JASPER’S MARKET SQUAWK 07-08-2023

<h2>NFP Miss, Earnings Buoy the Markets</h2>
<p>US yields ticked lower after non-farm payrolls came in below expectations. Still, the mood reversed throughout the day, with equities ending lower and the yield inversion widening, leaving the dollar in negative territory.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24819 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67.png" alt="" width="1752" height="837" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67.png 1752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-67-1536×734.png 1536w" sizes="(max-width: 1752px) 100vw, 1752px" /><em><strong>Chart: EUR/USD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Non-farm payrolls fall short of expectations, complicating Fed’s outlook</li>
<li>Canadian job losses and low PMI weigh on the Canadian economy</li>
<li>Bank of Japan emphasises maintaining accommodative policy</li>
<li>OPEC+ output targets to remain unchanged, WTI continues to rise</li>
</ul>
<h2>Mixed NFP Complicate Read from Fed, Drag on USD</h2>
<p>Headline payrolls were 187K, below the 209K expected, with the prior month also revised lower to 185K. The unemployment rate ticked down to 3.5% from 3.6% prior, but average hourly earnings were above expectations at 0.4% compared to 0.3%, which was seen as a sign that the labour market was still tight, inclining towards more Fed action. The currency index DXY weakened, sending EUR/USD back above $1.10 and increasing the chances of extending to $1.1045. If $1.0965 fails to hold, bears may target the $1.09 handle next.</p>
<h2>Canadian Data Disappoint, USD/CAD on 4-Day Streak</h2>
<p>Canada lost 6.4K jobs in July compared to the 20K gain that was expected, with the unemployment rate ticking higher to 5.5% despite a decimal drop in the participation rate. Canada’s Ivey PMI also disappointed, falling into contraction at 48.6 compared to 49.7 expected, offering a helping hand to loonie bears and marking a 4-day winning streak to $1.3380. A push above $1.34 may open up $1.3450, while a rejection will expose $1.33.</p>
<h2>BOJ’s SoO Takeaway: Greater YCC Flexibility</h2>
<p>The main takeaway from the BOJ’s summary of opinions (SoO) from the July meeting was an insistence on maintaining the easing profile. Allowing long-term interest rates to raise in response to the price environment was seen as a way to respond to the contingency while sticking to the ultra-easing rate policy. USD/JPY slid to ¥141.50 at some point, marking a 2-day down move with chances at ¥140.00 increasing. Conversely, if bulls can reclaim ¥142.50, the pair may gain towards ¥143.32.</p>
<h2>OPEC+ Recommends No Cuts, WTI Continues Undeterred</h2>
<p>Following Saudi Arabia’s extension of its voluntary cuts, OPEC’s JMMC recommended that current output targets remain unchanged. US weekly Baker Hughes rig count continued its decline, with WTI reaching a 4-month high of $82.60 per barrel. Resistance is expected near $83.50 and $84.20 per barrel higher up, but decent support remains somewhat distant at $79.70 per barrel.</p>
<h2>On The Docket</h2>
<ul>
<li>German Industrial Production MoM</li>
<li>Halifax House Price Index MoM</li>
<li>Mexican Consumer Confidence</li>
<li>Fed Bowman Speech</li>
<li>BRC Retail Sales Monitor YoY</li>
<li>Japan’s Current Account</li>
<li>Spanish Consider Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie is 0.07% higher, while Kiwi barely positive at 0.01%</li>
<li>Euro 0.15 lower, whereas the pound is down a mere 0.06%</li>
<li>Yen 0.31%, lower, Swissy follows with a 0.26% loss</li>
<li>Loonie down by a mere 0.01%</li>
<li>Gold 0.19% down, Silver 0.57% lower</li>
<li>Crude and Brent 0.12% and 0.1% lower</li>
<li>Natural gas is higher by 0.47%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-07-08-2023-24815/">JASPER’S MARKET SQUAWK 07-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>