Daily Market Outlook, January 17, 2024
Munnelly’s Market Minute…“UK Inflation Uptick Sees Sterling Higher”
Asian stocks were under pressure due to the recent rise in yields and reduced expectations of Fed rate cuts. The Nikkei 225 initially rose due to a weaker currency but later dropped from three-decade highs as it succumbed to the risk-off sentiment. The Hang Seng and Shanghai Comp also retreated due to mixed Chinese economic data, with Hong Kong particularly underperforming due to losses in tech and property sectors.
December UK CPI inflation slightly exceeded expectations, with the annual rate rising to 4.0% from November's 3.9%. This marks its first monthly increase since February. Despite this, it's crucial to note that, due to sharp declines in the previous two months, the rate still saw a significant drop in Q4 from 6.7% in September. The core rate held steady at 5.1%, while services inflation increased to 6.4% from 6.3%. Inflation might see a modest uptick in January due to the latest Ofgem price cap implementation, but markets anticipate a continued decline thereafter, potentially reaching the 2.0% target before mid-year. The Office for National Statistics will release the November UK house price index today, following a 1.2% decline in October. While some indices suggest a rebound in prices, the official numbers will be scrutinized for signs of this trend.
Today's December Eurozone CPI data, a second reading, is not expected to be revised. The initial report indicated a slight increase in headline inflation but a further decline in the core rate. Several ECB representatives will be speaking at Davos today, including ECB President Lagarde, ECB's Cipollone on "Euro Cyber Resilience", and ECB's Knot.
Stateside, a busy day for data includes retail sales and industrial production reports for December. A 0.4% rise is forecasted for retail sales during the festive month, while industrial production is expected to see a more modest 0.2% increase. Both releases will offer insights into Q4 GDP growth, expected next week. While it's anticipated that Q4 growth will slow after the robust 4.9% annualized expansion in Q3, early indications suggest solid growth. Additionally, the Fed Beige Book, featuring anecdotal economic reports, will be released today, with the previous one highlighting increased downside growth risks. Fed's Vice Chair of Supervision Barr will speak on cyber risks, Fed's Bowman on bank capital reforms, and Fed's Williams on "an Economy that Works for All: Measurement Matters".
Overnight Newswire Updates of Note
US Spending Bill To Avert Shutdown Clears First Senate Hurdle
US Set To Designate Iran-Backed Houthi Rebels As Terror Group
Bond Traders Start To Hedge Against Half-Point Fed Cut In March
China’s Economic Growth Disappoints, Fuelling Calls For Stimulus
Chinese Price Gauge Shows Longest Deflation Streak Since 1999
Polled Economists All Expect BoJ Holding In January After Quakes
Japan Manufacturers Pessimistic As Dark Clouds Hang Over China
Tory Resignations, Rebellions Expose Sunak’s Weak Grip On Party
UK Saw Strong Wage Growth In Late 2023, Jobs Site Indeed Says
EU Moves Ahead With Plans For New Naval Operation In Red Sea
Russia Call Peace Meetings Pointless, Says Plan Cannot Succeed
Global LNG Fleet Avoiding The Red Sea As More Tankers Diverted
(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: 1.0850 (1.1B), 1.0890-1.0900 (1.3B), 1.0970-75 (1.5B)
EUR/USD: 1.1000 (500M), 1.1015-25 (695M), 1.1050 (700M), 1.1060-65 (825M)
EUR/USD: 1.1070-75 (2.0B). USD/JPY: 144.00 (890M), 145.00 (370M)
USD/JPY: 145.75 (1.2B), 147.00 (425M), 147.35 (1.2B)
GBP/USD: 1.2600 (400M), 1.2625 (335M), 1.2700 (685M), 1.2715-25 (435M)
GBP/USD: 1.2795 (500M), 1.2885-1.2900 (540M), 1.2965 (730M)
AUD/USD: 0.6735 (355M), 0.6750 (940M). NZD/USD: 0.6330-50 (690M)
USD/CAD: 1.3235-40 (2.3B), 1.3375-80 (1.3B)
CFTC Data As Of 12/01/24
USD bearish increasing 12,192
CAD bearish decreasing -551
EUR bullish neutral 16,243
GBP bullish increasing 1,647
AUD bearish decreasing -2,158
NZD neutral neutral -110
MXN bullish neutral 2,606
CHF bearish neutral -644
JPY bearish neutral -4,841
Technical & Trade Views
SP500 Bullish Above Bearish Below 4750
Daily VWAP bullish
Weekly VWAP bullish
Below 4730 opens 4700
Primary support 4670
Primary objective is 4830
EURUSD Bullish Above Bearish Below 1.0930 - 1.0850 Target Hit - New Pattern
Daily VWAP bearish
Weekly VWAP bullish
Above 1.10950 opens 1.10
Primary resistance 1.10
Primary objective is 1.0730
GBPUSD Bullish Above Bearish Below 1.2750
Daily VWAP bearish
Weekly VWAP bullish
Above 1.28 opens 1.2870
Primary resistance is 1.2820
Primary objective 1.2580
USDJPY Bullish Above Bearish Below 146.40 - 147 target Hit - New Pattern
Daily VWAP bullish
Weekly VWAP bullish
Below 146 opens 145.50
Primary support 143.50
Primary objective is 149
AUDUSD Bullish Above Bearish Below .6650
Daily VWAP bearish
Weekly VWAP bearish
Above .6680 opens .6550
Primary support .6525
Primary objective is .6933
BTCUSD Bullish Above Bearish below 45200
Daily VWAP bearish
Weekly VWAP bullish
Below 45000 opens 44600
Primary support is 40000
Primary objective is 50000
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!