Daily Market Outlook, January 3, 2024

Daily Market Outlook, January 3, 2024Munnelly’s Market Minute… Most Asian markets experienced declines as market sentiment echoed the downbeat performance of Wall Street, even though there was no clear reason for the negative trend. Meanwhile, Japanese markets were closed for a market holiday. Hang Seng and Shanghai Comp had mixed performance, with Hang Seng experiencing losses driven by large-cap Hong Kong stocks also listed in the US with JD.com leading the charge lower shedding over 4%. Mainland China fluctuated between modest gains and losses, supported into the close by stimulus speculation in the Chinese press.Today sees no data of note in the UK or Europe, instead focus is firmly on the US data slate. The publication of the minutes from the December monetary policy meeting of the US Federal Reserve. During this meeting, Fed Chair Powell suggested the possibility of US interest rate cuts in 2024. This shift towards a more dovish stance has increased market optimism for significant rate cuts this year. Investors are currently expecting a high likelihood of the first cut happening as early as March, with a projected total decrease of around 150 basis points by December. One notable aspect of the December Fed update was the apparent lack of effort to warn against what some had speculated as an excessive easing in financial conditions. Prior to the update, there were suggestions that the Fed might see recent financial market movements as an unwarranted early relaxation in monetary policy. However, both the Fed's press statement and Chair Powell's comments showed little indication of such concerns. In contrast to the December policy updates from the Bank of England and the European Central Bank, the Fed seemed to support market expectations. The minutes released today will provide further insights into whether this interpretation holds. Market participants will also be eager to find hints or clues about the potential timing of rate cuts and the criteria policymakers will consider before taking action.In terms of additional US data releases today, the noteworthy update is the ISM manufacturing index for December. In November, it remained below the critical 50 level, indicating a contraction in activity for the 13th consecutive month. This trend is likely to have continued in December, although there may be indications of a slower pace of decline. On a positive note, the reading for the larger services sector, with the December update scheduled for Friday, remains in expansionary territory, indicating overall economic growth. Additionally, the November JOLTs survey of labour market turnover will be released, providing more details on labour market conditions after stronger-than-expected employment growth. Overnight Newswire Updates of NoteStocks, Bonds Drop In Tandem For Worst Start To Year In DecadesFed’s Balance Sheet Leaps Into Spotlight After Repo VolatilityIMF Chief: Fed Securing Soft Landing, Warns Of FragmentationUK Executives Urge BoE To Cut Rates After Confidence Sinks LowerChina Newspaper Says More Policies To Stabilise Economy ComingRBA Sees Living-Cost Pressure Weighing On Growth, Documents ShowBanks See Higher-Rated Bonds Beating Junk For First Time Since 2020China’s Commodities Demand Remains Resilient Despite Factory SlumpStocks, Bonds Drop In Tandem For Worst Start To Year In DecadesChina Fortune Land’s Bond Investors Get Only Partial PaymentSamsung To Kick Off Year Of AI Phones With New Launch This MonthAn Israeli Drone Kills Hamas Deputy Leader In Beirut(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:1.0900-05 (488M), 1.0940-50 (738M) 1.0975 (230M), 1.1000 (960M), 1.1015-25 (431M) 1.1030-35 (566M), 1.1045-55 (868M) 1.1075-85 (1.81BLN), 1.1090-00 (1.11BLN)USD/JPY: 142.00 (241M), 142.235-25 (234M)EUR/JPY: 153.40 (432M), 159.35 (370M)USD/CHF: 0.8430 (555M)GBP/USD: 1.2430 (338M), 1.2660 (284M)EUR/GBP: 0.8690 (377M)AUD/USD: 0.6720 (527M), 0.6670-75 (368M)NZD/USD: 0.6150-55 (561M)Technical & Trade ViewsSP500 Bullish Above Bearish Below 4730Daily VWAP bearishWeekly VWAP bullishBelow 4700 opens 4600Primary support 4600Primary objective is 4850EURUSD Bullish Above Bearish Below 1.1010Daily VWAP bearishWeekly VWAP bullishAbove 1.1030 opens 1.1130Primary resistance 1.1130Primary objective is 1.0850GBPUSD Bullish Above Bearish Below 1.27Daily VWAP bearish Weekly VWAP bearishAbove 1.2710 opens 1.2820Primary resistance  is 1.2820Primary objective 1.2550USDJPY Bullish Above Bearish Below 143.50Daily VWAP bullishWeekly VWAP bearishAbove 144 opens 146.50Primary resistance 146.50Primary objective is 136.30AUDUSD Bullish Above Bearish Below .6700Daily VWAP bearishWeekly VWAP bullishBelow .6660 opens .6550Primary support .6525Primary objective is .6933BTCUSD Bullish Above Bearish below 44000Daily VWAP bullishWeekly VWAP bullishBelow 43700 opens 42700Primary support  is 40000Primary objective is 47000