Daily Market Outlook, August 16, 2023

Daily Market Outlook, August 16, 2023Munnelly’s Market Commentary… Asian equity markets faced downward pressure in response to declines on Wall Street, reflecting a broad risk-off sentiment triggered by global macroeconomic challenges, notably the recent string of weak data from China. The Nikkei 225 index extended its losses, falling below the 32K handle. Major stock markets across the region were all impacted by the prevailing negative sentiment. The Hang Seng index and the Shanghai Composite index remained under pressure due to concerns about China's growth prospects. Poor recent data releases prompted several banks, including JPMorgan, to lower their growth forecasts for the world's second-largest economy. JPMorgan now anticipates 4.8% GDP growth for China this year. Additionally, the latest House Price data indicated a year-on-year contraction, adding to the ongoing challenges faced by property developers in China.In the Eurozone, the second reading of Q2 GDP is not expected to deviate from the original estimate of 0.3% growth. Simultaneously, new data for Eurozone industrial production in June is also anticipated to be released. Any significant surprise compared to the expected 0.0% monthly change could prompt a revision of the GDP outlook. Despite the initial faster-than-expected Q2 GDP growth, more recent indicators suggest the possibility of slower growth or even negative growth in Q3.The stronger-than-anticipated US retail sales data for July indicated that consumer spending was continuing to support economic growth at the start of Q3. The day also featured additional readings for July, including industrial production and housing starts, which were both expected to show growth. Despite stronger economic growth, the Federal Reserve is expected to pause its interest rate hikes in September. The minutes of the Fed's July policy meeting will be closely examined for confirmation of this stance. As the likelihood of a September rate hike is only around 10% in the markets, investors will be seeking clarity on the factors that Fed policymakers will consider when making their decision.FX Positioning & SentimentAccording to market expectations, the UK interest rate is anticipated to rise to 6% and remain at that level until June 2024. In comparison, the Eurozone deposit rate is expected to peak around 3.75% before starting to decline, trailing behind the UK's trajectory. This prolonged period of higher interest rates in the UK could exert downward pressure on the EUR/GBP exchange rate. The EUR/GBP currency pair has been testing the 100-day Moving Average (100-MMA) at 0.8541. It's important to note that the pair has been trading above the 100-MMA since August 2022. A break below this level would hold significance and might result in a decline towards 0.83. This potential downward move in the EUR/GBP exchange rate would equate to an increase in GBP/EUR from 1.17 to 1.20. Market participants will closely monitor interest rate differentials and central bank policies between the UK and the Eurozone, as these factors are likely to influence the movement of the EUR/GBP.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: 1.0850 (1.5B), 1.0900 (715M), 1.0935 (570M), 1.1000 (1.0B)EUR/USD: 1.1025 (870M), 1.1070/75 (875M)USD/JPY: 144.50 (750M), 145.00 (785M). GBP/USD: 1.2775 (490M), 1.2890 (300M)AUD/USD: 0.6500 (680M). NZD/USD: 0.6300 (585M). USD/ZAR: 18.60/65 (955M)Overnight Newswire Updates of NoteChina Stocks Approach Grim Milestones As Selloff DeepensNew Zealand Holds Rates, Signals Small Risk Of Another HikePBoC Adds Most Cash Since February Via Reverse Repo On Net BasisChina New-Home Prices Drop At Faster Pace As Downturn WorsensChinese Shadow Bank Misses Dozens Of Payments As Fallout SpreadsBanks Slash China Growth Forecasts, With JPMorgan Seeing 4.8%12th Consecutive Negative Print For The Australian Leading IndexFed Minutes Set To Show Only A Minority Saw End Of TighteningFed’s Kashkari: Not Ready To Say Fed Is Done Raising RatesWhite House Sees No Reason For A Government ShutdownYen Option Traders Unfazed By Risk Of Intervention From JapanBinance To Shut Down Crypto Payments Service, Refocus On Core ProductsOil Steadies After Two-Day Loss As US Inventories Seen DroppingLNG Strike Risks Drag On In Australia As New Talks EyedUS In Talks To Develop Ukraine’s Grain Export RoutesChina Stocks Approach Grim Milestones As Selloff DeepensIntel Set To Call Off $5.4 Billion Purchase Of Tower Semiconductor(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 1.2590Primary objective 1.385020 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bullish Above Bearish Below 144.50Below 143 opens 142Primary support 140.50Primary objective is 147.2020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Intraday Bullish Above Bearish Below .6530 Target Hit 6466 New Pattern EmergingAbove .6550 opens .6610Primary resistance  is .6730Primary objective is .646620 Day VWAP bearish, 5 Day VWAP bearsihBTCUSD Intraday Bullish Above Bearish below 30000Below 29400 opens 28300Primary support  is 28300Primary objective is 3275020 Day VWAP bearish, 5 Day VWAP bearish