JASPER’S MARKET SQUAWK 07-09-2023
<h2>ISM Services Slashes Hopes of Fed Cuts</h2>
<p>US Services PMI shows another price rise, with yields ticking up as better data shifted expectations of Fed cuts this year. Crude prices reached a new high for the year, while gold slipped again.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25459 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85.png" alt="" width="1916" height="911" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-85-1536×730.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><em><strong>Chart: GBPUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>ISM Services Report Dampens Expectations for Fed Rate Cuts</li>
<li>Gold Prices Take a Hit as ISM Data Surprises with Inflationary Performance</li>
<li>BOC Signals Concerns About Weaker Growth, Loonie Somewhat Muted</li>
<li>Uncertainty Surrounding BOE Vote and PMI Data Push Cable to $1.25</li>
<li>BOJ Commentary Leads to Fresh 10-Month Low for Yen</li>
<li>WTI Hits New Yearly High After Better China Imports and API Draw</li>
</ul>
<h2>Gold Stumbles 0.50% After ISM Beat</h2>
<p>Final US S&P Services PMI disappointed at 50.5 compared to the 51.2 projected, but ISM Services came in at 54.5, beating expectations of 52.5. The focus was on the jump in the prices paid component as it ticked to 58.9, up from 56.8 prior, affirming the narrative of potential inflation pressure also seen in ISM Manufacturing PMI last week. This suggested that the Fed won’t be much inclined to cut rates this year, boosting yields and pressuring gold. XAUUSD fell for a third session this week but met support at the 20-day SMA at $1915 an ounce. $1925/oz is expected to offer resistance.</p>
<h2>BOC Sees “Weaker Growth”, Loonie Diverges</h2>
<p>The BOC left the reference rate at 5.0% as anticipated but noted that it saw little downward momentum in inflation recently, with pressures broad-based. The general hawkish tone in the statement was tempered by comments about the labour market and the economy, suggesting that the jobs market is easing as the economy enters “a period of weaker growth”. The USD/CAD pair peaked at $1.3676 Wednesday but ended slightly negative. The spike formed a divergence, though, with the break of $1.36 exposing lower supports near $1.3550.</p>
<h2>BOE Vote Uncertainty Helps Send Cable to $1.25</h2>
<p>BOE Governor Bailey said that many indicators showed a fall in inflation and that such a fall would be “marked”. He added that the latest economic indicators have aligned with the BOE’s expectations but noted uncertainty about how the vote would go for a rate hike in September. Coupled with a stronger dollar and the downbeat S&P Global/CIPS Construction PMI, Cable slid to $1.25 to confirm a June low on Wednesday, opening up $1.24 next unless bulls reclaim $1.2550.</p>
<h2>Yen Hits 10-Month Low on BOJ Commentary</h2>
<p>BOJ policymaker Junk Nakagawa doubled down on the ultra-easing policy, citing uncertainty about reaching the inflation target in the long term. He said that the BOJ was watching the market functioning and restated BOJ’s position that the YCC tweak “enhanced sustainability” of easing while stressing the need to stay vigilant about economic risks, such as slowing economic growth outside of Japan. USD/JPY confirmed a new high at 147.82, with both 147 and 149 in focus.</p>
<h2>China Trade Surplus Unexpectedly Shrinks</h2>
<p>China’s August trade balance was $68.4B, below the $73.9B forecast, with imports and exports falling less than anticipated. Imports fell slower than exports, which explained the drop in the surplus. China’s trade surplus with the US expanded by almost $3.0B. Better imports and an extensive API draw report might have contributed to WTI reaching new highs for the year shy above $88 a barrel, increasing speculation for $89.90/bbl next. On the flip side, $85/bbl makes a critical support.</p>
<h2>On The Docket</h2>
<ul>
<li>Halifax House Price Index</li>
<li>ECB Elderson Speech</li>
<li>EA GDP Growth Rate</li>
<li>BBA Mortgage Rate</li>
<li>Initial Jobless Claims</li>
<li>EIA Crude Oil Stocks Change</li>
<li>BOC Gov Macklem Speech</li>
<li>JP GDP Growth Rate</li>
<li>Global Supply Chain Pressure Index</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie at -0.02% while Kiwi 0.13% higher</li>
<li>Euro 0.08% down, Pound down by 0.08%</li>
<li>Yen up by 0.06%, Franc negative at -0.07%</li>
<li>Canadian dollar higher by mere 0.04%</li>
<li>Gold 0.09% lower, Silver 0.40% in red</li>
<li>Crude 0.41% down, Brent lower by 0.36%</li>
<li>Natural gas down by mere 0.04%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-07-09-2023-25455/">JASPER’S MARKET SQUAWK 07-09-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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