Daily Market Outlook, November 13, 2023

Daily Market Outlook, November 13, 2023Munnelly’s Market Commentary… Asia – stock markets displayed a subdued performance as the region approached key risk events for the week. Investors exercised caution in anticipation of influential factors, including the release of US Consumer Price Index (CPI) data, Chinese activity data, the Biden-Xi meeting, and the looming US government shutdown deadline. In Japan, the Nikkei 225 initially saw gains following softer-than-expected Producer Price Index (PPI) data but later reversed its upward trajectory amid increasing yields and ongoing earnings reports. Hang Seng and Shanghai Composite traded cautiously, with optimism stemming from Alibaba and JD.com's strong Singles Day sales tempered by market hesitancy ahead of key Chinese economic data releases and the Biden-Xi summit. The cautious sentiment across the region underscores the impact of pending events on market dynamics and the overall risk environment.Europe – The UK is gearing up for a substantial week of data and insights from Bank of England (BoE) policymakers. The week begins with remarks from Catherine Mann, a known advocate for tighter monetary policy, and Sarah Breeden, a recent addition to the Monetary Policy Committee (MPC). Mann was among the minority that voted for an additional quarter-point increase in the Bank Rate at the November meeting, contrasting with the majority favouring a rate hold at 5.25%, a position that includes Breeden. Following the recent GDP report revealing stagnation in Q3 growth and indications of a loosening labour market, observers are keen to see if Mann's stance shifts away from supporting further rate hikes. Meanwhile, markets will be watching Breeden for clues on her outlook regarding potential future rate cuts, especially given her support for the pause in November. While today lacks major releases, tomorrow's early morning release of the UK labour market report is expected to shed light on domestic inflationary trends. However, due to ongoing data issues, the Office for National Statistics (ONS) will publish September results for its new 'experimental' employment and unemployment rate series, complicating precise forecasts. Nevertheless, indicators unaffected by data problems, such as employee figures based on PAYE returns and unfilled job vacancies, are anticipated to affirm a trend of easing labour market tightness. Additionally, both regular and overall pay growth for the three months to September are projected to show a slowdown, though the BoE has suggested these figures may overstate wage pressures compared to other data sources. As a result, the impact of this news on BoE policymakers' decisions may be limited.Europe is also set up for a busy data schedule this week, with several key releases on the agenda. On Tuesday, attention will be on the UK jobs data, the German ZEW survey, and Eurozone flash GDP figures. Additionally, Eurozone industrial production and trade data are set to provide further insights into economic activities in the region. Towards the end of the week, the Eurozone final October Harmonized Index of Consumer Prices (HICP) will be released, offering a comprehensive look at inflation trends. The week will culminate with a keynote speech by European Central Bank (ECB) President Christine Lagarde at a banking conference on Friday. Investors and analysts will keenly follow Lagarde's remarks for any hints or insights into the ECB's monetary policy stance and the central bank's outlook on economic conditions in the Eurozone.The convergence of these economic indicators and the speech by ECB President Lagarde makes this week a crucial period for assessing the economic landscape in Europe and understanding potential policy implications.US – Stateside, the upcoming week in the U.S. is poised for heightened event risk, with particular attention on the October Consumer Price Index (CPI) scheduled for Tuesday. This release holds significant potential to impact market sentiment, especially in the wake of unexpectedly hawkish comments from Jerome Powell last Thursday. Projections for the Core CPI anticipate no change from September, holding steady at 0.3% month-on-month and 4.1% year-on-year. In addition to the CPI data, other crucial releases include the October Producer Price Index (PPI), retail sales figures, industrial production data, weekly jobless claims, the Philadelphia Federal Reserve Index, and housing starts. These indicators collectively provide a comprehensive overview of various facets of the U.S. economy. Market watchers will also closely follow several speeches by members of the Federal Open Market Committee (FOMC), particularly in the aftermath of Powell's hawkish tone. The guidance from these officials will be instrumental in gauging the potential trajectory of monetary policy. Beyond economic indicators, the U.S. will host a summit of Asia-Pacific Economic Cooperation (APEC) country leaders. Attention will be focused on the possibility of a meeting between President Joe Biden and Chinese President Xi Jinping, as geopolitical dynamics continue to play a crucial role in shaping global economic landscapes. The combination of economic data releases and geopolitical events makes this week a period of heightened significance for U.S. markets and the broader global economic landscape.FX Positioning & Sentiment The USD/JPY currency pair is currently lingering close to a one-year high, propelled by heightened U.S. yields and bolstered by recent comments from Powell that have tempered expectations of imminent rate adjustments. Traders are in a holding pattern as they await the release of the U.S. October Consumer Price Index (CPI) report, recognizing its potential to significantly influence market sentiment. Moody's negative revision of the U.S. credit rating has stirred criticism from Washington, adding an additional layer of complexity to the financial landscape. Meanwhile, U.S. House Speaker Johnson has proposed a two-step measure aimed at averting a government shutdown, providing a focal point for policymakers. In terms of technicals, robust resistance levels are identified at 151.94-151.74, while underlying support is observed at 151.20-25 and 150.80-90. CFTC Data As Of 10-11-23CAD bearish neutral -3,555EUR bullish neutral 11,287 GBP bearish neutral -1,547 AUD bearish decreasing -4,760NZD bearish neutral -747MXN bullish neutral 867 CHF bearish neutral -2,047JPY bearish increasing -8,558 Gold bullish increasing 32,422USD position ex. Gold 9,060 (Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0625 (628M), 1.0700 (579M), 1.0800 (1.3BLN)GBP/USD: 1.2390 (236M)AUD/USD: 0.6340-50 (549M), 0.6410 (350M), 0.6435 (710M)USD/JPY: 150.00 (1.9BLN), 151.50 (395M), 152.00 (1.3BLN)Overnight Newswire Updates of NoteGoldman, Morgan Stanley Diverge On Fed Rate-Cut ForecastsUS Credit-Rating Outlook Changed To Negative Via Moody’sUS Sets Military Talks With China As Priority At Biden-Xi SummitShutdown Risk Lingers Despite House Speaker Compromise PlanAustin Warned Gallant About Israeli Military Actions In LebanonIsrael Fears War On The Horizon Against Hezbollah In The NorthChina Set To Add Liquidity Support To Stave Off Cash SqueezeJapan’s Input Inflation Slows Below 2% For First Time Since 2021RBA’s Kohler Sees Further Price Cooling Being More Drawn OutTraders Say UK Inflation Risks Undoing Aggressive Rate-Cut BetsGoldman Sees Resilient US Economy Tempering A Dollar DeclineChina Weighs Ending Freeze On Boeing With 737 Max Deal In US(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4375Below 4350 opens 4285Primary support 4200Primary objective is 446820 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish Below 1.0630Below 1.06 opens 1.0540Primary support 1.06Primary objective is 1.0820 Day VWAP bullish, 5 Day VWAP bearishGBPUSD Bias: Bullish Above Bearish Below 1.22Below 1.22 opens 1.2150Primary support  is 1.2069Primary objective 1.245020 Day VWAP bearish, 5 Day VWAP bullishUSDJPY Bias: Bullish Above Bearish Below 150Below 149 opens 148.30Primary support 147.30Primary objective is 152.5020 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Bullish Above Bearish Below 150Below 149 opens 148.30Primary support 147.30Primary objective is 152.5020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish Below .6450Below .6290 opens .6250Primary support .6330Primary objective is .662020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Bias: Bullish Above Bearish below 34000Below 33600 opens 32400Primary support  is 30000Primary objective is 3700020 Day VWAP bullish, 5 Day VWAP bullish