Daily Market Outlook, August 13, 2024

Munnelly’s Macro Minute…

“US Inflation Data Eyed As The Main Driver For A Fed Move ”

Following mixed signals from Wall Street overnight, Asian stock markets are trading mixed on Tuesday. Traders appeared hesitant to make big changes in positioning ahead of the release of important US inflation numbers later in the day and tomorrow, which are expected to have an impact on the outlook for US interest rates. Tuesday's post-holiday trading has seen a significant increase in the Japanese stock market, building on the gains of the previous session. Following conflicting overnight indications from Wall Street, the Nikkei 225 is rising more than 2.5 percent to above the 36k handle. Strong advances across all sectors are being led by index heavyweights and technology firms.

Regarding the US Federal Reserve's September interest rate reduction, there is yet hope. With a 51.5 percent probability of a rate cut of 25 basis points and a 48.5 percent probability of a rate cut of 50 basis points, the CME Group's FedWatch Tool is currently forecasting a rate decrease in September.

Before attention turns to the consumer price index data for July, which are slated for Wednesday, U.S. producer pricing data, which are coming later in the day, are expected to influence markets. This week's data dump is completed on Thursday with the retail sales report.

Later in the day, Federal Reserve Bank of Atlanta President Raphael Bostic is scheduled to speak, so investors will also be watching for his remarks. Meanwhile, UK wage data is expected to dominate European hours.

As for the conversation between billionaire entrepreneur Elon Musk and Republican presidential candidate Donald Trump, attendees had to wait a while for it to start because of a long delay brought on by technical issues that prevented many users from accessing the live feed.

Overnight Newswire Updates of Note

Tech Problems Overshadowed Trump-Musk X’s Interview
Australia’s Wages Elevated, Underlining Price Pressures
BofA CEO Reveals Problems With US Consumer Money
Japan’s PPI Stay Elevated, Yen Weakness Fuels Import Costs
Japan's Parliament To Hold Aug 23 Session On BoJ Rate Hike
Japan Stocks Gains As Nikkei Climbs Above 2% After Holiday
Chipmakers Face A Looming Crisis In Labour
UKMTO Reports Incidence Southwest Of Yemen's Hodeidah
US And South Korea Start Joint Military Exercises Next Week
US Warns Iran Attack On Israel Could Come This Week
Oil Prices Ease As Markets Refocus On Demand Worries
XAU Trims Overnight Gains Ahead Of US Inflation Data
Israel Puts Military On High Alert, US Sends Assets To Middle East
Putin: Recent Ukraine’s Attack, Aimed At Ceasefire Negotiations
FitchRatings Downgraded Isreal From A+ To A, Outlook Negative

(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: 1.0820-25 (2.4B), 1.0840 (641M), 1.0865-75 (1.4B), 1.0900 (2.0B)
EUR/USD: 1.0930 (896M), 1.0960 (849M)
USD/JPY: 146.25 (1.2B), 147.60 (350M). AUD/JPY: 95.50 (360M)
GBP/JPY: 185.50 (394M)
GBP/USD: 1.2850 (300M). EUR/GBP: 0.8580 (230M)
AUD/USD: 0.6575 (1.5B), 0.6675 (1.1B). AUD/NZD: 1.1050 (553M)

CFTC Data As Of 09/8/24

Equity fund speculators trim S&P 500 CME net short position by 25,312 contracts to 222,856
Equity fund managers cut S&P 500 CME net long position by 57,309 contracts to 881,533
Swiss franc posts net short position of -22,073 contracts
British pound net long position is 74,399 contracts
Euro net long position is 33,580 contracts
Japanese yen net short position is -11,354 contracts
Bitcoin net long position is 538 contracts