JASPER’S MARKET SQUAWK 12-07-2023

<h2>Markets Positive Ahead of Key US Data</h2>
<p>Global equities closed the day in the green, with the dollar under pressure from lower bond yields. Markets were seen waiting for the much-anticipated release of US CPI figures today and the unofficial start of earnings season at the end of the week.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24194 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49.png" alt="" width="1916" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-49-1536×731.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><em><strong>Chart: XWTI</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Global Equities Close in the Green, Dollar Under Pressure Ahead of US CPI</li>
<li>UK Unemployment Rate Rises, Wages Increase Boosts Chance of BOE Hike</li>
<li>RBA Governor Open to Further Tightening, No Announcement on New Governor</li>
<li>Japan Data Disappoints, USD/JPY Continues Losing Streak</li>
<li>WTI Prices Surge 2.30% on Speculation of Production Cuts and EIA Demand Revision</li>
<li>RBNZ Leaves Rates Unchanged, Kiwi Swings Despite USD Impact</li>
</ul>
<h2>UK Wages Increase 50bps Hike Chance, Boost Pound</h2>
<p>The unemployment rate in the UK for May increased to 4.0% compared to 3.8%, with the claimant count returning to positive 25.7K —- a positive number is worse for the economy. Average weekly earnings for May came in slightly above expectations of 6.8% at 6.9%, keeping labour markets tight and raising the risk of “second-level” effects of inflation. The chances of another 50bps hike from the BOE at the next meeting increased to 74% compared to 66% before the data release. Cable closed in on the $1.30 handle after putting a 4-day winning streak in at $1.2933 yesterday, and it traded as high as $1.2971 earlier on. $1.2850 is major support, with $1.3160 a critical resistance.</p>
<h2>RBA Open to More Tightening, No News on New Governor</h2>
<p>The current RBA Governor, Philip Lowe, spoke at the Economic Society of Australia, saying it was possible that more tightening will be required and that the full effects of tightening so far haven’t been felt. Australia Treasurer, Jim Chalmers, declined to say whether a new governor for the RBA has been selected but said that the Cabinet would meet “soon” to discuss the reappointment. Aussie ended the session marginally higher as it struggled to get past $0.67, but it was seen breaking out to $0.6743 early Wednesday. If bulls defend the round support, prices could re-extend towards the intraday top; otherwise, risk a drop towards $0.6650.</p>
<h2>Japan Data Downbeat, But USD/JPY on Lossing Streak</h2>
<p>Annual Japan PPI Change for June fell to 4.1% compared to 4.4% expected and hit the slowest pace since early 2021 in the sixth consecutive deceleration. May Core manage orders fell -7.6% compared to the 1.0% growth expected. USDJPY declined shy above 140.00, the lowest level since mid-June, but broker through it early Wednesday with an extension down to 139.40, potentially heading to a 5-day losing streak.</p>
<h2>WTI 2.30% Higher on Cuts Speculation, EIA Demand Revision</h2>
<p>The API saw US inventories jump by 3.0M bbl when analysts had forecast only 0.2M bbl growth, with the DOE releasing 0.4M from the SPR, the 15th consecutive week of releases. JPMorgan released a note saying that OPEC+ might cut production by another 700K bpd through the rest of the year. Moreover, the EIA raised its forecast for 2023 oil demand growth by 170K bpd, now expecting demand to increase by 1.76M bpd this year. WTI saw only one way out of this: up and 2.30% higher to $74.80/bbl. Price reached a 7-week high above $75 this morning, opening up $76.70/bbl and the chances of a spike towards the $80/bbl handle. Lower down, there is significant support by $73.15/bbl.</p>
<h2>RBNZ Holds Rates, Kiwi Swings But Mostly Impacted by USD</h2>
<p>RBNZ left rates unchanged, in line with a near-unanimous consensus. The accompanying statement was seen as dovish, as the language for core inflation changed from remaining under pressure to expecting it to decline. The currency fluctuated and put in at a 3-week high of $0.6240 on its way up, whereas it kept support at $0.6190, but it appears higher in the day due to a weaker dollar. Losing the 62-cent handle might see further declines towards $0.6162.</p>
<h2>On The Docket</h2>
<ul>
<li>Spain’s CPI Inflation</li>
<li>MBA 3-Year Mortgage Rate</li>
<li>US CPI Inflation</li>
<li>BOC Interest Rate Decision</li>
<li>EIA Crude Oil Stock Change</li>
<li>BOC Goc Rogers Speech</li>
<li>BOC Gov Macklem Speech</li>
<li>WASDE Report</li>
<li>Fed Bostic Speech</li>
<li>Fed Mester Book</li>
<li>NZ Food Inflation</li>
<li>RICS House Price Balance</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.36% higher, Kiwi up by 0.25%</li>
<li>Euro and pound are both up by 0.19%</li>
<li>Yen is up by 0.62%, Franc only by 0.18%</li>
<li>Canadian dollar 0.12% up</li>
<li>Gold is up by 0.33%, Silver 0.60% higher</li>
<li>Crude is unchanged, while Brent is down by 0.08%</li>
<li>Natural gas is down by 0.07%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-12-07-2023-24190/">JASPER’S MARKET SQUAWK 12-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>