JASPER’S MARKET SQUAWK 08-08-2023

<h2>Markets Return to Tentative Optimism</h2>
<p>Equities in Europe were mixed, while US indices advanced in a relatively quiet session ahead of key data points later in the week. Yields on US debt rose, supporting the dollar and in turn, pressuring gold price.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24853 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71.png" alt="" width="1750" height="835" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71.png 1750w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-71-1536×733.png 1536w" sizes="(max-width: 1750px) 100vw, 1750px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>US indices reflect return to tentative optimism ahead of CPI report</li>
<li>Gold prices dropped after used-car prices provided inflation hopes</li>
<li>Japanese wage data caused the yen decline against the US dollar</li>
<li>China’s significant imports drop impacts global commodity currencies</li>
<li>BOE remains concerned about inflation, the British pound trading higher</li>
</ul>
<h2>Used-Car Prices Offer CPI Hope, Gold Drops</h2>
<p>The US Manheim wholesale used car index fell 1.6% over the last month to accumulate -11.6% over the past year. While it showed a slowing in price declines, the drop provided some hope that US CPI to be released on Thursday will be lower than forecast. FOMC Voter Michelle Bowman reiterated that further rate hikes might be needed to bring inflation down, citing tightness in the labour market. But she did say that it would depend on the data going forward. On the other hand, FOMC Voter John Williams speculated in a New York Times interview that rates could be cut next year as inflation comes down. Gold prices declined 0.33% to $1936 per ounce, making room for the regional low at $1930 and perhaps $1923 unless bulls recapture $1946.</p>
<h2>Miss in Japanese Wages Softens Yen</h2>
<p>June labour cash earnings rose 2.3% compared to the 3.0% expected, with real cash earnings recording the 15th straight decline. The falling real wages are seen squeezing Japanese consumers and supporting the narrative of keeping rates lower for longer. Yen lost 0.60% against the greenback, and it is seen an additional 0.50% down early Tuesday above ¥143.00. Continuing at this pace may see the pair reach as high as ¥144.00, whereas on the flip side, USD/JPY has expected support at ¥142.23.</p>
<h2>China Imports Crash, Impacting WTI Price</h2>
<p>China’s trade balance increased to $80.6B compared to $70.0B expected, driven by a crash in imports. Exports were down 14.5% compared to a 13.2% drop expected, while imports cratered 12.4% compared to 5.6%. Commodity currencies dependent on China are among the most affected. WTI closed 0.45% lower at $82 per barrel after hitting a fresh April high at $83.25 yesterday. Early Tuesday, and following the event, has crude falling towards Monday’s low at $81.60 per barrel, exposing $80.60 on the the next downward leg while keeping $84.20 per barrel distant for bulls.</p>
<h2>BOE Still Worried About Inflation, Cable On The Rise</h2>
<p>The BOE’s Chief Economist Huw Pill said that inflation was too high and saw a lot of news on inflation persistence, but many of the effects of rate hikes have yet to hit the economy. He expects inflation to fall to 5% by the end of year and return to target by the first half of 2025. On the data front, UK July Halifax house prices fell 2.4% compared to 2.6% in the prior measure. Cable had a positive session Monday, rising 0.37% to $1.2784 and putting a 2-day winning streak in, increasing speculation for furter upticks towards $1.2834. But bulls will have to defend $1.2737 to keep chances at continuing higher high.</p>
<h2>On The Docket</h2>
<ul>
<li>German Inflation Rate</li>
<li>Fed Harker Speech</li>
<li>US Trade Balance</li>
<li>Fed Barkin Speech</li>
<li>IBD/TIPP Economic Optimism</li>
<li>API Crude Oil Stock Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi are down by 0.48% and 0.61%</li>
<li>Euro 0.10% lower, Pound has twice the losses</li>
<li>Yen is 0.57% weaker, Swissy is down 0.10%</li>
<li>Loonie lower down by 0.10%</li>
<li>Gold is 0.19% down, while Silver is at -0.03%</li>
<li>Crude up by 0.12%, Brent oil at +0.07%</li>
<li>Natural gas is in the red, 0.59% lower</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-08-08-2023-24849/">JASPER’S MARKET SQUAWK 08-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>