Daily Market Outlook, August 14, 2023

Daily Market Outlook, August 14, 2023Munnelly’s Market Commentary… Asian equity markets encountered downward pressure driven by ongoing economic concerns in China and apprehensions over developer defaults. This backdrop of risk aversion loomed over the region, especially with significant upcoming events such as key global data releases and the imminent release of the latest Federal Open Market Committee (FOMC) minutes.The Nikkei 225 index (-1.3%) in Japan experienced initial fluctuations between gains and losses. Early advances, attributed to a weaker currency, were eventually nullified as the index succumbed to the prevailing risk-off sentiment. In contrast, the Hang Seng index (-2.5%) and the Shanghai Composite index (-1.0%) recorded declines. Among these, the Hang Seng index took the hardest hit, largely due to substantial losses in the technology and property sectors. These losses were amplified by concerns surrounding defaults, as evidenced by Country Garden Holdings' suspension of trading for 11 onshore bonds and Sino-Ocean Group's announcement regarding the suspension of trading for 6% guaranteed notes due in 2024. Adding to the concerns, China's recent lending data revealed a significant drop of nearly 90% in New Yuan Loans, marking the lowest figure since 2009. Participants are also bracing themselves for the release of Chinese activity data scheduled for the following day, as well as the upcoming earnings reports from major tech giants Tencent and JD.com later in the week.The start of the week is expected to be relatively quiet, with a data docket devoid of any significant data releases. However, the data calendar for the rest of the week is quite active, particularly in the UK. The labour market report on Tuesday will be followed by inflation data on Wednesday and retail sales data on Friday. Anticipated mixed outcomes in these reports may underscore the Bank of England's delicate position as it contemplates the possibility of another interest rate hike. Forecasts suggest that the labour market report will reignite domestic inflationary concerns. Despite the BoE acknowledging tentative signs of easing labour market pressures in its August Monetary Policy Report, a further decline in reported unfilled job vacancies might be seen as another indication of this trend. Nevertheless, employment is projected to have risen by 155,000 in the three months leading to June, with the unemployment rate likely remaining stable at 4.0%. Furthermore, annual average earnings growth is expected to accelerate, reaching a new multi-year high of 7.4%. These forecasts are expected to intensify the challenges faced by the Bank of England.CFTC Data As Of 11-08-23USD net spec short cut significantly in Aug 2-8 period; $IDX +0.52%EUR$ -0.31% in period; specs -22,251 contracts now +149,811$JPY +0.1% in period; specs -3,964 contracts as pair rises to key 145 lvlGBP$ -0.22% in period; specs -2,542 contracts, long cut to +47,020AUD$ -1.13% in period; specs +8,600 contracts, specs bottom-fish$CAD +1.05%; specs -6,988, position flips to -623BTC +2.64% specs -610 contracts into strength, now short 1,149 (Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0975-80 (865M), 1.1000 (1.9B), 1.1050 (535M), 1.1065 (555M)USD/JPY: 142.00 (1.8B). GBP/USD: 1.2510 (310M), 1.2885 (305M)AUD/JPY: 0.9000 (915M). AUD/USD: 0.6505 (950M). USD/CAD: 1.3350 (580M)USD/ZAR: 19.3800 (540M)FX Options PositioningImplied volatility for near-term contracts in the G10 foreign exchange market continues to decline and has further decreased following the release of the CPI data, as was anticipated. The 1-month benchmark contracts are now approaching the possibility of revisiting their lows from June, indicating a resurgence of the typical FX market conditions during the traditional quieter period of August.Overnight Newswire Updates of NoteGoldman Pencils In First Fed Rate Cut For Second Quarter Of 2024Britain’s Landlord Selloff May Be Much Bigger Than First ThoughtNZIER Recommends The RBNZ’s OCR Should Remain At 5.5% In AugustYen Slides To Weakest Since November On Wide Japan-US Yield GapYuan Drops Toward This Year’s Low As Chinese Economy SputtersOil Edges Lower After Seven-Week Rally Driven By Tighter MarketGas Market Ructions Fuel Concerns About Energy Bills This WinterChina Stocks Close To Erasing Politburo Gains Amid Economic WoesTesla Cuts China Price Of Top-End Model Ys In Latest SalvoSoftBank In Talks To Buy Vision Fund's 25% Stake In ArmChina Country Garden To Suspend Onshore Bond Trading From Monday(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Intraday Bullish Above Bearish Below 4500Above 4530 opens 4560Primary resistance  is 4560Primary objective is 438020 Day VWAP bearish, 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 bearish, 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 bearish, 5 Day VWAP bearishUSDJPY Bullish Above Bearish Below 143Below 143 opens 142Primary support 140.50Primary objective is 147.2020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Intraday Bullish Above Bearish Below .6660Above .6750 opens .6820Primary resistance  is .6730Primary objective is .646620 Day VWAP bearish, 5 Day VWAP bearsihBTCUSD Intraday Bullish Above Bearish below 30000 Below 29400 opens 28300Primary support  is 28300Primary objective is 3275020 Day VWAP bearish, 5 Day VWAP bearish