JASPER’S MARKET SQUAWK 05-07-2023

<h2>China PMI Weighs on Market Sentiment</h2>
<p>With the US away on holiday, markets reacted negatively to China services PMI amidst low trading volume and the focus on the upcoming FOMC minutes release.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24062 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42.png" alt="" width="1915" height="911" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42.png 1915w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-42-1536×731.png 1536w" sizes="(max-width: 1915px) 100vw, 1915px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Concerns Arise as China’s Services PMI Hits Lowest Level of the Year</li>
<li>European Equities Boosted by Mergers, Threatened by Drought</li>
<li>Crude Prices Rise on Supply Cuts, Fail to Reach Monday’s High</li>
<li>Yen Teeters Below Intervention Line at 145.00</li>
</ul>
<h2>China Caixin Services PMI Weakest Since Start of Year</h2>
<p>The June reading of the private Caixin services PMI fell to 53.9 compared to 56.2 expected for the sixth month of expansion, with new orders rising. But being the second lowest print this year, markets took it as a sign of further trouble for the world’s second-largest economy. Trade tensions continued to heat up after it was reported that China cancelled a trip from top EU diplomat, European Union Foreign Policy Chief Josip Borrell, who was scheduled to travel to China next week. Gold rose on the risk-off mood, completing a 4-day winning streak with a fresh high 1-week high at $1930/oz. Next up lies the $1940/oz resistance unless a reversal brings the focus back to $1910/oz.</p>
<h2>European Mergers Boost Equities Higher</h2>
<p>European indices were propelled by a flurry of M&amp;A deal announcements, including reports that OMV would partner with Abu Dhabi to create a $30B chemicals and plastics company and Casino receiving a takeover offer from private investors. On the negative side, drought is once again threatening one of Europe’s main logistics arteries, as water levels on the Rhine River fell to the lowest point this year despite recent rains. EUR/USD was seen falling as risk-on mode led to higher stocks, losing the $1.09 handle and opening the door to $1.0824.</p>
<h2>Crude Prices Advance 1.25% But Still Below Monday High</h2>
<p>WTI was upbeat on the second day following production cuts announced by Saudi Arabia and Russia, but Brent prices weren’t as bullish. The price reached a high of $71.30/bbl, still overshadowed by Monday’s top at $71.75/bbl, but higher by 1.25% on the day off the low of $70/bbl. Traders appeared to be again shrugging off production cuts as concern over global economic growth seems to outweigh supply, suggesting that investors interpret cuts as a sign that producers are worried about slowing demand, making the round support all more critical.</p>
<h2>Yen Hovers Just Below Intervention Line a 145.00</h2>
<p>The Nikkei fell through the session this morning, with analysts pointing to profit-taking, while the USDJPY oscillated below the 145 handle, seen as potentially a limit that could spark further efforts by Japanese officials to support the currency. A break of 144.00 might enact additional shorts towards 142.36, with a move past the last line of defence exposing 146.00 and beyond.</p>
<h2>On The Docket</h2>
<ul>
<li>HCOB Services PMI Final</li>
<li>S&amp;P Global/CIPS Services PMI Final</li>
<li>FOMC Minutes</li>
<li>Fed Williams Speech</li>
<li>API Crude Oil Stock Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.03% lower, while Kiwi 0.16% higher</li>
<li>Euro is down by 0.03%, while Pound is at -0.03%</li>
<li>Yen 0.11% down, Franc 0.02% lower</li>
<li>Canadian dollar is down by 0.06%</li>
<li>Gold and silver 0.17% and 0.19% higher</li>
<li>WTI is 1.73% higher, while Brent is 0.42% lower</li>
<li>Natural gas is up by 2.40%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-05-07-2023-24058/">JASPER’S MARKET SQUAWK 05-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>