JASPER’S MARKET SQUAWK 03-07-2023

<h2>Risk-On as PCE Reveals Signs of Inflation Cooldown</h2>
<p>Risk assets gained while the dollar weakened going into the weekend, ahead of holidays in the US and Canada, as the Fed’s preferred measure of inflation rose but to its slowest level in two years.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24007 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38.png" alt="" width="1917" height="911" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38.png 1917w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-38-1536×730.png 1536w" sizes="(max-width: 1917px) 100vw, 1917px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Risk assets gain as inflation shows signs of cooldown, dollar weakens ahead of holidays</li>
<li>Fed’s preferred measure of inflation, the PCE deflator, shows disinflation, gold rises</li>
<li>EUR/USD at $1.09 on a weaker dollars and as core inflation accelerates in Euro Area</li>
<li>Canada’s monthly GDP slows below expectations, leaving loonie unchanged vs usd</li>
<li>China’s Caixin PMI helps WTI reclaim $70 barrier, positive outlook for consumer new orders</li>
</ul>
<h2>Dollar Impacted by PCE Deflator, Resulting in Gold Upside</h2>
<p>There were no surprises in the May PCE deflator, which came in as expected at 0.1% monthly and 3.8% annually. However, both monthly and annual figures came in lower than April’s, suggesting disinflation and sending the dollar down. As a result, gold rose 0.62%, bumping at $1920/oz, with the next level of interest while above the $1900/oz handle near $1933/oz.</p>
<h2>EUR/USD Back to $1.09, Core Inflation Accelerates</h2>
<p>June Flash CPI for the Euro Area came in at 5.5% compared to the 5.6% expected and unchanged compared to the prior month. The Core rate accelerated to 5.4% from 5.3% in May but was below the 5.5% expected, recording the first acceleration in three months.EUR/USD ended Friday 0.42% higher, recapturing $1.09 and opening up $1.0960 as long as bulls maintain control of $1.0863.</p>
<h2>Canada Monthly GDP Slows, Leaving Loone Unchanged</h2>
<p>April monthly GDP in Canada was flat, below the 0.2% growth expected, bringing the annual rate to 1.7% compared to the 0.9% expected. The BoC Q2 business outlook survey fell into more negative territories to -2.2 from -1.1 prior. USD/CAD closed lower but somewhat mixed as it swung between $1.3285 and $1.3200.</p>
<h2>China Caixin Helps WTI Reclaim $70 Barrier</h2>
<p>The private measure of Manufacturing PMI conducted by Caixin was lower than the prior month. Still, markets appreciated that it came in better than expected, holding on to expansion at 50.5, above the 50.5 forecast and below the 50.9 last. Consumer new orders were the only subgrouping to show positivity, however. The divergence between the official rate and crude prices in reclaiming the $70/bbp threshold, leaving support at $69.60/bbl with the next resistance at $71.70/bbl.</p>
<h2>On The Docket</h2>
<ul>
<li>EA HCOB Manufacturing PMI</li>
<li>S&amp;P Global/CIPS Manufacturing PMI Final</li>
<li>S&amp;P Global Manufacturing PMI Final</li>
<li>ISM Manufacturing</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.20% and 0.27% higher</li>
<li>Euro and Pound are up by 0.05% each</li>
<li>Yen is 0,12% lower; Franc is up by 0.06%</li>
<li>Canadian dollar is down by 0.03%</li>
<li>Gold is 0.1 lower, while silver is 0.20% higher</li>
<li>WTI is up by 0.05%, while Brent is unchanged</li>
<li>Natural gas is down by 3.43%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-03-07-2023-24003/">JASPER’S MARKET SQUAWK 03-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>