Daily Market Outlook, March 27, 2024

Munnelly’s Macro Minute…

“Markets Muted Ahead Of Holidays”

On Wednesday, most Asian stock markets are trading lower due to negative cues from Wall Street and cautiousness among traders. They are also awaiting key U.S. and European inflation readings and comments from central bank officials for insight into the interest rate outlook. Meanwhile, concerns are also rising about the economic impact of the indefinite suspension of vessel traffic at the Port of Baltimore, following a cargo ship's collision with the Francis Scott Key Bridge, resulting in its collapse. The Japanese stock market is showing significant gains, recovering from losses in the previous two sessions, despite the negative signals from Wall Street. The Nikkei 225 is currently above the 40.7k handle, with most sectors experiencing gains, particularly in the exporter and financial sectors. Stocks dropped in China and Hong Kong, primarily due to the decline in technology companies. The decrease was influenced by the drop in Nvidia's shares and Alibaba's announcement of postponing the IPO of its logistics subsidiary, impacting the morale of AI-related firms in the region.

In the Eurozone, the European Commission's monthly economic confidence survey for March is expected to indicate an increase in the headline index, rising from 95.4 to 96.2. Consumer confidence data, already released, revealed a rise to 14.9, marking the highest level since the invasion of Ukraine by Putin two years ago. Additionally, there is anticipation for a rebound in services confidence following last month's decline.

Meanwhile, there are no significant data releases expected Stateside today. However, the Fed's Waller is set to deliver a speech on the economic outlook at the Economic Club of New York. Last week's updated Fed dot plot maintained its signal for three interest rate cuts this year, although the number of projected cuts for 2025 was reduced.

Overnight Newswire Updates of Note

BoJ’s Ueda: Accommodative Financial Conditions Are Expected To Continue
BoJ’s Hawkish Member Eyes Steady Rate Hikes For Normalization
PBoC Chief Seeks To Deepen Currency Ties With Asian Economies
ECB’s Kazaks: Inflation Is Slowing, First Rate Cut Is Nearing
China Industrial Profits Rise In Sign Of Stabilizing Economy
Australia’s Inflation Rate Comes In Lower Than Expectations In February At 3.4%
Yen Drops To Lowest In 34 Years Despite BoJ Rate Hike
NZ FinMin Willis Reveals Gloomy Outlook In Budget Scene Setter
Oil Prices Slip As Traders Assess Ukraine Drone Strikes, Red Sea Impact

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

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

USD/JPY: 150.00 ($1.95b), 145.00 ($1.59b), 148.00 ($908.3m)
EUR/USD: 1.0865 (EU1.78b), 1.0800 (EU1.33b), 1.0860 (EU1.14b)
USD/CAD: 1.3650 ($1.26b), 1.3070 ($1.15b), 1.3445 ($681.9m)
USD/CNY: 7.2500 ($683.3m), 7.2600 ($493.1m), 7.3200 ($479.1m)
AUD/USD: 0.6510 (AUD1.23b), 0.6500 (AUD923m), 0.6395 (AUD510m)
NZD/USD: 0.6000 (NZD722m), 0.6095 (NZD647.8m), 0.6140 (NZD300m)
USD/MXN: 16.70 ($529.7m)
EUR/GBP: 0.8700 (EU377m)
Credit Agricole Month End Model: Our FX month-end rebalancing model suggests potential mild USD selling across various currencies, with the strongest sell signal observed against the SEK. Additionally, our corporate flow model indicates EUR selling at the end of the month. Consequently, we are employing a combined strategy, utilizing the signals from the month-end rebalancing model.

CFTC Data As Of 22/03/24

Bitcoin net short position is -2,096 contracts
Euro net long position is 48,342 contracts
Japanese Yen net short position is -116,012 contracts
Swiss Franc posts net short position of -20,500 contracts
British Pound net long position is 53,200 contracts
Equity fund speculators trim S&P 500 CME net short position by 57,268 contracts to 416,777
Equity fund managers raise S&P 500 CME net long position by 35.431 contracts to 949,421