JASPER’S MARKET SQUAWK 05-12-2023
<h2>Risk Assets Lose Ground</h2>
<p>Investors secured some profits from recent gains as US Treasury yields resumed higher on Monday despite data pointing to more weakness. Gold reversed substantially lower after hitting record highs.</p>
<p><img fetchpriority="high" decoding="async" class="alignnone wp-image-27495 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2.png" alt="" width="1912" height="911" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2.png 1912w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-2-1536×732.png 1536w" sizes="(max-width: 1912px) 100vw, 1912px" /></p>
<p><strong>Chart: EURUSD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>US Dollar Fights Back Despite Lower Inflation and Factory Orders</li>
<li>WTI Oil Falls 1.70% As Uncertainty Over OPEC+ Cuts Weighs In</li>
<li>German Economy Expected to Remain in “Shock” Until 2024</li>
<li>Contrasting Trends in Asian PMI Service Sector Activity</li>
<li>RBA Keeps Cash Rate at 4.35%, Chances of Future Hikes Wane</li>
</ul>
<h2>Dollar Resumes Fight, Adds to Gold’s 6% Reversal</h2>
<p>The US dollar recovered more of its recent losses despite easing inflation pressures in October, with the New York Federal Reserve noting a decrease to 2.6% from 2.88%. However, policymakers remain cautious around low unemployment, pointing to a hold or a hike rather than market-expected cuts. Additionally, US factory orders saw a 3½ year drop to 3.6% in October, below the expectation of 2.8%. The dollar’s uptick partially weighed on gold prices, reversing from all-time highs, down nearly 6% to $2030 an ounce. Below $2070, the next logical support remains at the $2K barrier.</p>
<h2>Oil Falls 1.70% Despite Middle East Tensions</h2>
<p>Concerns about demand dropping and little certainty over OPEC+’s cuts weighed on WTI prices despite ongoing tensions in the Middle East. DOE Secretary David Turk said SPR refills are physically constrained to about 3 million barrels a month, partially impacting sentiment. The price of US crude dropped by 1.70% to $73.20 a barrel, marking its third consecutive session of declines and exposing the $70 handle.</p>
<h2>Germany’s Economic Woes Continue</h2>
<p>According to a study, the German economy is expected to remain in a state of shock until 2024, with 38% of industrial companies expecting a drop in production. Meanwhile, the ongoing budget crisis is stinging the country’s already weak economy, per ZEW president Achim Wambach, despite improved morale from positive ZEW data recently. Falling Eurozone inflation data, on the other hand, may point to winning the battle, but too early to win the war, ECB’s De Guindos said. Eurodollar’s drop approached $1.08 but bounced somewhat, making $1.0875 all more important. Under the swing handle support lies at $1.077.</p>
<h2>Two Tales of Asian Service Sector Activity</h2>
<p>Service sector activity in November has shown contrasting trends in Asia. After surprisingly contracting last week in its official survey print, Caixin services saw a boost from new orders to 51.5 from 50.4, easing calls for further stimulus measures by the PBOC. Meanwhile, Japan’s services PMI expanded, albeit at its slowest pace of growth in a year, from 51.6 to 50.8 in November. Nikkei was seen under pressure after losing 33K, with 33700 as next support in focus.</p>
<h2>RBA Holds Cash Rate Steady at 4.35%</h2>
<p>The RBA held its cash rate steady at 4.35% in a no-surprising move this time, and as expected, investors now see a 38% chance of further hikes, down from 43% before the meeting. Meanwhile, Jubo Bank services PMI also contracted more than forecast to 46 versus 46.3 ahead of the event, weighing on the Australian dollar following the concussion of the dovishly perceived event. AUDUSD slipped 0.75% to 0.6570 for an instance but met solid support at the 20-day WMA, bringing 0.66 back into the spotlight.</p>
<h2>On The Docket</h2>
<ul>
<li>DE HCOB Services PMI</li>
<li>EA HCOB Services PMI</li>
<li>ZA GDP Growth Rate</li>
<li>S&P Global/CIPS Services PMI</li>
<li>BR GDP Growth</li>
<li>S&P Global Services PMI</li>
<li>ISM Services PMI</li>
<li>JOLTS Openings</li>
<li>ISM Services Employment</li>
<li>API Crude Oil Stock Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.54% in red, Kiwi at -0.15%</li>
<li>Euro up 0.07%, Pound lags at +0.14%</li>
<li>Loonie 0.15% up, while Franc 0.04% down</li>
<li>Japanese yen 0.10% in the green</li>
<li>Gold 0.38 higher, Silver 0.05% lower</li>
<li>Crude 0.08% up, while Brent muted</li>
<li>Natural gas largely unchanged</li>
</ul>
<p>The post <a href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-05-12-2023-27491/">JASPER’S MARKET SQUAWK 05-12-2023</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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