JASPER’S MARKET SQUAWK 01-09-2023
<h2>Dollar Crawls Higher Amidst Low Volumes</h2>
<p>Trading volume was near the low for the year, but still, the dollar managed to advance 0.52%, weighing on counterparts.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25329 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79.png" alt="" width="1913" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79.png 1913w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-79-1536×732.png 1536w" sizes="(max-width: 1913px) 100vw, 1913px" /><em><strong>Chart: EURUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Dollar Crawls Higher Amidst Low Volumes, Posing Challenges for Currency Pairs</li>
<li>PCE Matches Expectations, Personal Spending Raises Fed Concerns</li>
<li>Eurozone Inflation Hotter Than Expected, Euro Weakens Against Dollar</li>
<li>BOJ Bullish on Economy, USD/JPY Dips Lower</li>
<li>Caixin Manufacturing PMI Back in Expansion, Impact on Gold Prices</li>
<li>Russia Confirms OPEC Cuts Announcement Next Week, WTI Sees Solid Gains</li>
</ul>
<h2>PCE Matches Expectations, But Spending Adds to Concerns</h2>
<p>The US July PCE Deflator was 0.2%, as expected, and the year-over-year figure was 3.3%, affirming a growing narrative that the Fed could hold off on more hikes for an extended period. However, Personal Spending figures for July topped estimates, an area Fed Chair flagged as concerning. The US index rose from 103.10 to 103.64, with potential resistance higher settled around 103.92.</p>
<h2>Eurozone Inflation Hotter, EUR/USD Weaker</h2>
<p>The flash reading for inflation showed that prices in Europe grew at the same annual pace at 5.3%, above the 5.0% forecast. Core inflation, however, was in line with expectations at 5.3% and down from 5.5% prior. The minutes from the last ECB meeting showed that all members agreed with a rate hike but saw that the near-term economic outlook had deteriorated. Euro dropped 0.74% against the dollar to $1.0843, bringing $1.0820 and the handle lower in focus. If dollar strength deteriorates, though, we could see a revisit of the $1.09 handle instead.</p>
<h2>BOJ Bullish on Economy, USD/JPY Lower</h2>
<p>BOJ official Toyoaki Nakamura, a noted dove, said that the bank would watch FX moves closely and was not against further flexibility in YCC. He also said he wasn’t personally committed to waiting until the Jan-Mar 2024 period to see whether it’s time for a policy tweak. USD/JPY moved 0.48% lower on Thursday while the DXY advanced. At 145.52 and barely floating above the 20-day SMA, 144.83 is expected support. Conversely, 145.87 may act as resistance on the way up.</p>
<h2>Caixin Back in Expansion, Possibly Weighing on Gold</h2>
<p>The private measure of Manufacturing PMI in China surprised to the upside at 51.0, compared to 49.3 expected and back into expansion. However, the report warned of insufficient internal demand and saw overseas demand dragging on performance. The PBOC announced it would cut the Forex RRR to 4.0% from 6.0%, effective September 15th, for the first time in a year. The PBOC also cut rates on some existing mortgages. Increased confidence in China may be weighing on gold prices early Friday, with an inside bar pattern yesterday raising speculation for further drops towards $1930 an ounce unless bulls can reclaim $1945/oz.</p>
<h2>Russia Confirms OPEC Cuts When it Meets Next Week</h2>
<p>Russian Deputy Prime Minister Alexander Novak said that his country had agreed with the rest of OPEC+ on “further action”, which would be announced next week. WTI saw solid gains of 2.40% on Thursday, peaking at $83.50 a barrel while opening the door to $85. Losing $82/bbl intradaily may inspire bearish price action towards the round support.</p>
<h2>On The Docket</h2>
<ul>
<li>GB Housing Prices</li>
<li>EA HCOB Manufacturing</li>
<li>IT GDP Growth</li>
<li>GB S&P Global/CIPS Manufacturing PMI</li>
<li>CA GDP Growth</li>
<li>Non-Farm Payrolls</li>
<li>Average Hourly Earnings</li>
<li>CA S&P Global Manufacturing PMI</li>
<li>ISM Manufacturing PMI</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi lower by 0.20% and 0.10%</li>
<li>Euro 0.03% up while Cable 0.04% down</li>
<li>Japanese Yen and Swiss Franc are unchanged</li>
<li>Canadian dollar muted against dollar</li>
<li>Gold is barely positive, while Silver is at +0.13%</li>
<li>Crude and Brent up by 0.18% and 0.24%</li>
<li>Natural gas 0.22% lower</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-01-09-2023-25325/">JASPER’S MARKET SQUAWK 01-09-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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