Daily Market Outlook, January 11, 2024

Daily Market Outlook, January 11, 2024Munnelly’s Market Minute…“Markets Buoyant Ahead of US CPI Data”Asian stocks followed the upward trend seen in the US despite the absence of significant driving factors, as markets anticipate the release of US CPI data. The Nikkei 225 continued its impressive rally, surpassing 35K for the first time since February 1990. The Hang Seng and Shanghai Comp also saw gains, with Hong Kong showing positivity driven by tech and autos, while the mainland market slightly lagged ahead of potential tensions related to the upcoming election in Taiwan.This morning, Spain and Italy are set to release their industrial production data for November. Earlier this week, the industrial sector data for the Eurozone displayed mixed results, with France reporting a higher-than-expected increase in output while Germany experienced its sixth consecutive monthly decline. The broader region continues to grapple with a prolonged period of weakness in the factory sector.Tomorrow, early GDP data for the UK in November is anticipated to show a modest 0.3% month-on-month increase, reversing the 0.3% decline seen in October. The Office for National Statistics attributed the October decline to unseasonably wet weather, and with more normal weather conditions in November, a rebound is expected. However, following a downward revision to growth in the third quarter to -0.1% quarter-on-quarter, any weakness in the fourth quarter could indicate a technical recession for the UK at the end of last year.Stateside, today’s US CPI release is a crucial data point for the week, closely watched by markets for any new insights into the potential timing and pace of Federal Reserve interest rate reductions. Markets currently anticipate an early start to cuts, with approximately a 70% probability of a move by March and a fully discounted cut by May. US inflation experienced a significant decline throughout 2023, but the December report is expected to show a modest rebound. Gasoline prices in the US continued a slight decline in December, contributing to an anticipated small rise in monthly CPI inflation of around 0.1%. However, the decline in energy prices is not expected to match the one that occurred in December 2022, resulting in a modest acceleration in the annual inflation rate to 3.2% from 3.1%. Conversely, despite the forecast for core inflation to rise by 0.3% for the third consecutive month, the annual rate is expected to decrease to 3.9% from 4.0%. Recent US inflation data show conflicting trends, with goods inflation decelerating sharply while services inflation remains resilient. The Federal Reserve is likely to view this situation reasonably positively but may not see an immediate need to hasten rate cuts. Overnight Newswire Updates of NoteFed's Williams Flags End Of Banking Sector Stress, Touts Discount WindowJPMorgan Asset Says Fed Rate Cuts May Be Steeper Than ExpectedJoe Biden To Send Delegation To Taipei After Taiwan’s ElectionUS Set To Push Zelenskiy At Davos For Clearer War PlanBank of Korea Keeps Rate Unchanged To Extend Inflation FightBoJ Warns Of Uncertainty On Whether Wage Hikes Will BroadenBoJ Fully Prepared To End Negative Rate, Likely In April, Ex-Official SaysOECD Urges Japan's Central Bank To Gradually Raise Interest RatesAustralia Goods Trade Surplus Surges To A$11.4 Bln In NovemberChina Set To Lose Crown As Top U.S. Exporter After 17 YearsBank Of France Sees Lower Recession Risk This WinterJapanese Yen Lags Thursday While Dollar Waits On US CPIPBoC Provides Strongest Boost To Yuan Fixing Since November -SEC Approves Bitcoin Spot ETF In Milestone For Digital AssetsBond Sales Reach €108 Billion In A Record Week For EuropeOil Holds Decline After US Stockpiles Post Unexpected IncreaseAsian Markets Rise; Japan’s Nikkei Hits Highest Level Since 1990(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: 1.0900 (558M), 1.0950 (431M), 1.0965-75 (375M), 1.1000 (530M),1.1020 (730M), 1.1050 (1.7BLN)USD/CHF: 0.8500 (314M). GBP/USD: 1.2790 (429M)USD/JPY: 144.00 (1.1BLN), 145.00 (279M), 145.40-50 (736M)AUD/JPY: 97.75 (338M)Short positions are increasing in the majority of Asian currencies, with strong short positions against the Chinese yuan (CNY), Indonesian rupiah (IDR), South Korean won (KRW), and Philippine peso (PHP). Traders are particularly bearish on the Malaysian ringgit (MYR). However, investors are taking a neutral stance on the Singapore dollar and Thai baht. In contrast, there is a return of bullish sentiment for the Indian rupee, which has reached its highest level since December 2018 in January. It is now anticipated that U.S. rates will decrease in March and fall by 140 basis points in 2024. This surprising trend in the foreign exchange market should not be overlooked, and it suggests that FX traders may sell a significantly larger amount of dollars.CFTC Data As Of 05/01/24USD bearish increasing-1,674CAD bearish decreasing +1,045EUR bullish neutral +138GBP bullish neutral  +78AUD bearish decreasing +601NZD neutral neutral +198CHF bearish increasing -262JPY bearish neutral -157Technical & Trade ViewsSP500 Bullish Above Bearish Below 4730Daily VWAP bullishWeekly VWAP bullishBelow 4730 opens 4700Primary support 4670Primary objective is 4830EURUSD Bullish Above Bearish Below 1.1000Daily VWAP bullishWeekly VWAP bullishAbove 1.1030 opens 1.1070Primary resistance 1.1130Primary objective is 1.0850GBPUSD Bullish Above Bearish Below 1.27Daily VWAP bullishWeekly VWAP bullishAbove 1.28 opens 1.2870Primary resistance  is 1.2820Primary objective 1.2550USDJPY Bullish Above Bearish Below 143.50Daily VWAP bullishWeekly VWAP bullishBelow 143 opens 142.50Primary resistance 146.50Primary objective is 146.50AUDUSD Bullish Above Bearish Below .6750Daily VWAP bearishWeekly VWAP bearishBelow .6660 opens .6550Primary support .6525Primary objective is .6933BTCUSD Bullish Above Bearish below 46000Daily VWAP bullishWeekly VWAP bullishBelow 45900 opens 44600Primary support  is 40000Primary objective is 50000