Daily Market Outlook, February 1, 2024

Daily Market Outlook, February 1, 2024Munnelly’s Market Minute…“Focus Shifts To BoE After Post FOMC Selloff”Asian markets showed a mixed performance following losses on Wall Street due to concerns in the banking sector and Federal Reserve Chair Powell's resistance to a rate cut in March. However, Chinese Caixin Manufacturing PMI data exceeded expectations. The Nikkei 225 also declined due to recent currency strength and the influence of various earnings reports on price movements. The Hang Seng and Shanghai Composite indices had mixed results, initially benefiting from stronger-than-expected Caixin PMI data and additional support measures, but gains were limited after a significant liquidity drain by the People's Bank of China, causing the mainland index to gradually reverse course.Today's attention shifts to the Bank of England's policy decision. Similar to the recent actions of the Fed and the ECB, the BoE is unlikely to adjust interest rates and will maintain them at 5.25%. The BoE has been more cautious than its counterparts in signaling a shift in interest rate policy. Consequently, markets are not fully pricing in the first UK rate cut until June, with only four rate cuts expected in total for 2024. Markets anticipate the BoE to largely reiterate its previous stance, deeming it premature to signal lower interest rates. However, there might be a change in the MPC vote split this time. In December, three out of nine members voted for another rate hike. This time, it's likely that at least one, possibly two, of them will align with the majority and vote for no change. Additionally, there's a chance that one member might vote for a rate cut. Nonetheless, markets don't anticipate a modification to the forward guidance on policy, which is expected to indicate that rates will need to remain restrictive for an extended period.This meeting also involves the BoE updating its forecasts. Near-term inflation projections are likely to be revised downward, whereas longer-term inflation forecasts might see a modest upward revision but are expected to remain close to target, supporting expectations of impending interest rate cuts.Outside the UK, Eurostat will release its preliminary flash estimate of Eurozone CPI inflation for January. Consensus suggests Eurozone headline CPI to decrease to 2.7% from December's 2.9%.Stateside, focus will be on the ISM manufacturing survey and monthly construction spending figures. While construction spending is predicted to rise, the ISM survey is expected to remain in contraction territory. The unexpected sharp rise in the separate S&P Global manufacturing PMI report might pose an upside risk to the ISM.Overnight Newswire Updates of NoteFed Keeps Rates Steady While Powell Says March Cut UnlikelyGoldman Sachs Now Forecast First Fed Rate Cut In May, From March PriorSouth Korea’s Exports Get Off To Strong Start In 2024Modest Deterioration In Japanese Manufacturing Conditions In JanuaryECB’s Lane: ECB Needs More Confidence Inflation Is Headed To 2%US House Passes $78 Bln Tax Bill In Rare Bipartisan VoteUS House To Vote On Overturning Biden’s Natural Gas-Export FreezeUS Officials See 'Progress' In Israel-Hamas Cease-Fire Negotiations10-Year Treasury Yield Falls Below 4% As Traders Evaluate Fed DecisionOil Nudges Higher On Fed Rate Cut ExpectationsQualcomm Earnings Beat As Smartphone Chip Sales Suggest RecoveryMetLife Net Income Plunges Despite Revenue SurgeTesla To Open New US Battery Plant With Equipment From CATLFAA Says Boeing 737 Audit Will Review Spirit Fuselage ProductionDisney’s India Unit Takes Valuation Hit In Planned Sale(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: 1.0790-1.0800 (1BLN), 1.0850-55 (579M), 1.0900 (1.1BLN)USD/CHF: 0.8600 (578M), 0.8625 (555M), 0.8650 (409M)EUR/CHF: 0.9350 (395M), 0.9375 (220M)GBP/USD: 1.2630 (306M), 1.2760 (413M), 1.2800-15 (485M)AUD/USD: 0.6465 (490M), 0.6590 (660M), 0.6640-50 (1.2BLN)USD/JPY: 146.50 (258M), 148.00 (260M)EUR/JPY: 158.70 (674M), 159.30 (435M), 160.20 (308M)AUD/JPY: 97.50 (721M), 98.50 (611M)The GBP/USD is declining ahead of the BoE meeting due to reduced expectations of a March rate cut by the Fed. At 08:35, the Cable is approaching 1.2641 as the USD gains strength. On Tuesday, it reached a two-week low at 1.2641, while it peaked at 1.2750 before the Fed meeting on Wednesday. If the GBP/USD continues to drop, support may be seen around 1.2600, with the 2024 low at 1.2597. The BoE Monetary Policy Announcement is scheduled for 1200 GMT, including the rate votes of four 'external' MPC members.CFTC Data As Of 12/01/24USD bearish increasing -9,298 CAD bearish increasing -992 EUR bullish decreasing 14,150 GBP bullish increasing 2,443 AUD bearish increasing -3,151 NZD neutral neutral -177 MXN bullish neutral 2,370 CHF bearish neutral -542 JPY bearish neutral -4,803 Technical & Trade ViewsSP500 Bullish Above Bearish Below 4900Daily VWAP bearishWeekly VWAP bullishBelow 4900 opens 4800Primary support 4800Primary objective is 4950EURUSD Bullish Above Bearish Below 1.0875Daily VWAP bearishWeekly VWAP bearishAbove 1.10950 opens 1.10Primary resistance 1.10Primary objective is 1.0730GBPUSD Bullish Above Bearish Below 1.2750Daily VWAP bearishWeekly VWAP bearishAbove 1.28 opens 1.2870Primary resistance  is 1.2785Primary objective 1.2570USDJPY Bullish Above Bearish Below 146 Daily VWAP bearishWeekly VWAP bullishBelow 146 opens 145.50Primary support 143.50Primary objective is 149AUDUSD Bullish Above Bearish Below .6650Daily VWAP bearishWeekly VWAP bearishBelow .6500 opens .6440Primary support .6525Primary objective is .6933BTCUSD Bullish Above Bearish below 43850Daily VWAP bullishWeekly VWAP bullishAbove  43600 opens 44700Primary resistance  is 44700Primary objective is 44700