JASPER’S MARKET SQUAWK 17-08-2023

<h2>Expectations for Fed Action Driven by Better Data</h2>
<p>Markets worldwide were generally underperforming as investors weighed the latest news out of China and improved macro data from the US pointing to more action from the Fed. Gold retreated once again as yields rose to a June 2008 high.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25028 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023.png" alt="" width="1752" height="837" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023.png 1752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-Squawk-17082023-1536×734.png 1536w" sizes="(max-width: 1752px) 100vw, 1752px" /></p>
<p><strong>Chart: AUDUSD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Fed Action Expectations Soar on Better Data</li>
<li>Gold Suffers as FOMC Minutes Hint at More Tightening</li>
<li>UK CPI Falls Below Expectations, But BOE Rate Hike Still Likely</li>
<li>USD/JPY Streak Could Continue as Japan’s Trade Balance Adds to Risks</li>
<li>China Concerns Trigger WTI Sell-Off, Marks 3-Day Losing Streak</li>
<li>Aussie Jobs Disappoint, Open Door to 63 Cents After 8th Losing Session</li>
</ul>
<h2>Hiking Bias Pushes Gold Under $1900/oz to March Low</h2>
<p>The FOMC’s minutes reiterated that more tightening could be needed to deal with inflation risks. July housing starts were above projections, and July Industrial production came in at 1.0% growth compared to 0.3% expected. The data pushed the Atlanta Fed’s GDPNow tracker to forecast Q3 GDP at an annualised rate of 5.8%, up from 5.0% prior. Gold bulls lost the $1900/oz handle, opening up $1865/oz next.</p>
<h2>UK CPI Falls Below Expectations, But Core Component Raises</h2>
<p>Annual headline CPI change in the UK came down to 6.8% compared to the 6.9% forecast but well below the 7.9% prior. But core CPI was slightly higher than expected, remaining unchanged from the prior month at 6.9%. Analysts had expected a reduction of a decimal. Markets have moved to fully price in a 25% bps hike at the next BOE meeting, with cable recording a 0.25% gain to $1.2732. The next resistance is expected at $1.2782, should the bulls defend the $1.27 barrier.</p>
<h2>Trade Balance Increases Risk of Extensive USD/JPY Streak</h2>
<p>USD/JPY recorded its eighth session of gains on Wednesday, with Japan’s trade balance returning to deficit, increasing chances of yet another positive trading day. A large drop in imports to -¥78.7B compared to +¥47.9B was seen, but they fell 13.5%, less than the 15.2% drop forecast. Exports, however, reported the first drop in over two years at -0.3% compared to -0.2% expected. Japan machine orders also disappointed at 2.7% growth compared to the 3.5% expected. Slowing trade and orders data fed into the narrative of a slowing global economy, with 147 in closer proximity unless some profit-taking instigates a pullback towards or under 146.</p>
<h2>China Weighs on WTI Outlook, Triggers 2.45% Selloff</h2>
<p>The DOE reported that inventories fell by 6.0M bbl compared to the -1.5M forecast but in line with the API’s report. Domestic production increased by 0.1M bbl/day. Worries about demand weakness following continued headlines out of China weighed on the outlook, though, and WTI recorded a 3-day losing streak with a substantial 2.45% drop to $79.20/bbl. With the door to $77.30/bbl open, bulls may face difficulty gaining traction past $80/bbl unless an attempt at $80.50/bbl succeeds.</p>
<h2>Aussie Jobs Report May Have Opened Door to 63 Cents</h2>
<p>Australia reported that July jobs saw a net loss of -14.6% compared to the +15.0K expected and saw the unemployment rate tick up to 3.7% from the 3.6% forecast. The prior employment report was also revised lower across the board. Aussie, after recording an 8-day losing streak yesterday, is at risk of marking a 9-session drop as it already traded 0.85% lower early Thursday. Below $0.64, bears may be targeting 63 cents next.</p>
<h2>On The Docket</h2>
<ul>
<li>Spain Trade Balance</li>
<li>EA Trade Balance</li>
<li>Initial Jobless Claims</li>
<li>Philly Fed Manufacturing Index</li>
<li>Japan Inflation</li>
<li>China FDIs</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.55% and 0.38% down</li>
<li>Euro 0.12% lower, Pound down by 0.06%</li>
<li>Yen down by 0.04%, Swissy 0.07% lower</li>
<li>Loonie 0.02% lower</li>
<li>Gold 0.26% down while Silver up by 0.07%</li>
<li>Crude and Brent 0.18% and 0.05% lower</li>
<li>Natural gas up by mere 0.04%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-17-08-2023-25024/">JASPER’S MARKET SQUAWK 17-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>