Daily Market Outlook, August 2, 2024

Munnelly’s Macro Minute…

“A Sea Of Red As US Recession Fears & Geopolitical Tensions Rise”

Amid worries about the outlook for global economic growth following some disappointing economic data from the U.S., Europe, and China that offset optimism about a near-term interest rate cut by the US Fed, Asian stock markets are a sea of red on Friday. This is in response to the overnight negative cues from global markets. Data revealed that first-time claims for unemployment benefits in the United States reached their highest point in over a year last week, and that manufacturing production in the country unexpectedly shrank at an accelerated rate in July. Traders are currently awaiting the highly anticipated report on employment for July from the US Labor Department. The Japanese stock market is currently trading considerably lower on Friday, compounding the strong losses from the previous session. This is due to the general bearish indications from global markets overnight. The benchmark Nikkei 225 is declining by over 4%, closing well below the 36,600 mark. The largest sectors experiencing difficulties are technology and financial companies, as well as index heavyweights.

The head of Hamas' military wing, Mohammed Deif, was killed in an Israeli bombing in Gaza last month, the Israeli military claimed on Thursday, one day after the political leader of the party was assassinated in Tehran.

Europe has a light data schedule, so the attention is on the U.S. nonfarm payrolls report this afternoon; a miss would just hasten the risk retreat. Market consensus is that July's job growth was 175,000, compared to 206,000 the previous month. The unemployment rate, which is anticipated to remain at 4.1%, will also be under scrutiny.

Overnight Newswire Updates of Note

Australian Dollar Recovers Losses Following PPI Data
EU Prep, Potential Return of Trump To Power
A US Recession Is Not Off The Table Yet
Feds Put Nvidia AI Deal Under Antitrust Scrutiny
US’s Joe Biden’s Call With Israel's PM Netanyahu
Apple’s Revenue Rose Despite China Slowdown
Amazon Earnings Jump On Cloud Computing Strength
Intel Plans Job Cuts, Spending To Shore Up Finances
Tech Sell-Off Leads US Stocks Lower And 10Y Yield Sinks
Asian Stocks Broadly Lower After Wall Street Sell-Off
Companies See Limited Financing Impact; BoJ Hike
China Bond Traders Seek Refuge, Amid PBoC Fears

(Sourced from 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: 1.0725-35 (600M), 1.0740-50 (2.47BLN) 1.0770 (657M), 1.0785 (690M), 1.0800 (665M), 1.0850 (670M) 1.0865-75 (536M), 1.0885 (302M), 1.0900-10 (734M)
USD/JPY: 151.00 (1.22BLN)
USD/CHF: 0.8830-35 (510M).
EUR/CHF: 0.9360 (400M)
GBP/USD: 1.2815 (230M), 1.2850-60 (624M)
EUR/GBP: 0.8420-25 (1.2BLN), 0.8460 (1.1BLN)
AUD/USD: 0.6575 (301M), 0.6625-30 (555M), 0.6640 (289M)
NZD/USD: 0.5975 (582M), 0.6000 (200M). AUD/NZD: 1.1025 (545M)
USD/CAD: 1.3800 (518M), 1.3895-00 (1.02BLN)
USD/ZAR: 18.6620 (555M), 18.70 (1.22BLN)

CFTC Data As Of 23/7/24

Equity fund managers cut S&P 500 CME net long position by 2,812 contracts to 994,529
Equity fund speculators trim S&P 500 CME net short position by 89,786 contracts to 280,356
Japanese yen net short position is -107,108 contracts
Swiss franc posts net short position of -42,237 contracts
British pound net long position is 142,183 contracts
Euro net long position is 35,906 contracts
Bitcoin net short position is -661 contracts