Daily Market Outlook, September 15, 2023

Daily Market Outlook, September 15, 2023Munnelly’s Market Commentary… Asian equity markets posted gains as they followed the positive global trend driven by robust U.S. economic data, a dovish rate hike by the European Central Bank (ECB), and the People's Bank of China's (PBoC) cut in the Reserve Requirement Ratio (RRR). Additionally, better-than-expected Chinese economic data provided further support. The Nikkei 225 index increased by 1.1%, benefiting from the strong performance of power companies. SoftBank also saw a boost after its subsidiary, Arm, saw a 25% increase in its U.S. debut. Meanwhile, the Hang Seng index gained 1.7%, and the Shanghai Composite rose by 0.3%, both lifted by encouraging Chinese activity data. Industrial Production and Retail Sales in China exceeded expectations. The PBoC had recently reduced the RRR but maintained its 1-year Medium-Term Lending Facility (MLF) rate at 2.50%.Following the ECB's interest rate hike, ECB President Lagarde will hold a press conference after the Eurogroup meeting of finance ministers in Spain. Following the ECB decision, Lagarde mentioned that the focus is shifting towards the duration for which restrictive interest rates will be maintained, indicating that rates may have peaked.Market attention now shifts to updates from the U.S. Federal Reserve and the Bank of England next week. The release of the BoE/Ipsos Inflation Attitudes Survey today will provide insights into the latest inflation expectations. In the previous survey, 1-year ahead inflation expectations had fallen to 3.5%, the lowest level since late 2021. Despite generally softer data at the start of Q3, the BoE is still expected to raise interest rates next Thursday, especially with the August CPI inflation report anticipated to remain well above target.Stateside, August industrial production is forecasted to show marginal growth of 0.1% in August, consistent with ISM and PMI surveys. The Empire manufacturing survey will provide insights into September's economic activity. The University of Michigan's U.S. consumer sentiment survey for September is expected to slightly decrease to 69.1 from 69.5, reflecting consumer caution. Retail sales data from August softened compared to July, and market watchers will closely monitor the survey's inflation expectations, especially as oil prices continue to rise.FX Positioning & Sentiment Sentiment in the foreign exchange (FX) markets could face seasonal headwinds in the near future. The S&P 500 is approaching what is historically considered one of its weakest seasonal periods. It's important to note that seasonality should not be the sole factor considered when making trading decisions. There are several risk events on the horizon, including the possibility of a U.S. government shutdown and the resumption of student loan repayments. In light of these uncertainties, traders may lean towards defensive positions, with the Japanese Yen (JPY) being a potential safe haven should U.S. yields decline. Speaker McCarthy has so far been unsuccessful in preventing a potential government shutdown, which could have significant implications. Additionally, the resumption of student loan repayments, set to begin in October, is another factor contributing to market uncertainty.CFTC Data As Of 08-09-23USD net USD G10 short -$3.4bn in Aug 30-Sep 5 period, $IDX +1.17% in periodFed high for longer versus whiff of steady ECB, less austere BoE lifts USDEUR$ -1.42% in period, specs -10,448 contracts now +136,231Sellers overwhelm bottom-fishers as king USD reigns, pair flat since Tuesday$JPY +1.23% in period, specs +1,337 contracts now -97,136Longs sell USD ahead of expected intervention area near 150GBP$ -0.68% in period, specs sell 2,017 contracts now long 46,384Traders sense dovish BoE shift, high BoE rate path tempers GBP weaknessCAD & AUD shorts rise 9k & 13k respectively amid weak China growth viewBTC -6.79% in period, specs buy 532 contracts long grows to 2,039 contracts (Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0600 (270M), 1.0700 (244M), 1.0800 (673M)1.0850 (239M)USD/JPY: 145.00 (260M), 146.75 (2.03BLN), 147.00 (230M)148.00 (210M)GBP/USD: 1.2620 (900M)AUD/USD: 0.6610 (300M), 0.6630 (723M)USD/CAD: 1.3490 (210M), 1.3500 (670M), 1.3510-25 (814M)Overnight Newswire Updates of NoteChina Retail Sales Suggest Start Of Bounce Back, But Property Sector Still In DistressPBoC Boosts Liquidity Further With MLF Policy Tool, Rate UnchangedAnother Rate Cut From PBoC, 14 Day Reverse Repo To 1.95% From 2.15%Japan Considers Extending Gasoline Subsidy Beyond 2023ECB Hawks Warn Of December Rate Rise If Inflation And Wages Stay HotTrudeau Cuts Tax On Rental Builds, Pushes Grocers On Food CostsChinese Developer Sino-Ocean Suspends Offshore Debt PaymentsCountry Garden Delays Yuan Bond Extension Vote To MondayArm Climbs 25% In Nasdaq Debut After Pricing IPO At $51 A ShareUAW Strikes At Plants Owned By GM, Ford, StellantisAdobe Offers Tepid Sales Outlook Despite Growing AI OptimismDisney To Cut Target For Disney+ Streaming SubscribersByron Allen Makes $10 Bln Bid For ABC, Other Disney Networks(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4490Above 4500 opens 4540Primary resistance  is 4550Primary objective is 426620 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish Below 1.0810 – 1.0660 Target Hit – New Pattern EmergingAbove 1.860 opens 1.0945Primary resistance is 1.1066Primary objective is 1.066020 Day VWAP bearish, 5 Day VWAP bearishGBPUSD Bias: Bullish Above Bearish Below 1.25Above 1.2650 opens 1.27Primary resistance  is 1.2750Primary objective 1.2320 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Bullish Above Bearish Below 146.50Below 146 opens 144.90Primary support 144.50Primary objective is 15020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish Below .6450Above .6475 opens .6525Primary resistance  is .6620Primary objective is .632020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Bias: Bullish Above Bearish below 27000Above 28200 opens 30000Primary resistance  is 28175Primary objective is 2330020 Day VWAP bearish, 5 Day VWAP bullish