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Daily Market Outlook, March 23, 2023Powell Giveth, Yellen Taketh… Bailey Up NextAsian equities took their lead from Wall Street's souring in risk sentiment, as all US benchmarks closed in the red, nursing 1%+ losses on the session as markets sought to make sense of duelling narratives, on the one hand FOMC Chair Powell pretty much stuck to the script raising rates by the expected 25bps while reducing near term expectations for further imminent raises, Powell pushed back against the market pricing rate cuts, stating that this wasn't a baseline expectation for 2023 and that the Committee was prepared to do more on rates if needed. The fly in the ointment and the catalyst for the sharp reversal in gains seen during Powell’s press conference came from Treasury Secretary Yellen's testimony, as she stated that the Treasury is not considering insuring all uninsured bank deposits, flip flopping on initial posturing that a backstop for all deposits was in the offing, this led to investors dumping risk exposure into the close of trading.Today’s European session will be dominated by the UK’s Bank of England (BoE) the next major central bank to deliver a policy update later today. Investors had been cautiously optimistic that given the global backdrop of the banking turmoil having a direct impact in the UK with HSBC taking over SBV UK’s operations that this would lead to a pause from the BoE. However, this optimism has been thwarted given yesterday's UK CPI printing an upside surprise, ticking up to 10.4% in February from 10.1% in January, market watchers were eyeing the potential for a print sub 10%. After its last meeting in February the BoE hadd stressed that further rate move would be heavily data dependent, hence, markets have rapidly repriced the potential for another move north in rates today for a further hike, it appears that another raise today won't occur without dissent from doves on the committee with committee member Cunliffe believed to be shifting his stance towards a more dovish tilt, heading into today’s meeting markets are pricing over 80% probability of a 25bp hike pushing the headline rate to 4.25%.FX Options For 10am New York Cut USD/JPY: 131.50 ($1.5b), 130.50 ($980.5m), 70.00 ($856m)EUR/USD: 1.0580 (EU927.1m), 1.0800 (EU874.4m), 0.9935 (EU754.9m)AUD/USD: 0.7500 (AUD333.3m), 0.7100 (AUD325.4m), 0.7300 (AUD301.4m)USD/CNY: 6.7500 ($1.27b), 6.9500 ($575.5m), 6.4700 ($440m)USD/CAD: 1.5175 ($360m), 1.3850 ($312.6m)EUR/GBP: 0.8900 (EUl.Oób), 0.8705 (EU350m)USD/BRL: 4.7500 ($690m), 4.8000 ($400m) Benchmark 1-month expiry G10 FX implied volatilities are edging closer to levels seen ahead of the March banking crisis. USD/JPY implied volatility has proved a reliable FX fear gauge over recent weeks and took an ominous pre Fed hit on Wednesday. One-month was sold at 12.5 – the low end of its 11.8-15.5 March crisis range, which helps to reinforce the recovering risk appetite as bank worries fade. (RTRS)Overnight News of NoteAsian Shares Subdued After Fed Hints At Rate PauseDollar Slips As Fed Outlook ShiftsTreasury Sec Yellen: Not Considering ‘Blanket’ Bank Deposit InsuranceUS Futures Little Changed As Investors Weigh Fed OutlookGold Gains As Fed Hints At Pause In Rate HikesCitigroup CEO Jane Fraser: There Are 'Isolated Problems' In Banking IndustryFDIC Delays Bid Deadline For Silicon Valley Private Bank – Bloomberg NewsChina’s Australia Ambassador Says Threat of War Not ‘Realistic’BofA Lowers Peak US Interest Rate Forecast To 5-5.25% From 5.25-5.5%Brazil Central Bank Leaves Interest Rate Unchanged At 13.75%RBNZ Chief Economist Conway: Incredibly Determined To Get Inflation And Inflation Expectations Back To TargetCoinbase Gets SEC Notice Signalling Intent To Sue Over Crypto OfferingsOil Drops After Three-Day Rise As Investors Assess Fed’s Message (Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Intraday Bullish Above Bearish Below 3985Primary resistance is 4078Primary objective is 3804Above 4040 opens 407820 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Intraday Bullish Above Bearish below 1.0830Primary support is 1.0730Primary objective is 1.1000Below 1.0805 opens 1.073020 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Intraday Bullish Above Bearish below 1.2280Primary support is 1.2265Primary objective 1.2411Below 1.2170 opens 1.210020 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Intraday Bullish above Bearish Below 132.50Primary resistance is 135.15Primary objective is 130.00Above 136 opens 137.9020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Bias: Intraday Bullish Above Bearish below .6696 Primary resistance is .6740Primary objective is .6950Below .6560 opens .645020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Intraday Bias: Bullish Above Bearish below 26500Primary support 23000Primary objective is 30000Below 23000 opens 2240020 Day VWAP bullish, 5 Day VWAP bearish
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Daily Market Outlook, March 23, 2023
