Daily Market Outlook, February 5, 2024

Daily Market Outlook, February 5, 2024Munnelly’s Market Minute…“Powell Hitting Pause On Rate Cut Expectations”Asian stocks were mostly subdued due to the red-hot jobs report and Fed Chair Powell's comments indicating a likely delay in a March rate cut. In a pre-recorded TV interview aired last night, US Fed Chair Powell reiterated that more progress on inflation’s final descent was needed before the central bank would cut rates, aligning with comments made at last week’s policy meeting press conference. Powell also indicated that the scale of cuts priced in by financial markets seemed excessive relative to the Fed’s own expectations, while suggesting that the first cut would not occur until the middle of the year. The Nikkei 225 was supported by recent currency weakness, with earnings influencing the biggest movers. Hang Seng and Shanghai Comp initially faced pressure from a continuation of the equity rout, but Chinese markets later recovered from their lows.In the UK the Office for National Statistics (ONS) published revised UK labor market data, adjusted for new population estimates. Notably, the latest read on the UK unemployment rate, covering the three months to November, was reported to be 3.9% compared with a previous estimate of 4.2%, indicating that the labor market was tighter than previously assumed.Looking ahead, there was minimal chance that the US and UK central banks would change interest rates at their policy updates last week. Both the Federal Reserve and the Bank of England maintained interest rates at the 5.25-5.50% range and 5.25%, respectively. Financial markets, however, focused on signals about the timing and extent of potential interest rate reductions this year. This week, the UK and US inflation prints for January are due. Meanwhile, key survey data this week will provide insight into evolving price pressures and wider economic trends. In particular, today’s US ISM services survey is expected to rise to 52.5 from 50.5, indicating positive growth in service sector activity. In Europe, the final estimates of the UK and Eurozone services PMI for January are expected to be unrevised. Questions remain about the PMI survey's accuracy in predicting actual GDP growth. However, the UK services survey has signaled growth for a third consecutive month, while the Eurozone picture still reflects contraction, albeit with increasing optimism for future prospects.Stateside focus will be on speeches by Fed officials Raphael Bostic, Loretta Mester, and Thomas Barkin for clues on the timing of rate cuts after last week's policy meeting and Friday's strong U.S. employment numbers, which may impact the central bank's confidence in inflation.Overnight, the Reserve Bank of Australia is expected to leave interest rates unchanged at 4.35%. Markets will observe if it adjusts its hawkish bias following recent softer data. In the UK, the British Retail Consortium (BRC) releases its January update of retail sales.Overnight Newswire Updates of NoteJay Powell Says Fed Expects To Make Three Rate Cuts This YearUS Yields Jump As Powell And Payrolls Drive SellingChina Securities Regulator Vows To Prevent The Risk From Pledged StocksAustralia Goods Trade Surplus Narrows To AUD10.9 Bln In DecECB’s Vujcic Says Patience Needed Before Starting Rate CutsGerman Top Ministers Weigh Corporate Tax ReformUS Says Strikes Against Iran-Backed Militias Are ‘Beginning, Not The End’Hamas Denies Rejection Of Hostage, Ceasefire Deal, To Deliver Answer SoonOil Edges Higher As US Attacks On Houthis Ratchet Up TensionsChina Stocks Languish Despite Renewed Vow To Stabilize MarketsFoxconn Sees 'Slightly Better' 2024, Warns On AI Chip ShortageBoeing Finds New Problem With 737 MAX Fuselages(Sourced from Bloomberg, Reuters and other reliable financial news outlets)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0780 (230M), 1.0800 (314M), 1.0870 (554M)GBP/USD: 1.2600 (260M), 1.2645-50 (935M)NZD/USD: 0.6060 (610M), 0.6100 (450M)USD/JPY: 148.00 (1.1BLN)CFTC Data As Of 2/02/24USD bearish neutral -5,618 CAD neutral neutral -178 EUR bullish neutral 12,034 GBP bullish neutral 2,711 218AUD bearish increasing -3,849 NZD neutral neutral -64 MXN bullish neutral 2,343 CHF bearish neutral -566 JPY bearish increasing -6,813 Technical & Trade ViewsSP500 Bullish Above Bearish Below 4940Daily VWAP bullishWeekly VWAP bullishBelow 4900 opens 4800Primary support 4800Primary objective is 4981EURUSD Bullish Above Bearish Below 1.0875Daily VWAP bearishWeekly VWAP bearishAbove 1.10950 opens 1.10Primary resistance 1.10Primary objective is 1.0730GBPUSD Bullish Above Bearish Below 1.2750Daily VWAP bearishWeekly VWAP bearishAbove 1.28 opens 1.2870Primary resistance  is 1.2785Primary objective 1.2570USDJPY Bullish Above Bearish Below 147.50Daily VWAP bullishWeekly VWAP bullishBelow 146 opens 145.50Primary support 143.50Primary objective is 149.13AUDUSD Bullish Above Bearish Below .6650Daily VWAP bearishWeekly VWAP bearishBelow .6500 opens .6420Primary support .6525Primary objective is .6260BTCUSD Bullish Above Bearish below 43850Daily VWAP bullishWeekly VWAP bullishAbove  43600 opens 44700Primary resistance  is 44700Primary objective is 44700