Daily Market Outlook, November 29, 2024
Munnelly’s Macro Minute...
"Yen Pops On Hot Japanese Inflation, Markets Looking For Green Shoots In China Data”
Although a quiet post-Thanksgiving day was anticipated in Asia, investors were prompted to chase the yen, which is poised for its strongest week in four months, by Tokyo's surprisingly high CPI data. As traders strengthened their bets on a rate hike by the Bank of Japan next month, the yen surged as much as 1.1%, hitting its highest level in six weeks and dropping below the 150-per-dollar line. According to current swaps, there is a 60% chance that the rate will rise by one quarter point to 0.5%, the highest level since 2008. The BOJ has a chance to get closer to normalising rates now that concerns about deflation have mostly been replaced by concerns about a weakening yen. Investors are better ready this time around, despite the fact that the central bank's previous rate hike created a slight market disturbance. Chinese stocks excelled in Asia, with blue-chip shares rising by 2% before the upcoming release of official surveys regarding the manufacturing and services sectors on Saturday. There is an anticipation that the large factory sector probably continued to grow in November, though at a slow rate.The yuan in China rose slightly on Friday against a weakening dollar, positioning itself for its first weekly increase in two months, which is partly due to Beijing's efforts to mitigate the currency's decline amid tariff threats from Donald Trump. However, the yuan is still on track for its largest monthly decline in almost a year and a half, and analysts predict that volatility is likely to remain high with a trade war between the U.S. and China on the horizon under Trump's administration. While the yuan has shown some stabilization, aided by the central bank's daily fixing guidance, "traders continue to be concerned about geopolitical issues and are particularly uneasy about Trump's policies.
The euro zone inflation data series, which is scheduled for release later today, is the primary risk factor. Headline inflation is anticipated to rise from 2.0% in October to 2.3%, according to economists. Nevertheless, the inflation figures from Germany were unexpectedly low, which suggests that the outlook is skewed to the downside. A 25-basis point rate reduction by the European Central Bank in December has been fully anticipated by traders. A mild inflation report could result in a more substantial 50-basis point cut, which is currently only viewed as a 19% probability. There are increased concerns among investors in French bonds as a result of the uncertainties surrounding the stability of the current government. The far-right National Rally has suggested that the French Prime Minister Michel Barnier's decision to abandon plans to increase electricity taxes may not be sufficient to avert a no-confidence vote as soon as next week, which could conceivably topple the government. Consequently, the spreads of French bonds have nearly equalled those of Greece, indicating investor apprehension regarding France's debt problems, which appear to be unresolvable.
Overnight Newswire Updates of Note
Eurozone Inflation Spike May Block December 50bp Rate Cut
BoK Surprises With Cut As Trump’s Win Boosts Trade Risks
Australia's Hot Jobs Market Keeps Rate Cuts Out Of Reach
RBNZ Silk: Rate Track Implies Slower Easing After February
RBNZ: Trump Policies Pose Medium-Term Inflation Risk
Yen Strengthens On Dollar As US Bond Yields Fall
Japan’s Former Top FX Diplomat Kanda Elected ADB Chief
China’s Yuan To Hit Record Lows Amid Rising US Tariff Threat
Under Tariff Threat, US Wholesaler Warns: 'People Will Pay'
US Preps China Chip Curbs That Stop Short Of Early Proposals
Nvidia And The AI Boom Faces A Scaling Problem
Amazon Develops Video AI Model, The Information Reports
Tech Firms To UK Reeves: Ease Capital Access In Growth Push
Airbus Struggles To Capitalise On Rival Boeing’s Difficulties
(Sourced from reliable financial news outlets)
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0525 (972M), 1.0550 (351M), 1.0575 (397M), 1.0590 (403M)
1.0600 (2.6BLN),1.0605 (415M), 1.0620-25 (1BLN), 1.0650 (1.8BLN)
USD/CHF: 0.8850 (300M), 0.8900-05 (407M)
EUR/CHF: 0.9310 (200M). EUR/SEK: 11.5100 (496M)
AUD/USD: 0.6505 (372M), 0.6570 (393M)
AUD/NZD: 1.1050 (525M)
USD/CAD: 1.3900-05 (856M), 1.4000 (380M)
USD/JPY: 149.70 (450M), 150.00 (484M), 150.70-75 (410M)
FOR AN OVERVIEW OF FX MONTH END REBALANCING MODELS CLICK HERE
CFTC Data As Of 22/11/24
Equity fund managers raise S&P 500 CME net long position by 60 contracts to 1,079,539
Equity fund speculators trim S&P 500 CME net short position by 29,885 contracts to 258,924
Euro net short position is -42,557 contracts
Japanese yen net short position is -46,868 contracts
Swiss franc posts net short position of -37,071
British pound net long position is 40,315
Bitcoin net short position is -2,084 contracts
Speculators trim CBOT US Treasury bonds futures net short position by 6,123 contracts to 35,645
Speculators increase CBOT US 10-year Treasury futures net short position by 91,701 contracts to 907,502
Speculators increase CBOT US 5-year Treasury futures net short position by 113,816 contracts to 1,983,026
Speculators increase CBOT US 2-year Treasury futures net short position by 23,473 contracts to 1,447,344
Technical & Trade Views
SP500 Bullish Above Bearish Below 5990
Daily VWAP bullish
Weekly VWAP bullish
Below 5990 opens 5800
Primary support 5795
Primary objective 6100
EURUSD Bullish Above Bearish Below 1.05
Daily VWAP bullish
Weekly VWAP bearish
Above 1.05 opens 1.07
Primary resistance 1.0950
Primary objective 1.0380 - TARGET HIT NEW PATTERN EMERGING
GBPUSD Bullish Above Bearish Below 1.2750
Daily VWAP bullish
Weekly VWAP bearish
Above 1.26 opens 1.2750
Primary resistance 1.3050
Primary objective 1.25 - TARGET HIT NEW PATTERN EMERGING
USDJPY Bullish Above Bearish Below 154
Daily VWAP bearish
Weekly VWAP bearish
Below 150 opens 148
Primary support 150
Primary objective is 157.50
XAUUSD Bullish Above Bearish Below 2600
Daily VWAP bullish
Weekly VWAP bullish
Below 2530 opens 2467
Primary support 2530
Primary objective is 2800
BTCUSD Bullish Above Bearish Below 92000
Daily VWAP bullish
Weekly VWAP bullish
Below 91000 opens 87500
Primary support is 85000
Primary objective is 100,000
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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!