JASPER’S MARKET SQUAWK 04-08-2023

<h2>Markets Keep to Risk-Off Trend</h2>
<p>Global yields continued to rise with the curve steepening, putting pressure on equities as investors considered rate hikes might not be over. Benchmark US 10-year yield hit the highest since last November, but the US index ended the session flat.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24768 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66.png" alt="" width="1752" height="835" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66.png 1752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-66-1536×732.png 1536w" sizes="(max-width: 1752px) 100vw, 1752px" /><em><strong>Chart: GBPUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Global Yields Rise, Putting Pressure on Equities</li>
<li>US Data Points to Soft Landing, Putting Pressure on USD</li>
<li>Pound Recovers Losses of Dovish Hike After Bailey’s Remarks</li>
<li>Crude Prices Rise 2.55% as Saudi Arabia Announces Production Cuts</li>
<li>RBA Cuts Core Inflation Outlook, AUD/USD Appears Rising</li>
</ul>
<h2>US Data Point to Soft Landing, Somewhat Pressuring USD</h2>
<p>Preliminary US non-farm productivity was reported at 3.7% compared to 2.3% expected, while labour costs were 1.6% compared to 2.5% expected, affirming a narrative that inflation was coming under control. Initial jobless claims were broadly in line with expectations. The data was interpreted as bolstering the case for a soft landing, seen as easing bullish bets on the greenback. USD/JPY declined 0.56% to 142.52 after a failed attempt at 144.00. Expected support can be seen at 141.84.</p>
<h2>Pound Recovers Dovish Hike Losses After Bailey Remarks</h2>
<p>Although the 25bps was seen as more likely than the 50bps option, the pound was initially weaker as markets interpreted it as a dovish hike. But $1.2620 was the day low, as Governor Andrew Bailey’s presser emphasised concerns over services inflation, raising the odds of another hike in September and helping cable close flat at $1.271. Under $1.2776, chances of further declines remain elevated. The vote was a three-way split: 6-2-1, with 2 favouring a “double” hike, as has become customary.</p>
<h2>Crude 2.55% Higher on Expected Saudi Cuts</h2>
<p>Following the record drop in US inventories earlier in the week, crude prices got another boost after Saudi Arabia announced extending its voluntary production cuts for another month. The move was anticipated but still managed to drive the markets higher ahead of the OPEC+ meeting. However, the gains didn’t fully recover Wednesday’s losses, with prices under $82.50/bbl opening up speculation for another $80/bbl test unless bulls attempt $83.40/bbl. Lower down there lies major support near $77.30/bbl.</p>
<h2>RBA Cuts Its Core Inflation Outlook</h2>
<p>In the RBA’s Statement on Monetary Policy (SOMP) report, the bank said that the full impact of past rate hikes is yet to be seen. Inflation is moving in the right direction, seeing core inflation at 5.9% in June compared to 6.0% in the prior forecast. The RBA expects inflation to fall to 4.0% by the end of the year. Price action in AUD/USD was barely noticeable, with the pair 0.20% up to $0.6550 on Thursday but higher after the event. If bulls can hold the $0.6526 line intact, additional bets could see the pair extend its early Friday gain to $0.6613, with a likely rejection for the weekly close.</p>
<h2>On The Docket</h2>
<ul>
<li>EA Retail Sales</li>
<li>CA Employment Change</li>
<li>Non-Farm Payrolls</li>
<li>Ivey PMI</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.31% and 0.24% higher</li>
<li>Euro 0.05 higher, pound extended at 0.18%</li>
<li>Yen is up by 0.10%, whereas Swissy 0.03%, down</li>
<li>Loonie down by a mere 0.01%</li>
<li>Gold is 0.09% higher, while Silver is 0.20% lower</li>
<li>Crude is 0.27% up, Brent a little behind at 0.20%</li>
<li>Natural gas is completely muted</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-04-08-2023-24764/">JASPER’S MARKET SQUAWK 04-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>