Daily Market Outlook, May 2, 2023
Most major money center's have reopened after May day public holidays, Wall Street traded in a tight range given the lower overall volumes, Asian equity markets are mixed as investors are positioning for a slew of Central bank meetings for the week ahead. Overnight the Reserve Bank of Australia got the central bank ball rolling by making a surprise 25bps move raising the headline rate to 3.85% the bank also suggested that further hikes remain on the table for future meetings.
For European investors focus will be on the final meaningful data inputs ahead of Thursday’s European Central Bank (ECB) meeting. First up will be the ECB’s quarterly Bank lending figures, these will be parsed for any signals as to lending stress given the recent banking crisis and more broadly any implications for credit conditions within the Eurozone economy. Inflation data comes from Eurostat, individual national inputs would imply the possibility of a modest uptick in April's data after the steep decline seen in March, markets are expecting a circa 7% print, principally driven by energy associated base effects. Core inflation ex energy and food, is believed to pull back from 5.7% to 5.6%, representing the first decline in 12 months. PMI data for both the UK and the Eurozone is likely to confirm flash estimates and remain entrenched in contractionary territory, with manufacturing anchored below the pivotal 50 level. This mornings data, unless a meaningful miss or upside surprise occurs, is unlikely to move the ECB off course, the main query for investors is whether the ECB moves by 25bps or 50bps, markets are in the main leaning towards a 25bps move this week but any material signs of inflationary pressure exceeding expectations will likely make 50bps a lock for Thursday.
Stateside, today marks the beginning of the two day Federal Reserve meeting, markets are pricing another 25bps move, pricing implies a 90% probability. On the data front, job openings are set to reach pre-pandemic highs, while durable goods numbers are also pencilled in for a rise. ADP employment and ISM services will be released tomorrow before the FOMC rate announcement, then investor focus will shift to Friday’s Non Farm Payrolls data along with the re-emergence of a bevy of central bank speakers as the black out periods end.
FX Options Expiries For 10am New York Cut
(In bold represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0960 (1.2BLN), 1.0975 (680M), 1.0990-1.1000 (1.5BLN)
1.1050 (500M)
GBP/USD: 1.2300 (375M), 1.2610 (356M). EUR/GBP: 0.8775 (338M)
AUD/USD: 0.6600 (300M), 0.6625 (402M), 0.6700-15 (1.4BLN)
USD/CAD: 1.3750 (412M). USD/JPY: 137.70 (204M)
CFTC Data As Of 21/04/28
USD net spec short near unchanged in Apr 19-25 period, Yen sellers most active
EUR$ +0.02% in period specs +5,039 contracts now long 169,400
EUR long largest since mid-Oct '20, $-equivalent more than 2x other pairs
$JPY -0.26% in period, specs -11,875 contracts, short grows to 68,744
GBP$ -0.11% in period, specs +4,537, now +5,839 as BoE-Fed diverge on rates
CAD specs +2.4k short now 43,791, AUD specs +2,894 contracts now -39,462
BTC -8.02% in period, specs +196 contracts now short 293 (Source RTRS)
Overnight News of Note
Asia Stocks On Edge As Traders Cautious On Central Bankers
Investors Warn Of First Republic Aftershocks At Gloomy Gathering
Biden Eyes Tapping Jefferson For Fed Vice Chair, Kugler For Board
Biden Sets High-Stakes Debt-Limit Meeting As Deal Deadline Nears
Treasury Risk Running Out Of Cash As Soon As June, Yellen Warns
US Debt-Cap Fight To Restrain Auction Sizes Even As Deficit Grows
US FDIC Weigh More Business Deposit Insurance After Banks Fail
Australia Unexpectedly Raises Key Rate, Sending Currency Higher
North Asia’s Factories Stuck In Decline While Global Growth Stalls
IMF Says China Shifting On Debt Restructuring After Being Burned
Russia Near Milestone Of Buying Yuan Soon As Sanctions Hit Eases
UK Shop Price Inflation Decreases For First Time In 2023, BRC Says
Morgan Stanley Plans 3,000 More Job Cuts As Dealmaking Slumps
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4140
Primary support is 4000
Primary objective is 4207
Below 3985 opens 3950
20 Day VWAP bearish, 5 Day VWAP bullish
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EURUSD Bias: Intraday Bullish Above Bearish below 1.0990
Primary support is 1.07
Primary objective is 1.1128
Below 1.0700 opens 1.0660
20 Day VWAP bullish, 5 Day VWAP bearish
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GBPUSD Bias: Intraday Bullish Above Bearish below 1.2410
Primary support is 1.2250
Primary objective 1.2659
Below 1.22 opens 1.2010
20 Day VWAP bullish, 5 Day VWAP bullish
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USDJPY Bias: Intraday Bullish above Bearish Below 136.50
Primary support is 134
Primary objective is 138.80
Above 137.30 opens 138
20 Day VWAP bearish, 5 Day VWAP bullish
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AUDUSD Bias: Intraday Bullish Above Bearish below .6685
Primary resistance is .6750
Primary objective is .6565
Above .6775 opens .6825
20 Day VWAP bearish, 5 Day VWAP bullish
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BTCUSD Intraday Bias: Bullish Above Bearish below 28000
Primary support 26500
Primary objective is 30500
Below 26300 opens 25800
20 Day VWAP bullish, 5 Day VWAP bearish
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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!