JASPER’S MARKET SQUAWK 11-08-2023

<h2>Markets Drift Higher with Key CPI Data Inline</h2>
<p>Global equities traded generally higher throughout the day as US CPI figures were broadly in line with expectations, affirming the market outlook for the Fed.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24942 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph.png" alt="" width="1753" height="836" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph.png 1753w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Jasper-graph-1536×733.png 1536w" sizes="(max-width: 1753px) 100vw, 1753px" /></p>
<p><strong>Chart: GBPUSD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>US CPI in line with rising expectations, affirming Fed outlook</li>
<li>Gold drops as Fed expected to do more to reduce inflation</li>
<li>UK GDP expected to stall, Pound weakens ahead of release</li>
<li>Japan holiday affects USD/JPY, but BOJ may step in</li>
<li>RBA view on inflation impacts AUD at key 66-cent level</li>
<li>Most economists expect RBNZ to hold rates unchanged</li>
</ul>
<h2>Gold Drops Despite CPI Posts Expected Uptick After 14 Months</h2>
<p>Headline annual CPI for the US came in at 3.2% compared to 3.3% expected, up from the 3.0% prior, the first increase in 14 months, but largely the product of base effects. Monthly CPI was in line at 0.2%. Core inflation was exactly in line at 0.2% monthly and 4.7% annual. The consensus that the Fed will pause at the next meeting was practically unchanged, but there was more work to reduce inflation, supporting yields and hurting gold. The yellow metal rose as high as $1930/oz before sliding into the red, opening up $1900/oz. Investors are paying closer attention to Treasury auctions as the US government is expected to seek $1.0T in financing this quarter. The yield on the latest auction reached the highest since 2011, with a minor increase in bid-to-cover, hinting at a liquidity issue.</p>
<h2>Pound Weakens Ahead of Key UK GDP Data</h2>
<p>The UK economy is expected to have stalled in the second quarter, according to press reports, pointing to the impact of strikes and the extra bank holiday. The UK will report its Q2 GDP figures today, with the latest survey of economists forecasting 0.0% growth compared to expectations of 0.1% growth in prior surveys. Despite rising to $1.2820, cable revered over 1% from the top to close lower at $1.2676. The move could continue into deeper levels, with expected support above $1.26.</p>
<h2>Japan on Holiday, USD/JPY Records 4-Day Winning Streak</h2>
<p>The yen weakened to its lowest performance against the dollar since the end of June, and the EUR/JPY hit the highest level since 2008. With Japan closed for a holiday going into the weekend, the BOJ isn’t expected to make an offer to buy JGBs as USD/JPY nears 145.00. Above there, 146.00 is the first major resistance for bulls, whereas a reversal could bring 144.00 back into the spotlight.</p>
<h2>Aussie Reverses on Failed Attempt to Reclaim 66 cents</h2>
<p>Outgoing RBA Governor Philip Lowe and incoming Governor (current Deputy Governor) Michele Bullock presented in Parliament, affirming the bank’s view that inflation will be down to 3.25% by the end of the year, and higher rates would likely be necessary; pointed to the lagging effect of interest rate hikes. Without a change in position from the RBA, the Aussie was seen drifting due to concerns over economic growth and commodity demand. AUD/USD dropped to $0.6515 following a failed attempt above 66 cents, increasing speculation for a breakdown towards $0.6450.</p>
<h2>Poll Shows Economists Expect RBNZ To Hold Rates</h2>
<p>The latest survey of economists showed the vast majority expect the RBNZ to keep the OCR unchanged until the end of the first quarter of next year. Just 2 out of the 29 polled saw a chance of a single rate hike in the final quarter of the year. In a similar fashion to Aussie, pound and gold, Kiwi saw a full-blown reversal after bulls failed to hold the pace past 61 cents, with $0.60 reached early Friday already. Under $0.5985 risk of additional declines will increase.</p>
<h2>On The Docket</h2>
<ul>
<li>UK GDP Growth</li>
<li>UK Manufacturing Production</li>
<li>UK Industrial Production</li>
<li>US PPI</li>
<li>Michigan Consumer Sentiment</li>
<li>Spain Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.08% up, while Kiwi 0.22% lower</li>
<li>Euro 0.08% higher, Pound up but at 0.06%</li>
<li>Yen barely changed, Swissy 0.05% higher</li>
<li>Loonie manages 0.07% upside</li>
<li>Gold down by 0.07%, Silver 3x that at -0.22%</li>
<li>Crude 0.11% lower, Brent slightly in red</li>
<li>Natural gas higher by 0.65%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/market-analysis/jaspers-market-squawk-11-08-2023-24921/">JASPER’S MARKET SQUAWK 11-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>