JASPER’S MARKET SQUAWK 10-07-2023

<h2>NFP Weakness Saps Investor Confidence</h2>
<p>The dollar and US equities fell on Friday following the lack of jobs, with signs of loosening in the labour market seen softening the Fed outlook. Meanwhile, ECB members insisted hikes were not over.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24152 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45.png" alt="" width="1919" height="915" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45.png 1919w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-45-1536×732.png 1536w" sizes="(max-width: 1919px) 100vw, 1919px" /><em><strong>Chart: GBPUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>NFP misses expectations, denting investor confidence in the dollar and us equities</li>
<li>Disappointing jobs numbers weigh on dollar, prompt Fed rate speculation</li>
<li>Intervention fears push USD/JPY 1.40% lower, BOJ repo operation adds to decline</li>
<li>Euro strengthens on soft dollar and ECB’s hike rhetoric, eyes on $1.10</li>
<li>Weaker China CPI signals headwinds, enables gold price upside</li>
</ul>
<h2>Dollar Slides on Disappointing Jobs Numbers</h2>
<p>The US added 209K jobs last month compared to the 230K expected, but the unemployment rate ticked down to 3.6% in what could be seen as a rounding adjustment. April and May’s reports were revised lower by 110K, suggesting the market hasn’t been as strong as initially reported. The number of part-time workers increased, often a sign of weakness in hiring. Markets were seen adjusting how long the Fed will keep rates high, with the yield curve steepening. The pound headed to $1.2850 on the dollar’s weakness, forming a double top pending breakout towards $1.30. Support lies around $1.2725, provided 1.28 gives way.</p>
<h2>USD/JPY 1.40% Lower on Intervention Fears</h2>
<p>The yield on the US benchmark ten-year treasury moved above 4.0%, which was seen as a catalyst for fears that the Japanese government would intervene to shore up the yen. USD/JPY lost 1.40 on Friday, sliding from 144.00 to 142.00. Over the weekend, the BOJ announced a new 1-trillion yen repo operation, opening speculation for further declines towards 140.00. The pair is taking a breath Monday morning.</p>
<h2>Euro Bolstered from Soft USD, ECB Hike Rhetoric</h2>
<p>In an interview with La Provence, ECB President Christine Lagarde said the bank still had more to do to cut inflation and saw CPI above target well into 2025. ECB Vice President Luis de Guindos (Spain) emphasized that the ECB is not done with rate hikes and that whether a hike will ensue in September is an open question. EUR/USD was bolstered 0.75% higher to $1.0968, awaiting momentum for a chance at $1.10, which may see the pair extend as high as 1.1034. 1.09 is short-term support bulls must hold to keep the euro on a positive footing.</p>
<h2>Weaker China CPI Offers Gold Helping Hand</h2>
<p>Annual CPI change in China came in at 0.0% compared to the 0.2% expected, with monthly CPI at -0.2%. PPI fell -5.4% compared to the 5.0% expected. Inflation chalked up five straight months of contractions. The yuan was seen weaker in the aftermath of the report but shook investor sentiment as a sign that the world’s second-largest economy is facing headwinds, adding to support for gold. The yellow metal rose 0.79% to $1925/oz but appears constrained between $1900/oz and $1935/oz. A breakout will expose $1890/oz and 1950/oz.</p>
<h2>On The Docket</h2>
<ul>
<li>Fed Barr Speech</li>
<li>Fed Daly Speech</li>
<li>Fed Mester Speech</li>
<li>Fed Bostic Speech</li>
<li>BoE Gov Bailey Speech</li>
<li>BRC Retail Sales Monitor</li>
<li>ES Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi down by 0.52% and 0.46%</li>
<li>Euro 0.14% lower, pound at -0.26%</li>
<li>Yen 0.51% lower, Franc at -0.22%</li>
<li>Canadian dollar 0.15% lower</li>
<li>Gold 0.32% and Silver 0.34% lower</li>
<li>Crude and Brent 0.65% and 0.59% lower</li>
<li>Natural gas is up by 2.01%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-10-07-2023-24148/">JASPER’S MARKET SQUAWK 10-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>