JASPER’S MARKET SQUAWK 17-07-2023

<h2>Positive Earnings Fail to Inspire Investors</h2>
<p>US major banks delivered positive results at the start of the earnings season, but lack of breadth remained a concern. The dollar reversed some of the losses from inflation data with improved consumer sentiment and a flattening yield curve.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24281 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51.png" alt="" width="1917" height="915" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51.png 1917w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-51-1536×733.png 1536w" sizes="(max-width: 1917px) 100vw, 1917px" /><em><strong>Chart: GBPUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Positive earnings fail to ignite investor enthusiasm, but there’s hope on horizon</li>
<li>Investors turn to the dollar despite upbeat sentiment and earnings reports</li>
<li>China’s GDP growth adds fuel to crude’s weakness</li>
<li>USD says goodbye to losing streak, BOJ hints at potential changes</li>
<li>New RBA governor announced, but Aussie impacted by the Chinese economy</li>
</ul>
<h2>Investors Turn to Dollar Despite Michigan Sentiment, Earnings</h2>
<p>The University of Michigan Consumer Sentiment index jumped from 64.4 to 72.6, well above the expectation that it would remain essentially flat. The first major earnings of the season were dominated by banks, showing a positive outlook and improved guidance, but the gauge of regional banks underperformed and dragged down the Russell 2000. The yield spread widened as investors recalibrated the prospect of a Fed rate hike, supporting the dollar that had fallen to levels not seen since April last year. The pound ended a 6-day streak after losing 0.35% to $1.3088 but remains biased upward so long it trades above the $1.30 handle, opening up $1.32.</p>
<h2>China GDP Adds to Crude’s Weakness</h2>
<p>Q2 growth in China was in line on a quarterly basis, growing at 0.8%, down from 2.2% in the first quarter. Annual growth was just 6.3%, well below the 7.1% expected, though up from the 4.5% recorded in the prior report. The PBOC rejected calls for more stimulus. Due to economic growth concerns, the world’s largest crude importer’s economic report weighed on crude prices already on the backfoot from Friday. Crude had dropped 2.50% to $75.20/bbl, encouraging short bets towards $73/bbl unless bulls recapture $76.10/bbl.</p>
<h2>USD Ends 6-day Lossing Streak vs Yen, BOJ Hints at Changes</h2>
<p>In an interview with media at the G20 meeting, BOJ Governor Kazuo Ueda said he saw a decline in functionality in the JGB market, with lower liquidity. He also said that yield curve distortions have eased considerably, which could support speculation that control of the curve might be deemed unnecessary soon. USD/JPY rose on Friday but received rejection shy of 140.00, at 139.00, increasing speculation for additional declines towards 136.00. The pair has moved a little early Monday.</p>
<h2>New RBA Governor, But Economy Drives AUD</h2>
<p>On Friday, Australia Treasurer Jim Chalmers announced that the RBA’s Deputy Governor Michele Bullock would be promoted to Governor to replace Philip Lowe in the middle of September. Markets see little change in policy from the appointment, as Bullock is seen to have similar views as the now departing Lowe. The Aussie dollar was among the worst-performing currencies as it fell 0.79% from $0.69 to $0.6833, and it remains pressured early Monday amidst a weaker economic performance in China. $0.6786 is expected to hold, with its break eying $0.6720.</p>
<h2>On The Docket</h2>
<ul>
<li>Italian Inflation Rate</li>
<li>NY Empire State Manufacturing Index</li>
<li>China FDI</li>
<li>Spanish Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.29% and 0.23% lower</li>
<li>Euro flat while Cable down by 0.03%</li>
<li>Yen 0.11% higher, Franc by 0.12%</li>
<li>Canadian dollar 0.07% down</li>
<li>Gold down by -0.27%, Silver by 0.49%</li>
<li>Crude and Brent 0.97% and 0.95% down</li>
<li>Natural gas is up by 0.59%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-17-07-2023-24277/">JASPER’S MARKET SQUAWK 17-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>