Daily Market Outlook, July 21, 2023

Daily Market Outlook, July 21, 2023Munnelly’s Market Commentary… Asian equity markets were a mixed bad overnight following the negative sentiment from Wall Street, particularly from the Nasdaq 100, which had its second-worst day of the year due to tech earnings disappointment and rising yields, weighing on investor sentiment.The Nikkei 225 also started the day with a slump but recovered slightly as participants digested somewhat ambiguous CPI data. The data mostly met expectations but showed a slight acceleration in both headline and core inflation. Meanwhile, the Hang Seng rose modestly and the Shanghai Composite remained flat. These indices were supported by further efforts from China to boost the economy. The NDRC released policies aimed at stimulating electronics products consumption and promoting automobile consumption, helping to maintain positive sentiment in the region.Next week will be significant for central bank meetings, with the U.S. Federal Reserve, European Central Bank (ECB), and Bank of Japan (BoJ) all scheduled to meet. Investors will closely watch the outcomes of these meetings, especially in the context of potential policy tweaks. There is speculation that the BoJ may make imminent policy adjustments during its meeting. Inflation in Japan remained above the central bank's target of 2% for the 15th consecutive month in June. However, the inflation gains matched a median market forecast, suggesting that the central bank's efforts to achieve sustained inflation may still face challenges. As central banks play a crucial role in shaping economic policies and financial markets, the outcomes of these meetings are expected to have an impact on global investor sentiment and market dynamics.CFTC Data As Of 14-07-23USD net spec short fell a touch in the Jul 5-11 period as $IDX slid 1.37%Fairly serious moves among majors w/hardly any position changesSuggest a fair amount of position replacement as specs were getting stoppedEUR$ +1.2% in period, specs -2,675 contracts into strength now +140,162$JPY -2.84% in period after breaching 145 last wk, specs buy 738 contractsGBP$ +1.73% as BoE seen a cointoss for +50bp Aug 3, specs +7,798 now +58,063CHF specs relatively active -4,503 contracts now short 7,907$CAD +0.06%, Aussie -0.06% specs sell less than 1k contractsBTC fell a scant 0.74%, specs +221 on dip now short 1,855 contracts(Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.1100 (581M), 1.1150 (525M), 1.1175-80 (354M), 1.1200-05 (627M)USD/CHF: 0.8625 (200M), 0.8715 (300M). GBP/USD: 1.2970 (277M)EUR/GBP: 0.8600 (651M), 0.8640 (200M), 0.8695-0.8700 (551M)AUD/USD: 0.6700 (862M). AUD/NZD: 1.0900 (1BLN)USD/CAD: 1.3145-55 (1.1BLN)USD/JPY: 140.00 (608M), 140.50 (439M). EUR/JPY: 154.00 (300M)Options Market PositioningThe demand for U.S. dollar put options has weakened, and foreign exchange (FX) implied volatility has reached its peak for the time being as the dollar experiences a mild recovery. However, the options market is anticipating increased FX volatility around the July 26 Federal Open Market Committee (FOMC) policy decision. Even though markets are pricing in a final 25bps interest rate hike in the current cycle, related implied volatility gains are not ruling out the possibility of heightened FX volatility. For EUR/USD, the 1.13 barriers seem secure as demand for topside strike options decreases, and premiums for EUR put/USD call options show some recovery. In USD/JPY, there is interest in a large 140.00 strike before Thursday's 10 am New York cut, but further gains may be challenging until after Friday's Japanese CPI release. The one-week expiry will also include the Bank of Japan's (BoJ) policy announcement on July 28. Unless there is a significant CPI beat, any implied volatility gains related to the BoJ's dovish rhetoric might be seen as opportunities to sell.Overnight Newswire Updates of NoteAsian Shares Fall After US Tech Falters, Dollar And Yields Hold GainsJapan’s Inflation Speeds Up As BoJ Prepares To Update Price ViewBoJ Won't Tweak YCC In July, Say 77% Of Economists – RTRS PollJapan Bond Investors See Turbulence That Defies Ueda’s ViewChina’s Backing Will Ease Pressure For Yuan To Drop, Report SaysChina Lending Rate May Drop Further In Q3 If PBoC Cuts RRR – PaperECB’s High-For-Longer Rate Plan Fails To Convince EconomistsUS Pres Biden Creates Debt-Limit Team To Find Ways Of Ending StandoffsDollar Firms, Yen Steady After Japan Inflation Holds Above BoJ TargetOil Heads For Fourth Weekly Advance As Liquidity DeclinesAsia Stocks Mixed As Tech Drops On TSMC, Hong Kong GainsNasdaq 100 Reshuffle Adds Twist To $2.4 Trillion Options EventTSMC Falls Most In Five Months After Outlook Cut, Arizona DelayCapital One Financial Beats Profit Estimates On Higher Interest Income(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Intraday Bullish Above Bearish Below 4530Below 4520 opens 4460Primary support is 4370Primary objective is 463020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Intraday Bullish Above Bearsih Below 1.12Below 1.1150 opens 1.1050Primary support is 1.10Primary objective is 1.1320 Day VWAP bullish, 5 Day VWAP bearishGBPUSD: Intraday Bullish Above Bearish Below 1.2850 Below 1.2830 opens 1.2710Primary support  is 1.26Primary objective 1.385020 Day VWAP bullish, 5 Day VWAP bearishUSDJPY Bullish Above Bearish Below 139.60Above 139.60 opens 141.80Primary resistance 142Primary objective is 136.2020 Day VWAP bearish, 5 Day VWAP bullishAUDUSD Intraday Bullish Above Bearish Below .6800Below .6795 opens .6750Primary support  is .6448Primary objective is .700020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Intraday Bullish Above Bearish below 30000 Below 29400 opens 28600Primary support  is 28400Primary objective is 3275020 Day VWAP bullish, 5 Day VWAP bearish