JASPER’S MARKET SQUAWK 02-08-2023

<h2>Data Supports Soft Landing, Fitch Downgrades US</h2>
<p>Markets across the globe ended lower, with dollar yields rising after the US Treasury announced the issuance of $1.0T in debt this quarter, driving gold down. The sovereign rating cut at Fitch came after the US market close.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24709 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64.png" alt="" width="1771" height="849" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64.png 1771w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64-1024×491.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64-768×368.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-64-1536×736.png 1536w" sizes="(max-width: 1771px) 100vw, 1771px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>US Treasury announced $1.0T debt issuance this quarter, leading to an increase in dollar yields and a decrease in gold prices</li>
<li>Fitch downgraded rating of US government bonds on fiscal deterioration and debt ceiling negotiations</li>
<li>RBA keeps interest rates at 4.1% despite expectations of a hike</li>
<li>BOJ minutes emphasise importance of avoiding rate spike caused by exiting ultra-easing</li>
<li>API reports significant drop in crude, largest since the pandemic</li>
<li>US government withdraws offer to purchase 6M bbl to replace the SPR</li>
</ul>
<h2>Gold Tumbles After Fitch Cuts US Sovereign Rating to AA+</h2>
<p>Citing fiscal deterioration over the next three years and repeated debt ceiling negotiations, Fitch cut the rating of US government bonds one notch to AA+, with a stable outlook. Fitch had warned in May that a downgrade was possible given the stand-off on the debt ceiling at the time. Following the announcement, the benchmark ten-year yield rose above 4%. Gold lost over 1% to close Tuesday at $1945/oz, leaving resistance at $1953/oz and opening up $1930/oz.</p>
<h2>RBA Surprises by Holding Rates Steady, Aussie Crashes</h2>
<p>The RBA decided to keep rates at 4.1%, extending the pause and against the small majority of analysts who had projected a hike. The reserve bank repeated that further tightening might be required but would assess the impact of past hikes. It also reiterated its forecast for inflation around 3.25% by the end of the year. Aussie closed Tuesday 1.55% lower, losing the 66-cent barrier early Wednesday following rejection at $0.6632 and exposing the next support at $0.6560.</p>
<h2>BOJ Releases Minutes, JGB Hit Highest in 9 Years</h2>
<p>BOJ’s minutes were insistent on the current easing situation, with one member emphasising the importance of avoiding a rate spike caused by the prospect of exiting ultra-easing. Following last Friday’s announcement to widen the YCC band, yields on Japanese debt have continued to rise. The BOJ’s Deputy Governor Shinichi Uchida insisted that the bank will continue its policy and that YCC widening was intended to continue easing without disruptions. USD/JPY rose to a 3-day streak at 143.3, likely targeting 144.00 next. On the flip side, expected support lies at 142.25.</p>
<h2>API Reports Largest Stocks Drop Since Pandemic</h2>
<p>API survey of crude inventories showed a drawdown of 15.4M compared to just 0.9M expected, registering the largest drop since covid. The DOE reported no releases from the SPR. Notably, the US government withdrew its offer to purchase 6M bbl to replace the SPR, citing market conditions.WTI bulls appear to aim for April’s peak of $83.40/bbl, continuing the current 4-day streak unless they lose $81.65/bbl, opening the door to $80/bbl.</p>
<h2>On The Docket</h2>
<ul>
<li>ADP Employment Change</li>
<li>EIA Crude Oil Stock Change</li>
<li>Judo Bank Services PMI Final</li>
<li>Jibun Bank Services PMI</li>
<li>Caixin Services PMI</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.42% down, Kiwi 0.67% lower</li>
<li>Euro 0.08% up, pound by a mere 0.01%</li>
<li>Yen is up by 0.28%, Swissy 0.05% higher</li>
<li>Loonie down 0.10%</li>
<li>Gold is 0.35% higher, Silver is up by 0.65%r</li>
<li>Crude and Brent 0.93% and 0.91% higher</li>
<li>Natural gas is up by 0.47%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-02-08-2023-24705/">JASPER’S MARKET SQUAWK 02-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>