Daily Market Outlook, August 1, 2023

Daily Market Outlook, August 1, 2023Munnelly’s Market Commentary… Asian equity markets showed a mostly positive trend, taking cues from Wall Street's S&P 500, which marked its 5th consecutive monthly gain. However, market participants were also digesting disappointing Chinese Caixin Manufacturing PMI data and the Reserve Bank of Australia's (RBA) decision to keep rates unchanged.The Nikkei 225 gained 0.7%, supported by a weaker currency and positive earnings releases in Japan. A recent Bloomberg poll revealed that BoJ watchers do not expect any further policy shifts from the central bank this year, with April now considered the likely timing for any potential changes. The Hang Seng rose by 1.2%, and the Shanghai Composite increased by 0.1%, shrugging off the disappointing Chinese Caixin Manufacturing PMI data, which slipped into contraction territory for the first time in three months. Hong Kong's tech sector strength lifted the Hang Seng, while further support efforts from China helped buoy the mainland market.The rest of the day's economic calendar is dominated by July manufacturing PMI updates. The Eurozone and the UK are expected to have second readings that are unlikely to be revised from the initial estimates. Both regions experienced declines in manufacturing activity, with the Eurozone's output index reaching a 38 month low and the UK's hitting a seven month low. However, there are positive signs of easing inflationary pressures in the sector.Stateside, the first reading for the July PMI manufacturing index improved to a three month high, although it still remains below the 50 expansion level. There are signs that government incentives for 'green' industries are helping to boost demand for capital goods, offering hope that the sector's activity may be bottoming out. Nevertheless, the ISM manufacturing index for July is still expected to be below the expansion level of 50. Other data points for the US economy include construction spending, which has been impacted by higher rates but is showing tentative signs of improvement, and the job market turnover report from July. This data will provide insight into labour market conditions, with the key report on this topic being Friday's payrolls report for July.CFTC Data As Of 25-07-23USD net spec short grew in Jul 19-25 period, $IDX +1.34% in periodRates remain key driver, after period close Fed, ECB lilted dovishBoJ adjusted YCC JGB 10-yr intervention lvl to 1%, yen whipsawedEUR$ -1.52% in period, specs -1,602 contracts now -177,230$JPY +1.34% in period, specs +12,487 into strength now -77,752GBP$ -1%, specs -4,734 contracts, now +58,995; after below f/c CPIAUD$ -0.3% in period, specs -800 contracts; $CAD +0.03%, specs +5,009BTC -1.86% in period specs +516 contract by trend lows now -645 contracts(Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0900-05 (363M), 1.1000-10 (1.1BLN), 1.1030-40 (2.5BLN)1.1045-55 (2.9BLN), 1.1100 (2BLN)GBP/USD: 1.2850 (255M), 1.2855 (364M), 0.2865 (230M), 1.2900 (366M)EUR/GBP: 0.8660 (490M), 0.8710 (339M)AUD/USD: 0.6620-30 (850M). USD/CAD: 1.3285-1.3300 (818M)USD/JPY: 142.00 (1.7BLN), 142.50 (710M), 143.00 (361M), 143.25 (400M)Options Market PositioningThe implied volatility premiums for USD/JPY are notably lower for downside strikes compared to upside strikes. Additionally, trade flows are indicating a focus on pushing the USD/JPY pair towards 145.00, suggesting a potential downward movement in the exchange rate.For EUR/USD, implied volatility is declining, but there is considerable interest in owning downside strikes, which is leading to a volatility premium for EUR puts over calls on the -1-month expiry risk reversals, currently standing at 0.25. This indicates that there is a preference for hedging against potential downside risks for the EUR/USD pair in the short term.Overnight Newswire Updates of NoteAustralian Borrowers Given Reprieve As Reserve Bank Pauses AgainAustralian Manufacturing PMI Points To Soft Landing For IndustryChina's July Factory Activity Swings Back To ContractionJapan Jobless Rate Falls In Positive Sign For Wages, BOJ GoalJapan Economy Minister Goto: BoJ's Move Wasn't Shift In Monetary EasingChina Curbs Exports Of Drone Equipment Amid US Tech TensionUS Commerce Sec. Plans August China Trip As Tensions Over Tech Controls SimmerJudge Slams Ripple Decision In SEC's Case Against Terraform LabsToyota Profit Tops Estimates, Sticks To Full-Year ForecastsHSBC Announces Fresh Buyback As Higher Rates Propel Profits(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 bullish, 5 Day VWAP bullishAUDUSD 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