Daily Market Outlook, December 19, 2023

Daily Market Outlook, December 19, 2023Munnelly’s Market Minute… Asian stocks traded mixed after a slow start, with limited news and no significant impact from the BoJ's actions. The JPY was affected as the BoJ kept its rate and YCC unchanged, and acknowledged the recent cooling in inflation.BoJ Governor Ueda says that any policy change could involve surprise and it's difficult to present a clear picture on policy exit. He also mentions that the market should be able to forecast BoJ's policy shift to some extent. When it comes to exiting from NIRP, BoJ does not have a detailed picture of the order of policies to be taken. Additionally, accommodative conditions would be maintained for an unspecified period after lifting of negative rates. Fed's Daly mentioned the possibility of lowering interest rates in 2024 due to improved inflation. The US and its allies agreed to a Red Sea naval task force, while Yemen Houthi officials stated readiness to confront any potential US-led coalition in the Red Sea. Looking forward to the day ahead, there is not much economic data docket scheduled to be released in both the United States and Europe. The most important data point will be the last report on inflation in the Eurozone for November. However, investors are expected to focus on statements made by various central bank officials, as their comments are likely to attract considerable interest from the market. Chicago Fed President Austan Goolsbee and ECB dove Yannis Stournaras joined other central bank officials in pushing back against market expectations for a spring rate cut. Goolsbee will clarify his stance in a live interview on Tuesday, while Atlanta Fed President Raphael Bostic is also scheduled to speak about the U.S. economy at a separate event.FX Positioning & SentimentUSD/JPY option premiums decreased as the Bank of Japan kept its policy on hold and dampened expectations for a January policy move. This led to higher USD/JPY and a significant drop in FX option implied volatility. The implied volatility premiums for JPY calls versus puts also decreased, with 1-month 25 delta option risk reversals dropping from 1.9 to 1.35. The impact of the BoJ decision will be seen in the 1-month expiry from Friday.CFTC DataNet speculative positions in the futures market for various currencies as of Tuesday are as follows:- Long positions for the US dollar decreased to 147,327 contracts from 152,360 the previous week- Short positions for the Japanese yen decreased to 81,131 from 104,956- Short positions for the Australian dollar decreased to 52,340 from 57,681- Long positions for the British pound increased to 21,581 from 11,665- Short positions for the Swiss franc decreased to 14,474 from 17,852FX Options Expiries For 10am New York Cut(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0870-80 (1.7BLN), 1.0900-05 (862M), 1.0950 (441M), 1.1000 (456M)GBP/USD: 1.2435 (330M), 1.2750 (360M)AUD/USD: 0.6600 (400M), 0.6720 (492M)NZD/USD: 0.6090-0.6105 (688M)USD/JPY: 143.25 (519M), 144.50 (707M)Overnight Newswire Updates of NoteBoJ Stands Pat Amid Expectations For Policy NormalisationJapan MoF To Bring Forward Plan To Cut 20-Yr Bonds, According To SourcesJapan To Draft Budget For FY2024 Of More Than JPY110 TlnRBA Considered Interest-Rate Hike, Saw Pause Case As StrongerFed’s Daly: Rate Cuts Could Be Needed Next Year To Prevent Over-TighteningBoC’s Macklem Sees C.Bank Cutting Overnight Rate Sometime In 2024Senior Tories Pile Pressure On UK PM To Back Immediate Gaza CeasefireEarthquake In North-West China Kills At Least 111Volcano Erupts In Iceland After Thousands Evacuated From TownSEC Delays Several Ethereum ETFs, Pushing Final Decision To MayApple Plans Rescue For $17 Bln Watch Business In Face Of BanTesla To Raise Pay For Hourly Nevada Gigafactory Workers In JanuaryGoogle To Pay $700 Mln In Play Store SettlementIcahn Is Ready To Launch A Fight To Control Illumina’s Board(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 477020 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 bearishUSDJPY Bias: Bullish Above Bearish Below 145.50Above 145.50 opens 146.60Primary resistance 146.50Primary objective is 14020 Day VWAP bearish, 5 Day VWAP bullishAUDUSD 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 bearish