Daily Market Outlook, December 15, 2023

Daily Market Outlook, December 15, 2023Munnelly’s Market Minute… Asia – Stocks in the Asia-Pacific region mostly traded higher, buoyed by positive sentiment from Wall Street, supported by favourable data and decreasing yields following the recent dovish pivot by the Federal Reserve. The Nikkei 225 rose, surpassing the psychological 33K handle. The Hang Seng surged by 2.7%, outperforming on the back of strength in the tech sector, while the Shanghai Composite varied with a marginal decrease. Notably, in China, Industrial Production exceeded estimates, but Retail Sales fell short, House Prices continued to decline, and attention was on the People's Bank of China maintaining its one year MLF rate at 2.50% while injecting a record amount through the facility.Europe – Today's focus is on the release of December flash PMI surveys, with particular attention to the UK and Eurozone. The UK flash PMI results are likely available for the latest Bank of England (BoE) policy meeting, and are anticipated to show a slight decrease from the previous month. Despite this, the overall composite index is expected to remain above the 50 expansion level. In the previous month, services surprised positively by rising to 50.9, signalling expansion for the first time since July, while the manufacturing PMI also saw an increase. The Eurozone's December flash PMIs, including preliminary readings for Germany and France, will also be closely monitored. The composite index last month reached a four month high but remained in contraction territory (47.6) for a sixth consecutive month. Moderate improvements are expected this month, but it may not be sufficient to shift the signal into expansion territory. Despite this, the European Central Bank's (ECB) latest economic projections, updated recently, still anticipate marginal growth of 0.1% in Q4. While weak or subdued activity signals from the PMI surveys are expected, it's unlikely to prompt the BoE or the ECB to cut interest rates in early 2024. Policymakers will instead closely monitor various data sets, including indicators of domestic inflation risks such as wage growth, to assess whether CPI inflation remains on track to fall back to target. The focus is on gathering more information before making any significant monetary policy decisions.US – Stateside, the upcoming release of flash PMIs for the US may receive less attention compared to their European counterparts. Instead, the focus is expected to be on the US industrial production figures for November, which will be closely watched. This scrutiny is particularly notable following the positive surprise in retail sales reported yesterday and in the context of a relatively dovish stance from the Federal Reserve. There is anticipation that industrial output will rebound in November after the previous month's figures were impacted by auto strikes. The market will be keenly interested in these figures to gauge the trajectory of the industrial sector, especially considering the broader economic context and the recent dovish signals from the Federal Reserve. The interplay of these factors will likely contribute to the market's assessment of the overall health and resilience of the US economy.FX Positioning & Sentiment Traders in the EUR/USD market have even more incentive to secure their profits, as oil's strong performance at the end of the week could provide support for the USD at a crucial juncture. The EUR/USD has seen a surge in value due to expectations of U.S. interest rate cuts, with the European Central Bank (ECB) anticipated to follow suit in lowering rates in line with the Federal Reserve. The rate differential is expected to continue weighing on the EUR/USD pair throughout 2024. This year, the EUR/USD has rarely strayed outside the range of 1.04-1.11. The last increase above 1.10 was quickly followed by a significant drop back to the middle of the 2023 range. Traders have placed bets totaling over $20 billion on the rise of the EUR.CFTC DataDuring the period from November 29 to December 5, the net speculative position for the USD shifted from long to short. The $IDX increased by 1.35% during this period. The EUR$ decreased by 1.77% and speculators now hold 152,360 long contracts. The $JPY decreased by 0.24% and speculators now hold 104,956 short contracts. The Yen gained value after the period ended due to more hawkish talk from the Bank of Japan (BoJ), with a BoJ meeting scheduled for December 19. The GBP$ decreased by 0.88% and speculators now hold 11,665 long contracts. The AUD$ decreased by 1.4% and speculators now hold -57,681 contracts. The $CAD increased by 0.15% and speculators now hold -57,848 contracts. Bitcoin (BTC) increased by 15.6% during this period, with speculators reducing their contracts by 505 into new highs for 2023. FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0700 (1.4B), 1.0750 (1.4B), 1.0795-1.0800 (1.6B), 1.0825 (605M)EUR/USD: 1.0840-50 (2.4B), 1.0900 (1.3B), 1.0910-20 (1.5B), 1.0950 (2.2B)USD/JPY: 142.00 (580M), 143.50 (720M), 144.00 (590M), 145.00-05 (1.3B)GBP/USD: 1.2620 (350M), 1.2740-50 (495M)EUR/GBP: 0.8600-05 (640M), 0.8620-25 (750M)USD/CHF: 0.8600 (880M), 0.8900 (660M). AUD/USD: 0.6550 (622M), 0.6650 (945M)USD/CAD: 1.3400 (950M), 1.3420 (640M), 1.3430 (980M), 1.3500-05 (2.4B)EUR/NOK: 11.4700-11.5000 (565M). USD/SEK: 10.5925 (605M)Overnight Newswire Updates of NotePBoC Offers Record $112 Billion Of Cash As Economy StrugglesChina's Mixed Economic Data Unlikely To Quash Growth WorriesChina Home Price Slump Deepens As Large Cities Boost SupportChina To Run 2024 Budget Gap Of 3% Of GDP, Issue Special DebtSec Yellen To Visit China Again In 2024, Focusing On Difficult TopicsJapan Factory PMI Falls Back To Pandemic-Era Level Ahead Of BoJPoll: BoJ To Unwind Policy In January, Over 20% Of Economists SayNorth Korea May Test ICBM This Month To Ramp Up Threats To USECB Largely United On Expecting Rate Cut Later Than Market BetsEU Fails To Back Ukraine Aid After Agreeing On Membership TalksUK's Consumer Confidence Rises To Highest In Almost Two YearsFidelity, JPMorgan Buck Market By Betting Dollar To Rise In 2024(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4675Below 4600 opens 4560Primary support 4600Primary objective is 475020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish Below 1.09Below 1.0840 opens 1.0780Primary support 1.0650Primary objective is 1.105020 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish Below 1.2690Below 1.2650 opens 1.2550Primary support  is 1.2185Primary objective 1.2820 Day VWAP bullish , 5 Day VWAP bullishUSDJPY Bias: Bullish Above Bearish Below 143Above 143.50 opens 146Primary resistance 146.50Primary objective is 14020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Bias: Bullish Above Bearish Below .6660Below .6660 opens .6620Primary support .6525Primary objective is .677520 Day VWAP bullish, 5 Day VWAP bullishBTCUSD Bias: Bullish Above Bearish below 42500Below 40000 opens 38500Primary support  is 36800Primary objective is 4600020 Day VWAP bullish, 5 Day VWAP bullish