -68,324; Fed rate path uncertain

  • GBP$ +0.43%, specs -4,774 contracts now +1,065, sellers into strength

  • AUD$ +0.54% spec short grows by 5,548; $CAD 0.04% spec short grows to 50,096

  • AUD, CAD under pressure amid global growth concerns, oil hit hard in period

  • BTC +2.56% in period flips to positive as specs buy 461 contracts on dip early in period (Source RTRS)

Overnight News of Note

  • China Export Growth Slows, Imports Plunge As Recovery Wanes

  • Japan Will End YCC If Stable 2% Inflation Reached, BoJ's Ueda Says

  • Japan March Real Wages Mark Full Year Of Decline On Inflation

  • Australia Q1 Retail Sales Volumes Fall For A Second Straight Quarter

  • Australia To Post First Budget Surplus In 15 Years On Cash Surge

  • Fed Flags Concerns About Credit Tightening And Financial Stress

  • Fed’s Goolsbee Warns Debt-Limit Showdown Is Clouding Economic Outlook

  • US Treasury Sec Yellen Is Calling CEOs Personally To Warn On US Debt

  • California Boosts Scrutiny Of Banks With Assets Over $50 Billion

  • Euro Zone Inflation Will Slow But Momentum Still High: ECB's Lane

  • UK Inflation Holds Back Demand As Consumers Spend More On Less

  • Dollar Rises Slightly, Sterling Hovers Near One-Year High

  • Bittrex Files For Bankruptcy After SEC Lawsuit - WSJ

  • Goldman Sachs Joins Barclays In Bet Against Fed Rate Cuts This Year

  • Oil Prices Dip In Cautious Trade Ahead Of U.S. Inflation Data

  • Asian Stocks Edge Lower, Dollar Firm As US Inflation Data Looms

  • PayPal Earnings Top Expectations As Company Boosts Profit Forecast

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4100

  • Below 4090 opens 4040

  • Primary support is 4000

  • Primary objective is 4207

  • 20 Day VWAP bearish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearish below 1.0940

  • Below 1.0935 opens 1.0890

  • Primary support  is 1.07

  • Primary objective is 1.1128

  • 20 Day VWAP bullish, 5 Day VWAP bearish

GBPUSD Bias: Intraday Bullish Above Bearish below 1.25 Target Hit - New Pattern

  • Below 1.2475 opens 1.24

  • Primary support  is 1.2350

  • Primary objective 1.2750

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Intraday Bullish above Bearish Below 134

  • Below 133.90 opens 133

  • Primary support  is 133

  • Primary objective is 138.80

  • 20 Day VWAP bearish, 5 Day VWAP bullish

AUDUSD Bias: Intraday Bullish Above Bearish below .6750

  • Below .6730 opens .6690

  • Primary support  is .6640

  • Primary objective is .6826

  • 20 Day VWAP bullish, 5 Day VWAP bullish

BTCUSD Intraday Bias: Bullish Above Bearish below 29300

  • Primary resistance 30000

  • Primary objective is 26000

  • Below 26000 opens 25800

  • 20 Day VWAP bullish, 5 Day VWAP bearish