JASPER’S MARKET SQUAWK 07-07-2023

<h2>ADP Raises Worries of More Tightening</h2>
<p>US markets came under pressure following blow-out ADP jobs numbers owed primarily to substantial hiring in leisure and hospitality jobs. The dollar weakened as the belly of the yield curve descended, with the 2-year yield pushing above 5% for the first time since the regional bank crisis earlier in the year.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24090 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44.png" alt="" width="1920" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44.png 1920w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-44-1536×730.png 1536w" sizes="(max-width: 1920px) 100vw, 1920px" /><em><strong>Chart: USDJPY</strong></em></p>
<h2>Key Factors For Today</h2>
<ul>
<li>Blow-out ADP Jobs Numbers Raise Concerns about Tightening Measures</li>
<li>Dollar and Gold Falter as Upbeat ADP Employment Report Surprises</li>
<li>German Factory Orders Assist Euro, Despite Weak Eurozone Retail Sales</li>
<li>Rising Labor Costs in Japan Raise Worries for BOJ’s Ultra-Low Policy</li>
<li>Economists Unanimously Expect RBNZ to Maintain Policy, NZD Suffers</li>
</ul>
<h2>Upbeat ADP Weighs on Dollar, Gold</h2>
<p>The June measure of ADP employment more than doubled expectations at 497K adds vs the 225K forecasted, the most significant increase since February last year. The report showed that the market was “fragmented”, with manufacturing, tech and finance declining; the Services sector, mainly leisure and hospitality, provided the largest gains. Pay gains showed the slowest growth since October 2021. The ‘preview’ jobs report sent the dollar and gold lower as yields rose. Gold fluctuated between $1902/0z and $1928, closing 0.12% lower at $1910/oz. The next expected levels lie at $1935/oz and $1893/oz, pending directional breakout.</p>
<h2>Euro Higher After German Factory Orders Surprise</h2>
<p>May factory orders in Germany grew 6.4% compared to the 1.0% expected, but the annual measure was still negative at -4.3% compared to -9.7% in April. It was the most significant monthly jump since June 2020. Meanwhile, the Rhine River’s level fell to the seasonally lowest level in 30 years and is seen on track to be lower this summer than last year, which caused logistics disruptions. Eurozone retail sales underperformed, posting flat growth in May compared to the 0.2% expected, with the prior annual growth revised negatively. Primarily impacted by a softer dollar, EUR/USD rose to $1.0880, eying the $1.09 handle and $1.09360 next. Local support under $1.0854 remains intact at $1.08370.</p>
<h2>Japan Labor Costs Adds to BOJ Worries</h2>
<p>May labour cash earnings rose 2.5% compared to the 1.2% expected, with base salary rising 1.8% in May, the fastest increase since the beginning of 1995. Japanese household spending fell 4.0% compared to the -2.5% forecast. Rising labour costs are seen putting upward organic pressure on inflation in Japan, which could lead to the BOJ finally desisting from its ultra-low policy. USD/JPY lost 0.40% on Thursday after it closed shy of the 144.00 handle, with the weakness spilt over into today’s session. 142.40 and 145.00 are major levels to watch.</p>
<h2>Kiwi Impacted By Unanimous Agreement RBNZ Will Hold</h2>
<p>Bloomberg published a poll of economists showing 25 out of 25 agreed that the RBNZ will leave policy unchanged at its next meeting on Wednesday, the first pause in nearly two years. After having spiked to $0.6220 in sympathy with the AUD amid Australia’s benchmark 10-year yield rose to the highest since 2014., NZD ended closing by $0.6155, down 0.38% on the day. The next support to keep an eye on is settled at $0.61, while resistance remains at the daily high.</p>
<h2>On The Docket</h2>
<ul>
<li>Halifax House Price Index</li>
<li>Canada Employment Change</li>
<li>Non-Farm Payrolls</li>
<li>Ivey PMI</li>
<li>ECB President Lagarde’s Speech</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi up by 0.21% ad 0.26%</li>
<li>Euro 0.05% higher, Pound at +0.02%</li>
<li>Yen 0.1% higher, while Franc 0.05% lower</li>
<li>Canadian dollar is up by 0.03%</li>
<li>Gold is 0.17% higher, Silver also up by 0.04%</li>
<li>Crude and Brent 0.5% higher</li>
<li>Natural gas is up by 1.11%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-07-07-2023-24086/">JASPER’S MARKET SQUAWK 07-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>