Daily Market Outlook, October 25, 2023

Daily Market Outlook, October 25, 2023Munnelly’s Market Commentary… Asia – Asian stocks displayed mixed trading patterns, influenced by a positive lead from Wall Street. Market focus shifted to the earnings reports of major companies like Microsoft and Alphabet. Microsoft's shares rose by 3.9%, while Alphabet experienced a 5.9% decline, with particular attention on their cloud business performance. The Nikkei 225 benefitted from the recent weakening of the Japanese yen, with export-related sectors performing well. There were also potential tailwinds following reports that the Bank of Japan (BoJ) was not considering changes to its forward guidance regarding monetary easing measures, however the index ceded gains into the close. The Hang Seng and Shanghai Composite indices surged at the opening bell, with positive sentiment in the region attributed to Chinese President Xi's unprecedented visit to the People's Bank of China (PBoC), signalling a focus on the economy. Hong Kong markets outperformed, with large-cap stocks posting gains of 4-6%, and the technology sector received some momentum from Microsoft's earnings and guidance, as with the Nikkei both the onshore and offshore indices have started to rollover.Europe – Ahead of the European Central Bank's monetary policy update tomorrow, today's October German IFO survey is expected to provide further indications of a slowdown in economic activity. The recent weak October Purchasing Managers' Index (PMI) data for both Germany and the Eurozone as a whole have raised concerns of potential contractions in GDP, which may be confirmed by today's data.The October current conditions reading is anticipated to have declined for the seventh consecutive month, reaching its lowest level since August 2020, during the peak of the COVID-19 pandemic. On a more positive note, there is an expectation for a third consecutive increase in the forward-looking expectations reading, although it is expected to remain at a relatively low level. In the broader Eurozone, September's figures for the money supply are projected to show a third consecutive annual decline. This trend may lead some to believe that monetary policy is becoming overly restrictive, potentially posing a risk of recession.US – Stateside, it's expected that new home sales likely saw an increase in September after a notable decline in August. New home sales have shown relatively strong performance since the spring, with increases recorded in four out of the last six months. However, the recent sharp ascent in bond yields, especially if it continues, may result in higher mortgage rates. This development raises questions about the sustainability of the ongoing rebound in housing market activity.FX Positioning & Sentiment The USD/JPY pair traded within a range of 149.32 to 149.94 yesterday and has continued to fluctuate within the range of 149.82 to 149.87 in the Asian market today. The market still seems to be capped below the 150.00 level, and any potential downside appears to be limited as well.The currency pair experienced some fluctuations in overseas trading overnight but saw a good rebound due to positive economic data from the United States. The downside for US yields also appears to be constrained, with Treasury 10-year yields ranging from 4.800% to 4.889%. Significant option expiries in the vicinity have played a role in containing the market's movements. Notably, there are total expiries of $1.6 billion between 148.50 and 149.00, $1.9 billion between 149.25 and 149.75, and $1 billion between 150.00 and 150.25 for today. Looking ahead, there are massive expiries at 150.00 for both tomorrow and Friday, with an exceptionally large expiring amount of $3.7 billion on Friday. Japanese exporters and importers are adjusting their trading strategies accordingly, buying on dips and selling during rallies. Market participants continue to closely monitor US economic data, yield movements, and the overall risk sentiment in the market.CFTC Data As Of 20-10-23USD net spec long remained steady in Oct 11-17 period, $IDX +0.42% in periodEUR$ -0.42% in period, specs +6,878 contracts bottom-fishing, now +82,410,$JPY +0.77%, specs -3,182 contracts; bulls wary of MoF, pair holds near highGBP$ -0.84% specs -1,161 now -11,209; low BoE rate/growth view weighsAUD$ (-1.01%) specs -4,162 , $CAD (+0.49%) specs -2,050 on weak growth viewBTC +3.86% in period, specs -824 contracts now +327, BTC ending near weeks high on upbeat ETF outlook( Source Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0500-10 (1.3B), 1.0600-10 (1.0B), 1.0640-50 (1.1B), 1.0700 (1.1B)USD/JPY: 148.90-149.00 (965M), 149.75 (752M), 150.25 (623M), 151.00 (1.4B)GBP/USD: 1.2100 (845M), 1.2120-25 (1.1B), 1.2200-10 (501M)EUR/GBP: 0.8660-70 (883M), 0.8700 (601M), 0.8800 (400M)USD/CHF: 0.9000 (551M). EUR/CHF: 0.9650 (529M), 0.9750 (759M)EUR/NOK: 11.76 (536M). EUR/SEK: 11.25 (705M)AUD/USD: 0.6300 (1.6B). USD/CAD: 1.3590 (597M), 1.3750-60 (502M)Overnight Newswire Updates of NoteRBA’s Rate Hikes May Not Be Over, Inflation Data RevealsCommonwealth Bank, ANZ Now See 25Bp RBA Rate Hike In NovemberAustralia Seeks Rapid Passage Of AUKUS Laws To Spur US CongressHK Will Halve Home-Purchase Tax, Reduce Stamp Duty For Stock TransactionsChina Willing To Cooperate With US, Manage Differences, Xi SaysNew US House Speaker Nominee Emerges After Trump Torpedoes Emmer BidDTCC Spox: BlackRock's Bitcoin ETF Added To DTCC File In AugOil Nearly Flat As Macroeconomic Concerns Contend With Tighter US SupplyJapan Equity Fees Top China For The First Time Since 1999Alphabet Shares Fall After Cloud Revenue Gains Fall Short Of ExpectationsMicrosoft Earnings Growth Picks Up On Stronger-Than-Expected Cloud DemandTexas Instruments Revenue, Income Falls Despite Auto GrowthVisa Profit Beats Estimates, Plans $25 Bln Stock BuybackUAW Now Wants At Least 25% RaisesGM Is Slowing EV Production Amid Labour Strikes And “Evolving” DemandQualcomm Invests Further In Mobile AI With Chips Announcements(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4255Above 4280 opens 4320Primary resistance  is 4280Primary objective is 414420 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Bullish Above Bearish Below 1.0550Below 1.0550 opens 1.0480Primary support is 1.05Primary objective is 1.068020 Day VWAP bearish, 5 Day VWAP bearishGBPUSD Bias: Bullish Above Bearish Below 1.22Below 1.21 opens 1.1950Primary support  is 1.21Primary objective 1.2420 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Bullish Above Bearish Below 149.25Below 149 opens 148.50Primary support 144.50Primary objective is 150.2020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish Below .6400Above .6475 opens .6525Primary resistance  is .6620Primary objective is .627020 Day VWAP bearish, 5 Day VWAP bearishBTCUSD Bias: Bullish Above Bearish below 32000Below 27100 opens 26500Primary support  is 30000Primary objective is 3700020 Day VWAP bullish, 5 Day VWAP bullish