Daily Market Outlook, January 9, 2023

  • MSCI Asia Pacific Index In Bull Market Territory

  • Asian equity markets took their lead from Friday’s positive close to trade on Wall Street, with US equity markets posting their best gains for over a month, markets are once again pinning their hopes on a Fed pause or pivot, this view was primarily driven by the investor belief that the dire ISM print Friday suggests imminent recession in the US, investors took this data as bad economic news meaning good news for markets as the data may give the Fed cover to pause if not pivot on their current rate trajectory. The improved risk sentiment has driven the Asia Pacific MSCI index back into bull market territory, gaining 20%+ from the lows, the index has been given a further boost by the China re-opening story, with the region removing quarantine restrictions for inbound passengers.

  • In the UK there is no tier-one economic data of note today, investors will parse comments from the Bank of England Chief Economist, Huw Pill, who speaks at a conference at the New York University later today, Pill voted for a 50bps rate increase at the December meeting, stating that he preferred a pre-emptive approach to fighting inflation risks, as inflation remains stubbornly in double-digit territory, investors will look for further confirmation of a 50bps move at the next BoE meeting.

  • In the Eurozone, the focus will be on unemployment data which is expected to remain in the 6.5% ballpark, this release will be coupled with the Eurozone investor confidence report, and market watchers are anticipating modest improvement from the December -21 print, consensus suggests an uptick to -18 for January.

  • In the US, post Friday’s mixed bag of data, with Non-farm payrolls remaining relatively robust but the ISM data deteriorating at a clip, investors will be attuned to comments from Fed officials Daly and Bostic who both speak this afternoon, however, neither are voting members this year so their views will carry less weight than they did in 2022 The main events in the US this week will be Fed Chair Powell’s speech tomorrow ahead of Thursday’s critical inflation data ahead of the US Bank earnings, with JPMorgan reporting Friday, this earnings season is going to be critical for investor sentiment, with market watchers anticipating a potential earnings recession to develop in the first half of 2023.

  • Markets-wise, the Dollar story remains front and center as we head into 2023, positioning has shifted significantly, with investors paring support for the greenback, the Dollar closed out 2022 with a 7.6% decline, printing its poorest quarterly decline in Q4 22 since 2010 and 2000 respectively, it is noteworthy that we are heading into the most seasonally strong period for the USD from a historical perspective, with the reset in investor positioning could there be scope for some corrective upside in the world’s reserve currency?

Overnight Headlines

  • BTC Back Above $17,000; Ether, Crypto Market Extend Weekend Gains

  • Treasury Futures Hold Gains As Aussie, New Zealand Bonds Jump

  • Oil Rises As Chinese Border Opening Spurs Fuel Demand Optimism

  • Asia Stocks On Track To Enter Bull Market As China Rally Extends

  • China Central Bank Official Says Growth To Be Back On Track Soon

  • Chinese Cities Set GDP Targets At Least 5.5% For 2023 – Report

  • China Tightens Listing Guidelines To Funnel Funding To Strategic Sectors

  • China Military: Carried Out Combat Drills Around Taiwan On Sunday

  • Japan PM Says Careful Explanation Needed On Monetary Policy

  • U.S. Fed To Raise Rates Near 5.5% By May, Predicts Citigroup CEO

  • BoE’s Mann Says Energy Price Caps May Be Lifting Other Inflation

  • UK Manufacturers Issue Warning Over Cuts To Energy Support

  • Offshore Yuan Gains Past 6.8 Per Dollar For First Time Since August

  • Ant-Controlled Companies, Alibaba Rise After Ma Gives Up Control

  • Goldman To Cut About 3,200 Jobs This Week After Cost Review

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3865

  • Primary support is 3865

  • Primary objective is 3950

  • Below 3850 opens 3830

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Bullish Above Bearish below 1.0737

  • Primary resistance is 1.0737

  • Primary objective is 1.0350

  • Above 1.0750 opens 1.08

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Bullish Above Bearish below 1.23

  • Primary resistance is 1.23

  • Primary objective 1.1720

  • Above 1.2330 opens 1.2440

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish above Bearish Below 130.50

  • Primary support is 130.50

  • Primary objective is 137

  • Below 130 opens 129.50

  • 20 Day VWAP bearish, 5 Day VWAP bearish

AUDUSD Bias: Bullish Above Bearish below .6960

  • Primary resistance is .6960

  • Primary objective is .6650

  • Above .6970 opens .7050

  • 20 Day VWAP bullish, 5 Day VWAP bullish

BTCUSD Bias: Intraday Bullish Above Bearish below 17300

  • Primary resistance17300

  • Primary objective is 16300

  • Above 17300 opens 17500

  • 20 Day VWAP bullish, 5 Day VWAP bullish