Daily Market Outlook, December 8, 2022 

Wall Street Whipsawed On Deflationary Data & Putin Nuclear Rhetoric

Wall Street witnessed a whipsaw session, driven by downward revisions to Q3 unit labour costs, this prompted a sell-off in US Yields and a rally in US stocks, this move was sharply reversed as investors hit the sell button as comments from President Putin hit the wires, President Putin was reported to consider nuclear weapons as a response to any attack, once again elevating concerns about a nuclear threat from Russia. The benchmark SP500 ended the session with a fifth consecutive day of losses, and Asian equities followed suit overnight with lacklustre performance across the region. The only performer of note was the Hang Seng with investors once again piling into the tech stocks in the hope of reopening in Hong Kong.

There is no tier-one economic data in either the UK or the Eurozone today, so markets will focus on a smattering of ECB speakers, principally ECB President Lagarde, her speech will be parsed for any further clues as to the rate path trajectory in the Eurozone, along with any hints as to a potential terminal rate for the single currency region. In the US the only data of note later today will be initial jobless claims, the data has continued to confirm a robust employment environment stateside, with last week’s non-farm payrolls data printing above the market’s expectations, with a surprise increase in wage growth providing further cover for the Fed to maintain its hawkish policy stance. Markets will monitor comments from Fed Chair Powell who gives a Nobel lecture later today. 

Markets-wise, the mood remains somewhat subdued this morning; European bourses have made meagre gains as investors weigh the ongoing geo-political risk from Russia combined with the deteriorating macro perspective, on the positive side of the ledger the ongoing China re-opening story offers some solace for investors. Early Friday, China will release PPI data, which is expected to show further declines, the contraction in trade data announced earlier this week is likely to lead to weaker inflation in the region.

Overnight Headlines

  • Japan’s Economy Shrank Less Than First Thought In Third Quarter

  • Australia Extends Trade Surplus Streak On Metals And Gas Exports

  • HK May End Outdoor Mask Rule, Relax Covid Tests, Report Says

  • China Asks Insurers To Buy Bonds As Retail Investors Pull Back

  • China Studies Expanding REITs Pilot Scheme To More Properties

  • Netherlands Plans Curbs On China Tech Exports In Deal With US

  • China’s Yuan Dips On Economic Worries Even As Covid Rules Ease

  • Bond Market Points To Fed Standing Firm In Battle Against Inflation

  • Oil Edges Higher After Four-Day Retreat As Traders Look To China

  • Venezuelan Officials, Chevron Execs Hold Closed-Door Meetings

  • Bankman-Fried Faces Federal Market Manipulation Probe – NYT

  • Asia Stocks Slip As Hang Seng Surges On Reopening Expectations

  • Chevron Lifts 2023 Capital To Top Of Range Amid Biden Pressure

  • Musk Bankers Mull Tesla Margin Loan To Cut Risky Twitter Debt

FX Options Expiring 10am New York Cut

  • EUR/USD: 1.0400-05 (306M), 1.0420-30 (567M), 1.0450 (810M)

  • USD/JPY: 136.35-45 (420M), 137.00 (741M)

  • AUD/USD: 0.6665 (201M), 0.6700 (526M), 0.6800-10 (1.02BLN)

  • USD/CAD: 1.3490-00 (881M), 1.3550 (500M), 1.3650 (785M)

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3900

  • Primary support is 3900

  • Primary upside objective is 4120

  • Failure at 3880 opens a test of 3850

  • 20 Day VWAP bullish, 5 Day VWAP bearish

EURUSD Bias: Bullish Above Bearish below 1.0450

  • Primary support is 1.0450

  • Primary upside objective is 1.0620

  • Failure at 1.04 opens a test of 1.0350

  • 20 Day VWAP bullish, 5 Day VWAP bearish

GBPUSD Bias: Bullish Above Bearish below 1.21

  • Primary support is 1.21

  • Primary upside objective 1.24

  • Failure at 1.2080 opens a test of 1.2030

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish above Bearish Below 137.7

  • Primary resistance is 137.70

  • Primary downside objective is 132

  • Acceptance above 138 opens a test of 139.30

  • 20 Day VWAP bearish, 5 Day VWAP bullish

AUDUSD Bias: Bullish Above Bearish below .6640

  • Primary support is .6640

  • Primary upside objective is .6900

  • Failure at .6600 opens a test of .6550

  • 20 Day VWAP bullish, 5 Day VWAP bearish

BTCUSD Bias: Intraday Bullish Above Bearish below 16500

  • Intraday 16500 is primary support

  • Primary upside objective is 18000

  • Failure at 16400 opens a test of 16000

  • 20 Day VWAP bearish, 5 Day VWAP bullish