Daily Market Outlook, January 13, 2023 

  • Markets Poised To Post Weekly Back To Back Gains For The Start of 2023

  • Asian Equities are set to close out the week with a positive tone, following a whipsaw session on Wall Street, as investors digested US inflation data, markets are coalescing around the view that peak inflation is now firmly in the rearview mirror, as such investors hope that US interest rates are also close to peaking. US inflation as expected, posted a sixth month of declines, this has led markets to favour a 25bps rate move at the next FOMC meeting, which inturn has supported US equities with the benchmark SP500 closing the day with modest gains, and now heading for a potential second week of positive returns for the new year..

  • Risk sentiment has been further supported this morning, with UK GDP data surprising to the upside, posting a 0.1% gain in November, under the hood construction activity is subdued, with industrial production remaining depressed, however, the services sector displayed unexpected buoyancy, the data bucks the trend of declines, suggesting that unless December numbers post a meaningful drop, economist projections for another quarter of negative GDP data in the UK may be misguided.

  • Aside from the UK GDP the data slate is somewhat sparse ahead of the US trading session, focus today will be on the University of Michigan consumer sentiment survey, with consumer sentiment lifting in December given the hope that inflation has peaked, further confirmation from yesterday’s CPI data combined with lower fuel prices stateside, leads market watchers to expect another lift in consumer appetite in January, investors will also look for additional declines in inflation expectations to cement the peak inflation narrative. 

  • Investors will eye remarks from a  host of Fed speakers today, prior positive market reactions to the reduction in inflation data, have been followed by Fed speakers reaffirming their hawkish stance and restating their alliance around a rate story of ‘higher for longer’, if this pattern is repeated today, this could weigh on risk appetite into the weeknd, bulls will be hoping that today’s officials Williams and Kashkari, follow Philly Fed President Harker, who yesterday leaned towards a slower rate path favouring a 25bps move at the next meeting.

  • Markets-wise, the US earnings season kicks off in earnest today, with major financial franchises set to report, JPMorgan are due to announce before the bell and will likely set the tone for US trading, followed by Blackrock, BNY Mellon, Bank of America, Wells Fargo and Citi. Markets will be buoyed into the weekend as long as earnings meet expectations, any major misses from the marquee names could derail risk sentiment and lead to repricing of risk assets before the close of trading for the week.

Overnight News of Note

  • Oil Heads For Solid Weekly Gain On China Demand Hopes – CNBC

  • Asian Stocks Mostly Higher In Choppy Trading On Friday, Japan Declines

  • Fed’s Bostic: New Inflation Data Gives ‘Comfort’ For Smaller Rate Hikes

  • Fed’s Harker Ready To Downshift To 25 Basis-Point Interest Rate Hikes

  • US Budget Deficit Hits $421 Billion, Setting Stage For Debt-Limit Fight

  • IMF Chief Expects To Keep 2023 Global Growth Forecast Steady At 2.7%

  • Bank Of Korea Hikes Key Rate As Tightening Cycle Winds Down

  • China’s Exports Slump Further As Global Demand Drops Off

  • BoJ Watchers See Earlier Policy Shift After December’s Surprise

  • Japan Bond Yield Breaks BOJ’s New Policy Cap in Test of Resolve

  • BoJ Conducts Unscheduled Bond Buying As Yield Breaches Ceiling

  • Dollar Wobbles As U.S. Inflation Fuels Hopes Of Slower Fed Rate Path

  • Global Bonds Rally As Cooler US Inflation Set to Spur Fed Shift

  • SEC Sues Gemini And Genesis Over Crypto Asset-Lending Programme

  • China Takes ‘Golden Shares’ In Alibaba And Tencent Units – FT

  • Tesla Cuts Prices On Electric Vehicles For German And US Market

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiration, New York Cut 10am EST

  • EUR/USD: 1.0750 (EU2.76B), 1.0850 (EU1.88B), 1.0600 (EU1.79B)

  • USD/JPY: 139.50 ($729.1M), 131.00 ($707M), 136.00 ($612.3M)

  • USD/CNY: 6.8000 ($799.4M), 6.8500 ($728M), 7.4000 ($710M)

  • AUD/USD: 0.7125 (AUD1.87B), 0.6950 (AUD1.46B), 0.7000 (AUD1.34B)

  • GBP/USD: 1.2000 (GBP1.06B), 1.1800 (GBP583M), 1.1433 (GBP437.3M)

  • USD/MXN: 19.15 ($542.6M), 19.30 ($480M), 19.10 ($470M)

  • USD/KRW: 1360.00 ($457.4M)

  • USD/CAD: 1.3500 ($446.1M), 1.3300 ($430M)

  • EUR/GBP: 0.8900 (EU841.6M)

(Options Data DTCC)

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3940 – 4000 Target Hit – New Pattern Emerging

  • Primary support is 3940

  • Primary objective is 4022

  • Below 3940 opens 3890

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Bullish Above Bearish below 1.0735

  • Primary support  is 1.0735

  • Primary objective is 1.09

  • Below 1.0730 opens 1.06

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Bullish Above Bearish below 1.21

  • Primary support  is 1.21

  • Primary objective 1.2315

  • Below 1.21 opens 1.20

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish above Bearish Below 130

  • Primary resistance is 130

  • Primary objective is 126.25

  • Above 130.80 opens 132.20

  • 20 Day VWAP bearish, 5 Day VWAP bearish

AUDUSD Bias: Bullish Above Bearish below .6920

  • Primary support is .6920

  • Primary objective is .7030

  • Below .6900 opens .6820

  • 20 Day VWAP bullish, 5 Day VWAP bullish

BTCUSD Bias: Bullish Above Bearish below 18350 – 18900 Target Hit -New Pattern Emerging

  • Primary support 18350

  • Primary objective is 19155

  • Below 18300 opens 18000

  • 20 Day VWAP bullish, 5 Day VWAP bullish