JASPER’S MARKET SQUAWK 13-07-2023

<h2>Inflation Slowdown Bolsters Risk Appetite</h2>
<p>Markets around the globe rose in support of risk appetite. US inflation was lower than anticipated, and Fed Beige Book reported increased economic activity in May. The dollar fell, setting the trend for everything else.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24216 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50.png" alt="" width="1912" height="916" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50.png 1912w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50-1024×491.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50-768×368.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-50-1536×736.png 1536w" sizes="(max-width: 1912px) 100vw, 1912px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Slow Inflation Data Drive Sentiment, Strong Euro and Pound</li>
<li>Bank of Canada Raises Rates with a Hawkish Tone</li>
<li>Australian and New Zealand Dollars Surge, Yen Maintains Strength</li>
<li>Surprise Increase in Oil Inventories Does Not Impact Prices</li>
<li>China Trade Surplus Shrinks, USDCNY Benefits from Weaker Dollar</li>
</ul>
<h2>CPI At Lowest Since March ’22, Euro and Pound Soar</h2>
<p>Headline monthly CPI change came in at 0.2% compared to 0.3% forecast, with the annual rate at 3.0% compared to 3.1% expected. Core was also below forecasts, with the annual rate falling to 4.8% compared to the 5.0% expected, the smallest monthly rise since the middle of 2021, and the first time it fell below 5.0% since the end of 2021. Real average hourly earnings jumped to 1.2% from 0.2% prior. The yield curve steepened with the 2-year falling back to 4.75%. There was no change in the near-unanimous consensus that the Fed will hike by 25bps at the end of the month. EUR/USD rose over 1%, recapturing $1.11, while the pound took over the $1.30 handle, both rising to over a year high. $1.13 and $1.3150 are settler ahead, whereas supports lie at $1.1096 and $1.2932 – respectively. Gholr rose 1.30% to $1957/oz.</p>
<h2>BOC Hikes As Expected, But Statement Hawkish</h2>
<p>As expected by most economists, the BOC raised rates by 25 bps, saying it was concerned that progress towards the inflation target could stall. It also increased the timeframe for CPI to fall back to 2% by six months until mid-2025. The emphasis on concerns over persistent inflation left the markets with a hawkish sensation. Loonie was bolstered up, experiencing a drop of 0.35% in USDCAD to $1.3185. $1.3144 remains intraday support, whereas $1.3230 resistance.</p>
<h2>Aussie, Kiwi See Biggest Relative Gains, Yen Holds Streak</h2>
<p>Lower inflation pulled down the dollar, with the NZD and AUD seeing the largest relative gains or around 1.60% each, despite the lack of positive domestic news. $0.6900 and $0.6400 seem to be the next hurdles to face. The Yen maintained its strength, rising to 138.00 against the dollar to mark a 5-day winning streak. 140.00 remains a solid ceiling, while the door 135.50 has opened widely.</p>
<h2>EIA Reports Surprise Build-In Inventories But Oil Unmoved</h2>
<p>Inventories reported by the DOE grew by 5.9M bbl this week, compared to -0.5M expected. Distillates saw the largest growth, with refinery utilisation above outlook and US exports slightly below expectations. WTI, amidst a weaker greenback, broke into May highs of $76+, growing 1.45% for the day, leaving support at $73.90/bbl.</p>
<h2>China Trade Surplus Shrinks, USDCNY Benefits from Weak USD</h2>
<p>China’s trade balance fell to $70.6B in June, below the $74.9B forecast. Exports fell 12.4% compared to the 10.0% forecast, the weakest result since the start of the pandemic in February 2020. Imports also shrank more than expected at -6.8% compared to -4.1% forecast. USD/CNY was seen falling on the back of a weaker dollar, heading towards 7.1033 unless bulls take back 7.2180.</p>
<h2>On The Docket</h2>
<ul>
<li>UK GDP</li>
<li>UK Industrial &amp; Manufacturing Production</li>
<li>EC Economic Forecasts</li>
<li>ECB MP Meeting Accounts</li>
<li>US PPI</li>
<li>US Jobless Claims</li>
<li>Fed Waller Speech</li>
<li>Eurogroup Meeting</li>
<li>EU-Japan Summit</li>
<li>OPEC Monthly Report</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.42% higher but Kiwi up by 0.61%</li>
<li>Euro and pound up by 0.12% each</li>
<li>Yen is down 0.11%, while Franc is 0.11% higher</li>
<li>Canadian dollar 0.08% up</li>
<li>Gold is down by -0.03%, while Silver is 0.30% higher</li>
<li>Crude is 0.24% higher, Brent is up by 0.30%</li>
<li>Natural gas is up by 0.87%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-13-07-2023-24212/">JASPER’S MARKET SQUAWK 13-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>