Daily Market Outlook, September 8, 2023

Daily Market Outlook, September 8, 2023Munnelly’s Market Commentary… Asian equity markets faced downward pressure in response to declines in the technology sector on Wall Street, driven by concerns about Apple's performance in China. Additionally, markets were digesting disappointing downward revisions to Japanese GDP data for the second quarter. The Nikkei 225 index retreated, slipping below the 33k handle. This decline was attributed to a dampened risk appetite caused by the disappointing GDP revisions and slower wage growth in Japan. The Hang Seng index remained closed due to severe rainfall, while the Shanghai Composite index declined, influenced by ongoing tech-related tensions as China expands its iPhone ban and the US Commerce Department investigates "made in China" Huawei chips.Although the past week had seen relatively active economic events, today's data docket is notably devoid of major releases.. The lack of significant releases in the Eurozone, the UK, and Stateside  means that the Canadian labour market report for August becomes the primary point of interest for the day. Consensus forecasts predict a 17.5k increase in employment for August, following an unexpected decline of 6.4k in July. However, despite the anticipated rise, the unemployment rate is also expected to inch up from 5.5% to 5.6% in August.Fed Vice Chair Barr is the sole central banker scheduled to speak today. It is unlikely that his comments will focus on the outlook for US monetary policy, as his scheduled topic is payments innovation.Overnight, China is set to release its latest Consumer Price Index (CPI) report for August, with expectations leaning toward a return to positive territory after July's dip into deflation. Furthermore, producer price inflation data, which provides insight into price pressures further back in the supply chain, is expected to show a moderation in the rate of annual deflation.FX Positioning & Sentiment The proximity of oil prices to the $90 mark holds significant importance in the market. Brent crude oil has not closed above this level since the end of January, indicating a sustained period of trading below this threshold. In September, the price of oil reached a high of $91.15, meeting the target to correct a substantial drop that had been influenced by the Federal Reserve's actions. Specifically, the Fed accelerated its pace of tightening in June 2022 by implementing a 75 basis points (bps) interest rate hike. To provide context, the price of Brent crude oil had surged to $125.19 in June but experienced a sharp decline to $70.12 during a period of banking turmoil in March. If oil prices were to reach or surpass this peak level, it could have varying effects on currencies: currencies of countries that are net importers of oil, such as the Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Indian Rupee (INR), and Chinese Yuan (CNY), may benefit from lower oil prices. Reduced oil costs can lead to lower import bills and improved trade balances for these nations, which can strengthen their currencies. Conversely, currencies of countries that heavily rely on oil exports, like the Russian Ruble (RUB), Canadian Dollar (CAD), Norwegian Krone (NOK), and Mexican Peso (MXN), may experience a decline in value if oil prices drop significantly. Lower oil prices can negatively impact the revenues and trade balances of these oil-exporting countries, potentially weakening their currencies.CFTC Data As Of 31-08-23Tuesday close of Aug 30-Sep 5 spec IMM period saw $IDX +1.17%Less-dovish Fed rate expectations stoke USD bidUSD rise hints Fri's spec data may show reduced USD shortEUR$ -1.42% in period amid EZ growth concerns, end of hike cycleEuro net spec long well off May high +187k contracts, now +147k$JPY +1.23% in period; US-JY rate divergence keeps yen on back footYen net short may have diminished after Kanda's spec rebukeGBP$ -0.68% in period, global growth concerns drag GBP lowerUK rate dominance in near-term tempers GBP$ declineAUD$ -1.57%, China growth concerns, steady RBA view weighs on AUD (Source: Reuters)FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.0650 (601M), 1.0700 (1.3BLN), 1.0750 (701M)1.0790-00 (679M), 1.0805-15 (804M), 1.0825-30 (813M)USD/JPY: 146.10-25 (551M), 147.00 (385M), 148.00 (439M)USD/CHF: 0.8700 (300M), 0.8750 (400M)GBP/USD: 1.2490-00 (333M)AUD/USD: 0.6300 (543M), 0.6400 (318M), 0.6450 (904M)0.6500 (218M), 0.6600 (846M)USD/CAD: 1.3465 (379M), 1.3480-85 (790M), 1.3495-00 (814M)1.3730 (371M). USD/ZAR: 18.90 (265M)Overnight Newswire Updates of NoteUS Futures Little Changed As Traders Weigh Risk Of Rate HikesAsia Markets Fall Hong Kong Cancels Morning Trade On StormFederal Reserve Officials Support September Rate Rise PauseFed’s Williams: Policy In Good Place, Must Be Data DependentLogan Says Fed May Need To Hike Rates After September SkipFed's Goolsbee Poises Central Bank Almost Done Raising RatesBiden Not Planning To Meet Chinese Premier Li At G20 SummitOffshore Yuan Sinks Toward Record Low After China Cuts FixingJapan Economic Growth Revised Down As Consumers Cut BackBoC’s Governor Macklem Says Victory Over Inflation Is ‘In Sight’UK Job Recruiters Say Demand For Staff Falls To Three-Year LowWall Street’s Biggest Bear Ditches Call For 11% S&P Drop In 2023Goldman See New Job Cull For Bankers Viewed Underperformers(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4500Above 4500 opens 44540Primary resistance  is 4450Primary objective is 426620 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Bullish Above Bearish Below 1.0810Above 1.860 opens 1.0945Primary resistance is 1.1066Primary objective is 1.066020 Day VWAP bearish, 5 Day VWAP bearishGBPUSD Bias: Bullish Above Bearish Below 1.2560Above 1.2650 opens 1.27Primary 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 143.90Primary objective is 15020 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish Below .6450Above .6525 opens .6575Primary resistance  is .6620Primary objective is .632020 Day VWAP bearish, 5 Day VWAP bearishBTCUSD Bias: Bullish Above Bearish below 26175Above 28200 opens 30000Primary resistance  is 28175Primary objective is 2330020 Day VWAP bearish, 5 Day VWAP bearish