Daily Market Outlook, June 30, 2023

Daily Market Outlook, June 30, 2023Munnelly’s Market Commentary… Asian equity markets traded cautiously into month & quarter end, with modest gains against the backdrop of a higher yield environment. Market participants were digesting a series of data releases at the end of the quarter, including the latest official PMIs from China. The Nikkei 225 in Japan declined, impacted by mixed data such as disappointing Industrial Production and softer-than-expected Tokyo CPI. However, the losses were cushioned by recent currency movements, with USDJPY briefly reaching its highest level since November. The Hang Seng and the Shanghai Composite gained following the release of Chinese PMI data. While headline Manufacturing PMI matched estimates at 49.0, Non-Manufacturing PMI was slightly below expectations at 53.2 but still indicated a solid expansion.In the UK, the June Lloyds Business Barometer revealed a rebound in business confidence after a dip in the previous month. The report showed increased optimism regarding both firms' trading prospects and the broader economy. Business sentiment improved in ten out of twelve UK regions and nations and across the four main sectors. Staffing expectations reached a one-year high, while firms' expectations for average pay growth also picked up compared to the beginning of the year. Wage and price expectations remained elevated relative to pre-pandemic levels.For the Eurozone, today's June CPI data is expected to show a decrease in annual inflation to 5.5% from May's 6.1%, reaching its lowest level since January 2022. However, the "core" rate, which excludes volatile components, is anticipated to accelerate to 5.5% from 5.3%, suggesting that some inflationary pressures remain persistent.In the US, recent data releases, such as the upward revision of Q1 GDP growth and lower-than-expected weekly unemployment claims, indicate that economic activity remains stronger than anticipated. The personal spending report for May, set to be released today, is expected to show slower growth compared to April but still indicative of overall growth in Q2. The report will also include the consumer expenditure deflator, the Federal Reserve's preferred inflation measure. Headline inflation is forecasted to experience a significant decline, while the core inflation rate is expected to remain unchanged at 4.7%, well above the Fed's target of 2%. Based on expectations, the Chicago Purchasing Managers' Index (PMI) for June is anticipated to show an improvement compared to the previous month. However, it is projected to remain below the threshold of 50.0 which would suggest ongoing challenges for the manufacturing sector in the region.Citi Quants Month End Rebalancing ExpectationsCiti has published its preliminary estimate for month-end FX rebalancing, indicating a preference for selling USD. According to their model, both hedge and asset FX rebalancing requirements align in this direction. The estimate suggests that negative flows from US equities will have a significant impact on equity rebalancing. It is worth noting that month-end flows typically influence FX markets in the days leading up to the end of the month.CFTC Data As Of 23-06-23(USD net spec short grew in Jun 14-20 period; $IDX -0.76%EUR$ +1.15% in period, specs -7,173 contracts into strength, now +144,649$JPY +1.31% in period, JPY soft amid rate divergence, specs -3,680 contractsGBP$ +1.21%, specs get long ahead of CPI/BoE, +39,873 contracts now +46,608Specs guessed right higher CPI, +50bp BoE but GBP$ -150 pips from weeks highAUD$ +0.3% in period, specs +12,129 contracts on hawkish RBA, now -33.5kBTC +8.96%, specs 346 contracts into strength, halved long to +397 contractsSource: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0800 (837M), 1.0825 (280M), 1.0840 (320M), 1.0855 (573M)1.0870-75 (600M), 1.0900 (1.4BLN), 1.0935-45 (2.2BLN), 1.0950-60 (1.1BLN)USD/CHF: 0.8850 (350M), 0.9100 (252M). GBP/USD: 1.2600 (360M)EUR/GBP: 0.8600 (320M), 0.8650 (580M). NZD/USD: 0.6175 (1.9BLN)AUD/USD: 0.6600 (640M), 0.6650 (785M), 0.6690-0.6700 (540M)AUD/NZD: 1.0900 (285M), 1.0940 (255M)USD/JPY: 143.90-144.00 (1.2BLN), 144.50 (677M)Overnight News of NoteFed’s Bostic: Powell Sees More Urgency To Hike Than He DoesUS, Dutch Set To Hit China's Chipmakers With One-Two PunchChina’s Growth Momentum Slows Further Amid Stimulus CallsYen Weakens To 145 Per Dollar, Nears 2022 Intervention LevelJapan Finance Minster Warn Against Excessive Yen WeakeningTokyo’s Inflation Jumps Up Again As Japanese Output SputtersECB Hawks Take Aggressive Rates View After UK Inflation RiseUK Lloyds Business Confidence Rebounds To A 13-Month HighJPMorgan Team Ditches Bullish Treasuries View On Data BeatsBrent Oil Set For Record Quarterly Losses Run As Demand LagsApple Stock Has Another 30% Upside, Citi Says New Buy RatingNike Shows Sales Gains While Profit Fall Just Short Of Estimates(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Intraday Bullish Above Bearish Below 4370Below 4360 opens 4330Primary support is 4300Primary objective is 458020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Intraday Bullish Above Bearsih Below 1.0840Below 1.0840 opens 1.08Primary support is 1.0666Primary objective is 1.105020 Day VWAP bullish, 5 Day VWAP bearishGBPUSD Bias: Intraday Bullish Above Bearish Below 1.2650Below 1.26 opens 1.2550Primary support  is 1.2680Primary objective 1.288020 Day VWAP bullish, 5 Day VWAP bearishUSDJPY Bullish Above Bearish Below 143.50 Target Hit, New Pattern Emerging Below 143 opens 142.30Primary support  is 141Primary objective is 145.5020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias:Intraday Bullish Above Bearish Below .6660Below .6600 opens .6550Primary support  is .6448Primary objective is .691720 Day VWAP bearish, 5 Day VWAP bearishBTCUSD Intraday Bullish Above Bearish below 29500 Below 28000 opens 26900Primary resistance is 27400Primary objective is 3275020 Day VWAP bullish, 5 Day VWAP bullish