Daily Market Outlook, September 19, 2023

Daily Market Outlook, September 19, 2023Munnelly’s Market Commentary… Asian equity markets mostly traded lower, mirroring the flat performance in the United States. The lack of significant catalysts and mounting caution ahead of upcoming central bank decisions contributed to the subdued market sentiment. The Nikkei 225 underperformed as recent regional losses caught up with the index after returning from a holiday closure. Additionally, market sentiment was dampened as investors questioned whether Bank of Japan (BoJ) Governor Ueda would use this week's events to lay the groundwork for a potential future policy exit.The Hang Seng and Shanghai Composite indices experienced choppy trading, influenced by pressure in the technology sector and mixed fortunes among property stocks. However, some downside was mitigated following further talks between the United States and China and the People's Bank of China's (PBoC) ongoing efforts to maintain liquidity.In the UK, August Consumer Price Index (CPI) inflation data is scheduled for release early Wednesday morning, just before the Bank of England's (BoE) announcement. Expectations are for annual headline CPI inflation to increase to 7.1% from July's 6.8%, driven by recent petrol price rises and an increase in alcohol duty. On a more positive note, 'core' CPI inflation, which excludes energy and food prices, is expected to dip to 6.8% from 6.9%. Nevertheless, the rebound in headline inflation may strengthen the BoE's determination to raise rates this week.Later today, the Eurozone will release its final reading of August CPI, which is expected to confirm preliminary 'flash estimates.' These estimates indicated that headline CPI would remain at 5.3%, compared to expectations of a decline to 5.1%. Core inflation was forecasted to drop from 5.5% to 5.3%, in line with expectations. Energy prices played a significant role in the headline figure. Upgrades to near-term inflation forecasts were a key factor behind the European Central Bank's (ECB) recent rate hike, which was viewed as a finely balanced decision.Stateside, housing starts and building permits data will be released in the afternoon. Although stronger-than-expected outcomes are anticipated, these reports are unlikely to alter expectations for the Federal Reserve, which is expected to announce its second pause this year during Wednesday's meeting.FX Positioning & Sentiment The USD has seen a slight uptick, supported by sustained elevated U.S. yields that are hovering near multi-year highs. However, during the Asian trading session, the USD remained largely unchanged as traders adopted a cautious stance, awaiting upcoming risk events.In the coming week, there will be central bank meetings for six out of the ten most heavily traded currencies, including the Federal Reserve (Fed), Bank of Japan (BOJ), and Bank of England (BoE). Additionally, there will be rate decisions and guidance from six emerging market central banks. Key events to watch include the decisions and announcements from the Fed, BOJ, BoE, and China's Loan Prime Rate (LPR) announcement. These will likely have a significant impact on the currency markets. Furthermore, the Eurozone's August Harmonized Index of Consumer Prices (HICP), scheduled for release on Tuesday, will be closely monitored as it plays a crucial role in shaping expectations for the European Central Bank's (ECB) interest rate policies.CFTC Data As Of 15-09-23EUR net spec long drops to 113,080 contracts from 136,231JPY short rises to 98,713 from 97,136AUD short lower at 79,533 from 83,537GBP long slightly smaller at 46,174 from 46,384 (Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0625-30 (855M), 1.0645-55 (220M)1.0700-10 (1.34BLN), 1.0730-35 (496M), 1.0750-60 (765M)1.0765-75 (3.25BLN), 1.0795-05 (766M)USD/JPY: 145.15-25 (1.95BLN), 145.30 (451M)145.50-55 (471M), 147.00-10 (1.2BLN), 147.95-05 (702M)148.15 (300M), 148.50 (584M): EUR/JPY 155.00 (400M)GBP/USD: 1.2290-00 (1.0BLN), 1.2400 (388M)1.2455-65 (587M), 1.2500m (572M), 1.2700 (905M)AUD/USD: 0.6395 (450M), 0.6415-20 (416M), 0.6525 (600M)0.6550 (334M), 0.6650 (562M)NZD/USD: 0.5850 (719M), 0.5910 (279M)USD/CAD: 1.3150 (569M), 1.3655-65 (332M), 1.3670-80 (370M)Overnight Newswire Updates of NoteChina Analysts: China May Keep LPR Steady In September, Cut Further In Q4Japan's Industry Minister Predicts Eventual End To Ultra-Easy PolicyECB To Keep Interest Rates At 4% As Long As Needed, Villeroy SaysForeign Holdings Of US Treasuries Increase In July, China Holdings PlungeOil Rally Gathers Pace As Brent Crude Powers Above $95 A BarrelS&P 500 Marks 100 Days Without 1.5% Drop, First Time Since 2018UAW Will Strike At More Plants Without 'Serious Progress' By FridayStellantis Could Close 18 Facilities Under UAW DealUS Companies Are The Gloomiest In Decades About China OutlookAsia Stocks Drop On Concern Policy To Stay HawkishCountry Garden Wins Approval to Extend Yuan Bond With Sweetener(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4475Above 4500 opens 4540Primary resistance  is 4550Primary objective is 426620 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Bullish Above Bearish Below 1.07Above 1.860 opens 1.0945Primary resistance is 1.1066Primary objective is 1.0620 Day VWAP bearish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish Below 1.2450Above 1.2450 opens 1.25550Primary resistance  is 1.2750Primary objective 1.2320 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Bullish Above Bearish Below 146.50Below 146 opens 144.90Primary support 144.50Primary objective is 15020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish Below .6450Above .6475 opens .6525Primary resistance  is .6620Primary objective is .632020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Bias: Bullish Above Bearish below 27500Above 28200 opens 30000Primary resistance  is 28175Primary objective is 2330020 Day VWAP bearish, 5 Day VWAP bullish