Daily Market Outlook – Wednesday, Feb. 14

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 Most Asian equity indices are trading in negative territory, reflecting the downturn observed in the United States.The significant change in Federal Reserve expectations, first triggered by a strong U.S. jobs report and then reinforced by Tuesday’s unexpected increase in inflation, has led to a decrease in market expectations for 2024 interest rate cuts from approximately 160 basis points at the end of last year to just under 90 basis points currently.This shift has had a ripple effect globally, with traders now anticipating only one interest rate cut from the Reserve Bank of Australia this year, compared to the previous expectation of two cuts. Furthermore, the anticipation of higher U.S. interest rates for a longer period is expected to constrain the potential for central banks in emerging markets to implement easing measures, especially those that had previously raised rates in an attempt to stabilise their currencies against a strengthening dollar.UK January CPI held steady at 4.0%, contrary to expectations for a slight increase to 4.1%. Core inflation, excluding energy and food prices, remained at 5.1%. Higher utility and petrol prices contributed to the inflation rate, partially offset by lower food and furniture costs. A downward trend in CPI inflation is anticipated next month, aiming for the 2% target by spring. The Bank of England is likely to be cautious about premature interest rate cuts.Eurozone Q4 GDP figures are expected to confirm stagnant growth. Modest growth is forecasted for the Eurozone in Q1, with Germany expected to experience stagnation. German IFO and Eurozone flash PMI surveys will provide further insights into early 2024 economic activity. In the UK, tomorrow we are likely to see a 0.3% decline in December GDP and a 0.2% quarterly contraction in Q4 overall. BoE Governor Bailey may reiterate that any recession is likely to be shallow and emphasise reliance on positive forward-looking growth indicators.Japan’s Q4 GDP is expected to rebound with a 1.1% annualized increase following the Q3 contraction. The impact on the Bank of Japan’s policy normalization decision remains uncertain, as the expected rebound may be driven by temporary factors.
 Overnight Newswire Updates of Note

(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)

CFTC Data As Of 8/02/24

Technical & Trade ViewsSP500 Bullish Above Bearish Below 5000

(Click on image to enlarge)EURUSD Bullish Above Bearish Below 1.08

(Click on image to enlarge)GBPUSD Bullish Above Bearish Below 1.2683

(Click on image to enlarge)USDJPY Bullish Above Bearish Below 149.50

(Click on image to enlarge)AUDUSD Bullish Above Bearish Below .6650

(Click on image to enlarge)BTCUSD Bullish Above Bearish below 48500

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