JASPER’S MARKET SQUAWK 26-10-2023

<h2>Dollar Extends Gains on Dour Risk Appetite</h2>
<p>Equities ended sharply lower on Wednesday as big tech and AI earnings failed to reassure investors. The 10-year benchmark rose to 4.911%, supported by home sales and weak demand for the 5-year notes. Meanwhile, the House has a Speaker now, Rep. Mike Johnson, and Ford and UAW agreed on a tentative deal.</p>
<p><img decoding="async" fetchpriority="high" class="aligncenter wp-image-26546 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3.png" alt="" width="1913" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3.png 1913w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-3-1536×732.png 1536w" sizes="(max-width: 1913px) 100vw, 1913px" /></p>
<p><strong>Chart: EURUSD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Dollar Continues to Climb In Response to Cautious Investor Sentiment</li>
<li>German Ifo Survey Shows Slight Improvement, But Economic Risks Persist</li>
<li>WTI Oil Surges 2% As Netanyahu Confirms Potential Ground Invasion</li>
<li>Yen Weakens as US Yields Rise, Sparking BOJ Intervention Concerns</li>
<li>BOC Holds But Leaves Room For Hikes Despite Lower Growth Expectations</li>
</ul>
<p><strong>Dollar Up From Disappointing Auction, Upbeat Home Sales</strong></p>
<p>Alphabet cloud services missed expectations, dragging the entire tech sector down and pointing investors toward the safety of the dollar. Yields were already rising before the 5-year $52B auction attracted 4.899% (vs 4.659%), indicating short demand, reinforced by upbeat new home sales data (12.3% act vs -11% exp). The dollar advanced to 106.55 against a basket of currencies, opening up at 107 and leaving behind support at 106.32.</p>
<h2>German Ifo Exceeds Expectations, But Risks Remain</h2>
<p>German business sentiment improved slightly in October, coming in at 85.7 from 85.1 expected. However, the report showed that interest rate hikes and economic uncertainty continued to weigh on business confidence. The eurodollar lost 0.22% on Wednesday, partly on a stronger dollar, with 1.0507 back into the spotlight. Resistance is expected at $1.06.</p>
<h2>WTI Soars 2% After Netanyahu Confirms Ground Invasion</h2>
<p>The Prime Minister of Israel, Benjamin Netanyahu, said that Israel was facing an existential battle and that a ground invasion was imminent, reviving a 2% premium in oil prices to $85 a barrel from potential shipping disruptions and export curbs. WTI rose despite the EIA reporting a crude build of 1.371M barrels for the week ending October 20, as Turkey President Egip Erdogan canceled his planned trip to Israel after speaking with Russian President Vladimir Putin. $86.70 is back on track unless bulls lose $83.60/bbl.</p>
<h2>US Yields Send Yen Past 150, Intervention Back on Table</h2>
<p>A widening gap between Japanese and US bonds continues to pressure the yen, raising concerns about an imminent intervention. BOJ officials are reportedly debating whether to tweak their yield curve control program in light of the spike in long-term yields. USD/JPY has moved past the critical level, seen shy of 150.50 early Thursday.</p>
<h2>BOC Holds But Could Still Hike Despite Lowering Growth</h2>
<p>The BOC decided to hold rates unchanged at 5% in line with expectations but lower its 2023 and 2023 growth. However, with wage growth high and core inflation showing little downward momentum, the bank also left the door open to further hikes. USD/CAD rose 0.40% to 1.3742 and appears to be heading towards 1.39 next. Support can be seen near 1.3755.</p>
<h2>On The Docket</h2>
<ul>
<li>CBI Distributive Trades</li>
<li>TCMB Interest Rate Decision</li>
<li>ECB Interest Rate Decision</li>
<li>GDP Growth Rate QoQ</li>
<li>GDP Price Index</li>
<li>Initial Jobless Claims</li>
<li>ECB Press Conference</li>
<li>Fed Waller Speech</li>
<li>Pending Home Sales</li>
<li>ECB President Lagarde Speech</li>
<li>European Council Meeting</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.52% and 0.44% in red</li>
<li>Euro 0.20% lower, Pound down by 0.26%</li>
<li>Loonie at -0.11%, Franc 0.14% lower</li>
<li>Japanese yen 0.15% down</li>
<li>Gold 0.1% up, Silver leads 0.25% higher</li>
<li>Crude 0.23% in red, Brent down by 0.31%</li>
<li>Natural gas in the green by mere 0.18%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-26-10-2023-26545/">JASPER’S MARKET SQUAWK 26-10-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>