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Asia – In the Asia-Pacific region, most stock markets experienced gains driven by positive movements in US tech stocks, notably Microsoft, which reached a record high. Chinese markets found support from the property sector, while the ASX 200 benefitted from strength in the mining and materials sectors, despite a hint of hawkishness in the Reserve Bank of Australia’s tone. The Nikkei 225 faced uncertainty amid recent strength in the Japanese Yen (JPY), but a decline in Japanese Government Bond (JGB) yields provided some relief. The Hang Seng and Shanghai Composite both saw positive momentum fueled by optimism surrounding property stocks. Reports indicated that China is in the process of drafting a “whitelist” of 50 developers, suggesting a potential boost in financing. Furthermore, China has called on government officials to increase financial support for the economy and is actively working on strengthening major economic strategies. Overall, these market movements reflect a combination of global tech trends, regional economic dynamics, and specific sector performances, with property and mining sectors notably influencing market sentiment in various countries across the Asia-Pacific region. Europe – With a scant data docket in Europe and the UK today attention will shift to central bank commentary. In the UK the Governor of the Bank of England is set to face questioning from the Treasury Committee, focusing on topics such as inflation and economic data. The latest figures indicate that inflation is presently at 4.6%. Interestingly, despite a track record of voting to raise interest rates fourteen consecutive times, the Monetary Policy Committee (MPC) opted to maintain the base rate at 5.25% during the last two meetings. This decision to hold the interest rate steady raises questions about the MPC’s current stance and the factors influencing their choice amid the backdrop of elevated inflation. The upcoming session with the Treasury Committee will likely provide insights into the central bank’s perspective on the economic landscape, the challenges posed by inflation, and the considerations that led to the recent decisions regarding interest rates.Ms. Christine Lagarde, President of the European Central Bank (ECB), is scheduled to deliver a speech at a high-level public discussion titled “Inflation kills democracy” in Berlin, Germany. The event is organized by the German Ministry of Finance and is intended to commemorate the 100th anniversary of the currency reform in Germany in 1923. The choice of the event’s theme, “Inflation kills democracy,” suggests a focus on the historical context of how inflationary pressures can impact democratic systems, possibly drawing parallels between the past and contemporary economic challenges. Ms. Lagarde’s insights in this discussion are likely to provide perspectives on the relationship between inflation and the stability of democratic institutions, as well as considerations relevant to the current economic landscape.US – Stateside, later today, investors will closely scrutinize the minutes of the Federal Reserve’s recent meeting, seeking insights into potential future movements in interest rates. The general recovery, propelled by recent data indicating a potential decrease in inflation in the United States, has sparked speculation that the Federal Reserve might reconsider its monetary tightening efforts and could even contemplate rate cuts in the coming year. Traders are adjusting their expectations, with a prevailing sentiment that the Fed is likely to keep interest rates steady at their current level in December. Notably, there are indications from the CME Group’s FedWatch tool that rate cuts could become a reality as early as March.Additionally, attention will be directed towards the earnings report of Nvidia, a prominent company in artificial intelligence chips. Expectations are high for another impressive revenue forecast from Nvidia. The ongoing positive performance of the U.S. earnings season has been well-received by investors, contributing to a favorable market sentiment. Nvidia’s earnings results are poised to be a significant test for the AI-driven rally that has played a crucial role in the growth of the U.S. stock market throughout the year. The outcome of Nvidia’s report will likely have broader implications for the tech sector and could influence market dynamics, providing investors with valuable information about the health and trajectory of industries reliant on artificial intelligence technologies.
FX Positioning & Sentiment JPY is in demand, but buy-backs are taking the shine off of some JPY crosses. For example, EUR/JPY is off hard from its Nov 16 high of 164.31, trading at 162.00-162.39 in Asia today and holding above its Nov 13 low of 161.80. More downside is possible as yields abroad are off more than in Japan. Support is expected at sub-161.80, with option expiries at 163.00 likely to cap any upward movement. GBP/JPY is also heavy, trading at 184.56 yesterday but reaching a high of 188.30 on Nov 13. Anticipated leniency from the Federal Reserve and low long-term US yields are prompting further adjustments to positions. In contrast to falling yields in other countries, Japanese yields are not declining at the same rate, as they did when yields were increasing.
CFTC Data As Of 17-11-23
FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
Overnight Newswire Updates of Note
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 4525
EURUSD Bias: Bullish Above Bearish Below 1.0830
GBPUSD Bias: Bullish Above Bearish Below 1.2430
USDJPY Bias: Bullish Above Bearish Below 149
AUDUSD Bias: Bullish Above Bearish Below .6520
BTCUSD Bias: Bullish Above Bearish below 34000
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