Daily Market Outlook, December 14, 2022


Daily Market Outlook, December 14, 2022 Stocks Reverse CPI SurgeWall Street surged higher on softer-than-expected CPI as investor risk sentiment seemed fuelled by the prospect of peak inflation being in the rear view mirror, however, as markets digested the data sentiment shifted significantly from the prospect of peak inflation to growth concerns, the intraday reversal was also deemed to be driven by profit-taking ahead of today's FOMC meeting and tomorrow's BoE & ECB meeting the final meaningful macro events of 2022. Asian equity markets have held onto small gains overnight as investors wait for Fed Chair Powell's press conference this evening.The remaining central bank meetings this week are all likely to raise rates, however, markets are positioned for a reduction in the increment of rate rises, with markets currently pricing a 50bps move by the FOMC this evening. The focus for investors is going to be firmly centred on the Fed Chair Jay Powell's press conference, his comments will be parsed for any signs of a dovish tilt to his messaging, specifically his views on the Fed funds terminal rate, markets appear to be aligning around a 2023 terminal rate between 5.25% and 4.50%, markets will likely cheer any lean towards the lower end of the spectrum, however, markets are currently pricing a 4.82% terminal rate down from 4.98% ahead of the CPI release, if Powell pushes back against this reduction in expectations, expect further selling in equities as investors will likely seek solace in the safety of government debt over riskier assets. Markets-wise, huge options expiration in US markets on Friday are likely to contain any major moves on Wall Street, with $3.9 trillion of options expiring on Friday, the options market is priced for a 4000-4100 range on the benchmark SP500, ahead of the options expiration the action is likely to remain broadly within this range, post-expiration offers the potential for a range expansion, with investors still pinning their hopes on a Santa rally into year-end!Overnight HeadlinesChina’s Economy Likely Worsened Before Abrupt Covid Policy ShiftChina Gives Up Counting All Covid Cases After Ending Mass TestsChina’s Zero-Covid Retreat Sparks Wealth Mgmt Product Sell-OffMorgan Stanley Lifts China GDP Forecast On Reopening, EasingJapan’s Tankan Highlights Manufacturing, Service Firms’ DivideNew Zealand Forecasts 2023 Recession As Rates RiseCongressional Negotiators Reach Framework For Deal On Funding GovFed Seen Slowing Rate Hikes, Likely Ending Them Below 5%Dollar Weak After Soft US Inflation Data, Focus Switches To FedCrypto’s Binance Seeks to Reassure Over Reserves, Says Debt FreeOil Slips As US Crude Stock Build Stirs Doubts On DemandEU Pushes Gas Cap Decision To Next Week As Haggling ContinuesEU Agrees To Tap Carbon Market For €20 Billion In Energy PivotAsia Stocks, US Futures Edge Higher Before FedBipartisan Senate Bill Would Bar Huawei From US Finance SystemPfizer Awarded $1.96B Contract From US Gov For Paxlovid FX Options Expiring 10am New York CutEUR/USD: 1.0375-80 (1.74BLN), 1.0450 (564M), 1.0500 (526M)1.0545-55 (505M), 1.0650 (444M), 1.0700 (929M), 1.0800 (406M)USD/JPY: 136.00 (355M). USD/CHF: 0.9415 (210M)GBP/USD: 1.2120 (210M). EUR/GBP: 0.8700 (239M)AUD/USD: 0.6450 (960M), 0.6675 (216M), 0.6750 (327M)NZD/USD: 0.6400 (1.02BLN), 0.6425 (1.15BLN)USD/CAD: 1.3560 (1.1BLN)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 39004120 Target Achieved, New Pattern EmergingPrimary support is 3980Primary upside objective is 4150Failure at 3950 opens a test of 390020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish below 1.051.0620 Target Achieved, New Pattern EmergingPrimary support is 1.0590Primary upside objective is 1.07Failure at 1.05 opens a test of 1.0420 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish below 1.22Primary support is 1.22Primary upside objective 1.24Failure at 1.2080 opens a test of 1.203020 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Bullish above Bearish Below 137.70Primary resistance is 137.70Primary downside objective is 132Acceptance above 138 opens a test of 139.3020 Day VWAP bearish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish below .6790Primary support is .6790Primary upside objective is .6900Failure at .6700 opens a test of .660020 Day VWAP bullish, 5 Day VWAP bearishBTCUSD Bias: Intraday Bullish Above Bearish below 1750018000 Target Achieved, New Pattern EmergingIntraday 17500 is primary supportPrimary upside objective is 18200Failure at 17400 opens a test of 1720020 Day VWAP bearish, 5 Day VWAP bullish


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