Daily Market Outlook, May 5, 2023
Asian equity markets are in general hugging the flatline in holiday thinned trade with Japan offline, the handover from Wall Street was again less than convincing, banking concerns continue to linger, however, a decent set of earnings from Apple kept risk appetite afloat ahead of today’s Non Farm Payroll release. Onshore and offshore China indices managed to post marginal gains after some decent PMI services data came in overnight, with the Hang Seng and Shanghai Comp both trading up circa 0.5% on the session.
In the UK much of the focus is on the holiday extended weekend celebrations of the King’s coronation, however, ahead of this UK investors will have one eye on PMI construction data which may add some colour to this sensitive sector ahead of next week’s Bank of England meeting, after notching up a nine month high in February, March data disappointed to the downside, but maintained a level above the pivotal 50 denoting expansion, investors will be looking for further improvement today specifically any uptick in housing construction whilst the commercial landscape should remain relatively buoyant. In a particularly scant data docket, European investors will be eyeing retail sales data, after the retreat in February market watchers are expecting another pullback in March.
Stateside the main focus will be on Non Farm Payrolls, the significance of another round of headline layoffs in the US has yet to make a meaningful dent in the data, while relevant to the tech and financial sectors the general employment landscape appears to remain firm, the question is the quality of these jobs, which remains a concern for economists, markets are expecting a 180K print which would represent a decent pullback from the prior 236k print any headline upside surprise will bring the Fed firmly back into the picture, another uptick in the unemployment rate would be welcome, investors will also be looking for any signs of a retreat in inflationary pressure on the wage data, markets have pencilled an annualised 4.2% inline with the March print. The final data input of the week will be ISM manufacturing data, as investors will be looking for additional confirmation of a nascent trend of expansion after last months positive print, however, the focus from a Fed perspective will be squarely on the jobs numbers, while investors will also have one eye on the regional banks heading into the weekend, will it be another Sunday night bailout story?
FX Options Expiries For 10am New York Cut
(In bold represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0950 (1.6BLN), 1.0975 (551M), 1.1000 (1.7BLN)
1.1050-55 (1.6BLN), 1.1075-85 (2.8BLN), 1.1100 (3BLN)
EUR/CHF: 0.9700 (250M)
AUD/USD: 0.6700 (311M), 0.6800 (652M). AUD/NZD: 1.0750 (254M)
USD/CAD: 1.3525 (585M), 1.3685-95 (3.4BLN)
USD/JPY: 133.50 (1.4BLN), 133.85 (330M), 134.20-25 (390M), 135.00 (592M)
CFTC Data As Of 21/04/28
USD net spec short near unchanged in Apr 19-25 period, Yen sellers most active
EUR$ +0.02% in period specs +5,039 contracts now long 169,400
EUR long largest since mid-Oct '20, $-equivalent more than 2x other pairs
$JPY -0.26% in period, specs -11,875 contracts, short grows to 68,744
GBP$ -0.11% in period, specs +4,537, now +5,839 as BoE-Fed diverge on rates
CAD specs +2.4k short now 43,791, AUD specs +2,894 contracts now -39,462
BTC -8.02% in period, specs +196 contracts now short 293 (Source RTRS)
Overnight News of Note
US Stock Futures Moved Higher Following Apple’s Earnings
Fed Swaps Point To A Rate Cut By July, Or Maybe Even June
Fed’s Emergency Loans Fall Following First Republic Seizure
US Officials Assessing Possible Banking Shares Manipulation
FDIC Set To Hit Big Banks With Fee To Refill Insurance Fund
US Seeks China Defence Minister Meet After Being Spurned
Top Biden Advisor Plans To Visit Saudi Arabia This Weekend
Chinese Services Activity Expands For Fourth Straight Month
RBA Cut GDP, Inflation Forecasts As Rate Hikes Cool Activity
BoC’s Macklem: BoC May Hike Further If Inflation Gets Stuck
UK Labour, Liberal Dem Positive In Strong Local Election Win
Apple iPhone Sales Rise, Bolsters Results In Shaky Economy
Google Falling Behind In AI Arms Race, Senior Engineer Warn
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Intraday Bullish Above Bearish Below 4050
Below 4040 opens 4020
Primary support is 4000
Primary objective is 4207
20 Day VWAP bearish, 5 Day VWAP bearish
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EURUSD Bias: Intraday Bullish Above Bearish below 1.10
Below 1.0990 opens 1.0910
Primary support is 1.07
Primary objective is 1.1128
20 Day VWAP bullish, 5 Day VWAP bullish
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GBPUSD Bias: Intraday Bullish Above Bearish below 1.25
Below 1.2475 opens 1.24
Primary support is 1.2250
Primary objective 1.2659
20 Day VWAP bullish, 5 Day VWAP bullish
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USDJPY Bias: Intraday Bullish above Bearish Below 133.50
Below 134.90 opens 134
Primary support is 133
Primary objective is 138.80
20 Day VWAP bearish, 5 Day VWAP bearish
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AUDUSD Bias: Intraday Bullish Above Bearish below .6685 Target Hit - New Pattern
Below .6620 opens .6560
Primary support is .6620
Primary objective is .6750
20 Day VWAP bullish, 5 Day VWAP bullish
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BTCUSD Intraday Bias: Bullish Above Bearish below 29300
Primary resistance 30000
Primary objective is 26000
Below 26000 opens 25800
20 Day VWAP bullish, 5 Day VWAP bearish
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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!