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Daily Market Outlook, September 11, 2024

On Wednesday, Asian markets experienced a decline as a result of the increase in bond prices and mixed signals from Wall Street, driven by economic concerns in anticipation of the US inflation data. The Yen reached its strongest level against the Dollar since January as BoJ policymaker Nakagawa declared that the central bank will continue to adjust the level of easing. The BoJ decision is expected to be made next week, with the majority of economists predicting that it will delay the next rate hike until December or January. Benchmarks in Japan and Hong Kong led declines for the third consecutive session. The Nikkei 225 is trading below the 35.9K handle, with index heavyweights and financial equities leading the way lower. The dollar was under pressure following a contentious presidential debate between Republican Donald Trump and Vice President Kamala Harris in the United States, which kept investors on alert. During their first debate, the presidential candidates engaged in a heated discussion regarding abortion, the economy, immigration, and Trump's legal issues. President Joe Biden's withdrawal in July has resulted in Harris' late entry into the presidential contest, which has tightened the race and prompted a reversal of trades that were established in anticipation of a second Trump presidency. The candidates' fiscal policies and economic plans are the primary concern of investors; however, the debate was devoid of specific details; however, betting markets shifted in Harris' favor following the event. The UK experienced a sluggish start to Q3, with no growth in July. However, the MPC is unlikely to be overtly concerned by the data. The third quarter began with a subpar performance, as evidenced by a 0.0% m/m increase in July, which was below the anticipated 0.2% m/m increase. The manufacturing sector was notably weak, with a contraction of -1.0% m/m. Construction activity also experienced a decline, albeit at a more moderate rate of 0.4% m/m. The services sector, which is more significant, did experience a 0.1% m/m growth rate, although it fell slightly short of the 0.2% m/m expectation. Stateside, the headline inflation rate is anticipated to decrease from 2.9% y/y to 2.5% y/y. However, there are potential hazards. Energy price base effects are favorable for the August US CPI release, and the same should be true for this month. Consequently, a decrease in the annual headline inflation rate is anticipated. Expect a decrease to 2.5% y/y, which is a decrease from the 2.9% y/y rate observed in July. Therefore, it is anticipated that the rate will be marginally lower than the consensus of 0.2% m/m. However, markets anticipate an unchanged rate of 0.2% m/m and 3.2% y/y for the ex-food and energy metric in the absence of these energy price dynamics. It appears that the overall narrative will not advance significantly with this release, at least on paper. However, as we have recently observed, even apparently modest data surprises have elicited more significant market reactions. The Fed's preference for a 25bp move to initiate the rate reduction cycle next week remains significantly more probable than the 50bp alternative, which has been assigned a one-in-three chance by the market. One potential risk for those who are inclined to position for a more aggressive cut is that certain volatile components, such as airfares and used vehicle prices, have contributed to the softening of the market over the past few months, thereby increasing the likelihood of a partial snapback. Overnight Newswire Updates of Note Trump And Harris Clash In Fiery Debate Traders Expect At Least Two Big Fed Cuts Soon ECB Expected To Cut Rates As Fed Prepares To Do Same RBA ‘Surprised’ By Limited Easing In Job Gauges, Hunter Says BoJ’s Nakagawa Ready For Rate Hike If Inflation Steady Yen Gains To Strongest Since Jan 2 After BoJ Official Speaks Aussie Recovers Above 0.6650, As Focus Shifts To US CPI Brent Oil Tumbles Below $70 Due To Oversupply Fears NatGas Prices Rise 3%, Output Cuts Before Storm Francine Warren Buffett’s BofA Stock Sales Slow After Price Declines China's Auto Sales Dip 5% In August, 3rd Straight Month JPMorgan Shares Fall After Warning On Earnings Outlook Australia REA: Rightmove Board Rejected £5.6B Proposal Israel Still Wants Integration With Arab States (Sourced from reliable financial news outlets) FX Options Expiries For 10am New York Cut (1BLN+ represents larger expiries, more magnetic when trading within daily ATR) EUR/USD: 1.1000 (1.3BLN), 1.1020-25 (1.2BLN), 1.1050 (833M) 1.1075 (725M), 1.1100 (400M)... USD/CHF: 0.8600 (750M). GBP/USD: 1.3050-60 (247M), 1.3100 (200M) NZD/USD: 0.6065 (2.2BLN), 0.6100 (300M), 0.6120-25 (707M) AUD/USD: 0.6610 (1.1BLN), 0.6625 (750M), 0.6700 (365M) USD/CAD: 1.3495-1.3510 (1.3BLN), 1.3625-30 (917M) USD/JPY: 140.00 (272M), 142.00 (354M), 142.50 (912M), 142.75 (544M) EUR/JPY: 157.00 (236) CFTC Data As Of 6/9/24 Bitcoin net long position is 108 contracts Swiss Franc posts net short position of -21,882 contracts British Pound net long position is 108,078 contracts Euro net long position is 100,018 contracts Japanese Yen net long position is 41,116 contracts Equity fund managers raise S&P 500 CME net long position by 1,368 contracts to 991,219 Equity fund speculators trim S&P 500 CME net short position by 85,360 contracts to 271,561 Speculators increase CBOT US 10-year Treasury futures net short position by 88,390 contracts to 1,002,827 Technical & Trade Views SP500 Bullish Above Bearish Below 5490 - Daily VWAP bullish - Weekly VWAP bearish - Above 5510 opens 5550 - Primary resistance 5555 - Primary objective is 5325 EURUSD Bullish Above Bearish Below 1.1140 - Daily VWAP bearish - Weekly VWAP bullish - Below 1.09 opens 1.0850 - Primary resistance 1.1150 - Primary objective 1.0950 GBPUSD Bullish Above Bearish Below 1.3190 - Daily VWAP bearish - Weekly VWAP bullish - Below 1.3050 opens 1.2960 - Primary support is 1.2730 - Primary objective 1.3390 USDJPY Bullish Above Bearish Below 143.70 - Daily VWAP bearish - Weekly VWAP bearish - Above 146 opens 150 - Primary support 140 - Primary objective is 139.60 XAUUSD Bullish Above Bearish Below 2500 - Daily VWAP bullish - Weekly VWAP bullish - Below 2450 opens 2400 - Primary support 2300 - Primary objective is 2598 BTCUSD Bullish Above Bearish Below 54000 - Daily VWAP bullish - Weekly VWAP bearish - Below 50000 opens 444400 - Primary support is 500000 - Primary objective is 700000

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Publication date:

2024-09-11 12:06:58 (GMT)

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