Daily Market Outlook, January 23, 2024

Daily Market Outlook, January 23, 2024Munnelly’s Market Minute…“China Mulling $278Bln Equities Bailout”Asian stocks mostly rose after Wall St's fresh record levels, but gains were limited ahead of risk events. The region also processed the BoJ policy decision and reports of a potential Chinese equity market rescue package. Nikkei 225 extended gains after the BoJ maintained its ultra-easy policy, as widely expected. Hang Seng and Shanghai Comp were somewhat varied, with Hong Kong boosted by reports of a potential equity market rescue package,China may consider a USD 278 billion equity market rescue package, as reported by Bloomberg citing sources. while tech names were also helped after China's gaming regulator took down draft rules for controlling spending on video games from its website. Conversely, the mainland lagged as initial support from the news of a potential equity market rescue waned, given that potential support measures remain speculation and more stimulus will likely be needed to revive the property sector.Released earlier this morning UK public finances data for December indicated net borrowing of £6.8 billion. This figure is approximately £4.5 billion below expectations and less than half of the borrowing reported in December of the previous year. The Office for Budget Responsibility, in its commentary following the November data, acknowledged that in the first eight months of the fiscal year, borrowing had been higher than the same period a year ago and exceeded its November forecast. However, it anticipated a slower increase in the remaining months of the fiscal year due to stronger receipts. Today's data appears to align with that expectation. The upcoming January data, which will include self-assessment income tax receipts, is anticipated to provide insights into the potential fiscal space for Chancellor Hunt, especially concerning any potential tax cuts.Ahead of the European Central Bank's policy update on Thursday, today's ECB bank lending survey will offer evidence regarding the impact of past interest rate moves on credit demand and supply. ECB Chief Economist Lane emphasized the importance of this survey in the ECB's analysis, potentially offering insights into the Board's willingness to cut rates.In the Eurozone, consumer confidence data for January is set to be released. This measure has seen increases for two consecutive months and currently stands at its highest since February 2022. Despite being relatively low compared to the longer-term picture, the rise suggests that consumers perceive an improving environment as inflationary pressures ease. A further modest increase is expected for January.The rest of today's data docket is scant, Stateside, the Richmond Fed's manufacturing index for January will provide an update on recent conditions, with the consensus expectation anticipating some improvement. However, this index typically does not attract significant market attention. Overnight Newswire Updates of NoteBoJ Keeps Ultra-Loose Policy Intact, Cuts Inflation ForecastJapan LDP’s Kishida Faction Approves Its DissolutionChina Weighs Stock Market Rescue Package Backed By $278 BlnGoldman’s Hatzius Sees US Soft Landing, Basis For March Fed CutFed Review Clears Central Bank Officials Of Violating RulesUnited Airlines Forecasts Q1 Loss Due To Boeing 737 Max 9 GroundingNetflix Film Chief Scott Stuber Leaving To Start New CompanyChina Regulator Removes Draft Video Game Rules From Website; Shares JumpSamsung Races Apple To Develop Blood Sugar Monitor That Doesn’t Break SkinIndia Overtakes Hong Kong As World’s Fourth-Largest Stock MarketRed Sea Reroutings To Further Disrupt Car Supply Chains, Warn Shipping Execs(Sourced from Bloomberg, Reuters and other reliable financial news outlets)FX Options Expiries For 10am New York Cut(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0915-25 (874M), 1.0975 (595M)USD/CHF: 0.8600-10 (326M)AUD/USD: 0.6650 (452M), 0.6700 (510M)USD/CAD: 1.3400 (354M), 1.3475-80 (413M)USD/JPY: 146.75 (450M), 147.00 (536M), 150.00 (559M)The FX realized volatility in major currency pairs continues to trade at its lowest levels in two years, putting pressure on overall G10 FX option implied volatility. Despite a busy week with central bank meetings and data releases, there is a lack of demand for FX volatility premium, suggesting that FX realized volatility may not increase. If FX realized volatility remains low this week, larger G10 FX option expiries and related hedging flows may have a greater impact on the FX market. For those seeking direction in EUR/USD, risk reversal contracts do not provide any clear answers, as the downside strike premium is at long-term lows and there has been no premium for topside strike options since November 2022. Additionally, USD/CNH option implied volatility is returning to longer-term lows.CFTC Data As Of 12/01/24USD bearish decreasing -9,298CAD bearish increasing -992EUR bullish decreasing 14,150GBP bullish increasing 2,443AUD bearish increasing -3,151NZD neutral neutral -177MXN bullish neutral 2,370CHF bearish neutral -542JPY bearish neutral -4,803Technical & Trade ViewsSP500 Bullish Above Bearish Below 4810 Daily VWAP bullishWeekly VWAP bullishBelow 4800 opens 4750Primary support 4700Primary objective is 4880EURUSD Bullish Above Bearish Below 1.0930 Daily VWAP bullishWeekly VWAP bearishAbove 1.10950 opens 1.10Primary resistance 1.10Primary objective is 1.0730GBPUSD Bullish Above Bearish Below 1.2750Daily VWAP bullishWeekly VWAP bearishAbove 1.28 opens 1.2870Primary resistance  is 1.2785Primary objective 1.25USDJPY Bullish Above Bearish Below 146.40 Daily VWAP bullishWeekly VWAP bullishBelow 146 opens 145.50Primary support 143.50Primary objective is 149AUDUSD Bullish Above Bearish Below .6650Daily VWAP bullishWeekly VWAP bearishAbove .6680 opens .6550Primary support .6525Primary objective is .6933BTCUSD Bullish Above Bearish below 43600Daily VWAP bearishWeekly VWAP bearishAbove  43590 opens 46000Primary support  is 40000Primary objective is 36097