JASPER’S MARKET SQUAWK 06-07-2023

<h2>FOMC Minutes Signal Possible July Hike</h2>
<p>The FOMC minutes showed that policymakers believed that borrowing costs are expected to rise through the end of the year due to above-target inflation. While the committee opted not to raise rates in June, there is an expectation for a possible rate hike in July, boosting the US dollar.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24076 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43.png" alt="" width="1917" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43.png 1917w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-43-1536×732.png 1536w" sizes="(max-width: 1917px) 100vw, 1917px" /><em><strong>Chart: EURUSD</strong></em></p>
<h2>Key Factors For Today</h2>
<ul>
<li>FOMC Minutes Indicate Possible July Rate Hike</li>
<li>Dollar Strengthens as Investor Sentiment Dips, Pressuring Gold</li>
<li>Eurozone PPI Turns Negative, Eurodollar Weakens</li>
<li>Australian Trade Surplus Expands, but Aussie Under Pressure</li>
<li>Japan Sees Significant Wage Hike, Equities and Yen React</li>
<li>API Inventories Show Strong Drawdown, Boosting WTI Oil</li>
</ul>
<h2>Dollar Rises as Investor Sentiment Shifts, Weighing on Gold</h2>
<p>Investors displayed signs of pessimism following the release of the last FOMC minutes as they showed Fed’s willingness to hike due to a tight labour market and stronger-than-expected activity. The futures market indicates a 90% probability of a quarter-point rate hike in July, compared to 80% on Friday. May final durable goods orders were revised slightly higher to 1.8% from the 1.7% expected, but May factory orders were worse than anticipated at 0.3% compared to the 0.8% forecast, further weighing on sentiment. The boost in the dollar showed gold falling back to $1915/oz after receiving rejection at $1935/oz. Expected support lies at $1900/oz.</p>
<h2>Eurozone PPI Turns Negative For First Time Since 2020</h2>
<p>Eurozone May PPI came in at -1.5% compared to the -1.3% expected, suggesting inflationary pressures in the shared economy might be abating. Eurozone final June Services PMI was in line with expectations, confirming the 6th straight month of expansion. EUR/USD bulls failed to reclaim $1.09, with flows into the dollar sending the pair down to $1.0850, opening up $1.08 next unless an attempt at $1.0935 takes effect.</p>
<h2>Australian Trade Surplus Sees Expansion</h2>
<p>May Australian trade surplus AUD11.8B compared to the 10.9B expected, and above the AUD10.5B prior. The move was driven by increased foreign demand, with exports growing at 4% compared to imports growing only 2%—yields on Australian debt lifted to the highest level since late last year. The Australian dollar was under pressure on the back of a stronger dollar, reaching 0.6650 for a negative session after a 4-day winning streak, exposing $0.66 next. Resistance is expected at $0.6720 if the 67-cent barrier gives in.</p>
<h2>Japan Sees Largest Wage Hike Since 1993</h2>
<p>The Japanese Labor Confederation reported that the average wage increase this year was 3.58%, the fastest pace in three decades, and well above the BOJ’s 2.0% inflation target. The Nikkei fell on reports of capital outflows from equities, and the yen is seen rising. USD/JPY is down to 143.70 at the time of writing, with the next support settled by 142.38. The top appears to be near 145.00.</p>
<h2>API Inventories Show Another Strong Drawdown</h2>
<p>The API survey of inventories saw a drawdown of 4.4M bbl in inventories, on top of the 2.4M bbl reported last week. The consensus of expectations was for a drawdown of just 1.8M bb, supporting WTI oil. The DOE reported selling another 1.5M bbl from the SPR last week, with oil adding 1.12% on top of Tuesday’s gains, reaching $72.10/bbl and encouraging bets towards $72.70/bbl. The commodity remains biased up so long as bulls defend the $70/bbl floor; otherwise, risk declines.</p>
<h2>On The Docket</h2>
<ul>
<li>EA Retail Sales</li>
<li>ADP Employment Change</li>
<li>US Trade Balance</li>
<li>Initial Jobless Claims</li>
<li>Fed Logan Speech</li>
<li>S&amp;P Global Services PMI</li>
<li>ISM Services PMI</li>
<li>JOLTs Job Openings</li>
<li>EIA Crude Oil Stock Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.04% up, Kiwi 0.14% higher</li>
<li>Euro is down by 0.08%, while Pound is by 0.03%, up</li>
<li>Yen 0.61% higher, Franc 0.07% higher</li>
<li>Canadian dollar is down by 0.11%</li>
<li>Gold and silver 0.05% and 0.20% higher</li>
<li>WTI 0.07% down, Brent 0.27% lower</li>
<li>Natural gas is down by 0.19%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-06-07-2023-24072/">JASPER’S MARKET SQUAWK 06-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>