Daily Market Outlook, June 27, 2024

Munnelly’s Macro Minute…

“Japanese Yen Trading Like It’s 1986 As US PCE Data Is Eyed”

After a decline in late trading for major US tech titans, Asian markets also experienced a drop. The JPY, which had plummeted on Wednesday, stabilized, leading to speculation that the government may step in to support the currency. With South Korea, China, Japan, and Hong Kong stocks all falling, the MSCI Asia Pacific index was on track for its first loss in three days. Following Micron Technology's disappointing projection, which did not meet the high expectations for the tech sector that has been driving the stock market's growth, US equity futures also decreased. The JPY bounced back by 0.3% after dropping 0.7% to 160.87 per USD, its lowest point since 1986.

Thursday will bring the release of Eurozone confidence, services, and economic sentiment surveys, as well as the final U.S. GDP data. However, the focus is expected to shift to the PCE reading on Friday, which is the Federal Reserve's preferred inflation measure.

CNN will also air the first U.S. presidential debate, where topics such as debt and the dollar are likely to be discussed. The market has been struggling to fully understand the potential impact of the November election outcome. During the debate. A new Reuters/Ipsos poll found that voters see Republican candidate Trump as better for the economy, but they prefer Democratic rival President Biden's approach to preserving democracy. However, a Washington Post poll in swing states shows that more voters trust Trump to safeguard democracy.

Overnight Newswire Updates of Note

TD Says Deep Rate Cuts Will Revive Canada’s Economic Growth
China’s Industrial Profits Rise Along With Commodity Prices
China’s Financial Elite Face $400,000 Pay Caps, Bonus Clawbacks
Japan’s FinMin Repeats Warnings After Yen Hits Lowest Since 1986
Westpac Boss Warns On Economic Risk From Sticky Australia Prices
New Zealand Pricing Intentions Signal Slower Inflation, ANZ Says
Micron’s Selloff Shows Risk Of Sky-High AI Expectations
Big Banks Sail Through Stress Test In Harbinger For More Payouts
Reports Boeing Is Resuming Widebody Deliveries To China
Boeing Faces New Whistleblower Claims Of Lapses On Some 787 Jets
Amazon To Launch Discount Section With Direct Shipping From China
US War Aid Of $6.5 Billion Discussed During ‘Productive’ Gallant Visit
US Scrambles To Head Off Wider War Between Israel & Hezbollah

(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)

EUR/USD: 1.0625 (EU1.29b), 1.0800 (EU1.18b), 1.0775 (EU1.07b)
USD/JPY: 144.50 ($1.68b), 150.00 ($1.27b), 152.00 ($1.24b)
AUD/USD: 0.6630 (AUD1.69b), 0.6540 (AUD1.54b), 0.6600 (AUD769.4m)
USD/CAD: 1.3725 ($668.6m), 1.4550 ($584.2m), 1.3900 ($448.2m)
USD/CNY: 7.0900 ($562m), 7.1800 ($560m), 7.1400 ($520m)
GBP/USD: 1.2420 (GBP779.8m), 1.2470 (GBP658.8m), 1.2580 (GBP480.1m)
NZD/USD: 0.5930 (NZD729.9m), 0.6020 (NZD559.2m), 0.5900 (NZD453.7m)
USD/BRL: 5.1200 ($321.8m)
USD/MXN: 16.80 ($1.41b)
Barclays' month end model suggests that there may be dollar selling at the end of the month, despite the dollar index being up almost 1% in June and close to an eight-week high. The model indicates potential dollar selling against most major currencies by the end of the month, based on foreign versus U.S. equity and bond performance. This is driven by a continued rally in U.S. equity markets, while ex-U.S. assets are either stagnating or experiencing losses amid heightened uncertainty. The model predicts higher rebalancing demand in Europe and Japan, as these regions have experienced most of the outflows in equities.

CFTC Data As Of 21/06/24

Bitcoin net short position is -723 contracts
Swiss Franc posts net short position of -37,390 contracts
British Pound net long position is 47,621 contracts
Euro net long position is 7,951 contracts
Japanese Yen net short position is -147,753 contracts
Equity fund speculators increase S&P 500 CME net short position by 112 contracts to 353,049
Equity fund managers cut S&P 500 CME net long position by 7,915 contracts to 960,056