Daily Market Outlook, July 28, 2023

Daily Market Outlook, July 28, 2023Munnelly’s Market Commentary… Asian equity markets traded mixed as investors were cautious and focused on the Bank of Japan's (BoJ) policy decision. The central bank kept monetary policy settings unchanged but announced a more flexible approach to yield curve control (YCC), with fixed rate operations for 10-year Japanese Government Bonds (JGB) to be conducted at 1.0%, an increase from the previous 0.50%. This move spooked markets, causing the Nikkei 225 to underperform, falling 1.7%. In contrast, the Hang Seng and Shanghai Composite recovered from early weakness and gained as China's efforts to support the housing market and tech industry boosted sentiment.Looking ahead, there are no major data releases on the docket in the UK today. However, next week's focus will be on the Bank of England's policy decision, with expectations of at least a 25bps interest rate increase to 5.25%, and a considerable chance of a 50bp increase to 5.5%.For the Eurozone, France reported firmer-than-predicted Q2 GDP growth of 0.5%, showing a rebound from the previous quarter. Spain also reported a rise of 0.4% for Q2. While these figures indicate a return to growth in the Eurozone, business surveys suggest weakening demand and pose downside risks for the second half of the year. Additionally, France's preliminary July CPI inflation fell to 5.0%, the lowest since February 2022, while Germany's July inflation data is still pending.Stateside, several important data releases are expected. June personal spending is predicted to increase by 0.5%, and the PCE deflator, the Federal Reserve's preferred inflation measure, is expected to fall to 3.1% from 3.8% in May, with the core measure declining to 4.2% from 4.6%. The Q2 employment cost index will also be closely watched by the Fed as a gauge of wage pressures, with an expected rise of 1.2%q/q, matching the Q1 result. A weaker figure could increase the odds of the Fed holding rates in September.CFTC Data As Of 18-07-23USD net spec short grew in the Jul 12-18 period amid a $IDX 1.65% slideEUR$ +2% in period, specs +38,670 into strength, now long 178,832 contracts$JPY -1.05%, specs +26,943 contracts, short reduced to -90,239GBP$ +0.77%, specs +5,666 contracts now +63,729; data pre-UK CPI WednesdayAUD$ +1.88%, specs -5,317 now -50,401 contracts; $CAD -0.46% specs -3,923BTC -2.6% in period specs buy 694 contracts on dip, now -1,161 contractsNote since Tuesday reporting period close the $IDX is down near 0.9%EUR$ has dipped 0.88%, $JPY rose 2.11% after period closed leaving recent EUR & JPY buyers in the red(Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0900 (433M), 1.0970-80 (500M), 1.1000 (1.7BLN)1.1020 (406M), 1.1050 (3BLN)EUR/GBP: 0.8575 (424M). USD/CHF: 0.8650-55 (316M), 0.8675 (431M)AUD/USD: 0.6750 (258M). USD/CAD: 1.3250 (578M), 1.3280 (1BLN)USD/JPY: 138.00 (465M), 140.00 (322M), 140.25 (1.3BLN), 140.65 (678M)Options Market PositioningThe overnight break-evens for EUR/USD options were perceived as costly, considering the market's expectation that the European Central Bank (ECB) would follow the Federal Reserve's path and adopt a more hawkish stance. However, those who held EUR/USD options and those who had sold EUR/USD in the cash market, as anticipated by market participants, were rewarded. The ECB's dovish shift, combined with strong economic data from the United States, led to a decline in the EUR/USD pair from 1.1150 to 1.1000. Looking ahead, month-end FX rebalancing flows are projected to be mildly USD bearish, which means they could weaken the US dollar, and simultaneously be supportive of the Euro (EUR). This could add further pressure on the USD and lend support to the EUR in the currency market.Overnight Newswire Updates of NoteBoJ Loosens Grips On Long-Term Yields In Ueda’s First SurpriseInflation In Japan's Capital Slows In July, Stays Above BoJ TargetChina Ask Tech Giants To Present Investments In Sign Of EasingTop China Housing Official Urge Fresh Real Estate Rescue EffortMoney-Market Assets At Fresh Record High Post Latest Fed HikeUS, Testing Xi, To Bar Hong Kong Leader From Economic SummitGovernment Shutdown Threatened, Congress Departs For AugustECB Discussion Suggest Inflation Outlook Risks Seen As BalancedUK Home Sellers More Open To Price Cuts As Costly Mortgages HitTurkey Erdogan Replaces Three Deputy Governors At Central BankIntel Shares Jumped After PC Recovery Bolsters Chipmaker OutlookFord Blames EV Price Fights For Slowdown In Plans To Boost Output(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Intraday Bullish Above Bearish Below 4530Below 4530 opens 4512Primary support is 4370Primary objective is 463020 Day VWAP bullish, 5 Day VWAP bearishEURUSD Intraday Bullish Above Bearsih Below 1.1020Below 1.890 opens 1.0830Primary support is 1.830Primary objective is 1.1320 Day VWAP bullish, 5 Day VWAP bearishGBPUSD: Intraday Bullish Above Bearish Below 1.28Below 1.2750 opens 1.2650Primary support  is 1.26Primary objective 1.385020 Day VWAP bullish, 5 Day VWAP bearishUSDJPY Bullish Above Bearish Below 139.60Above 143.50 opens 145Primary resistance 143.40Primary objective is 136.2020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Intraday Bullish Above Bearish Below .6800Below .6795 opens .6700Primary support  is .6448Primary objective is .700020 Day VWAP bearish, 5 Day VWAP bearsihBTCUSD Intraday Bullish Above Bearish below 30000 Below 29400 opens 28600Primary support  is 28400Primary objective is 3275020 Day VWAP bullish, 5 Day VWAP bearish