JASPER’S MARKET SQUAWK 16-11-2023

<h2>Peak Rates Reinforced by New Data</h2>
<p>Slowing inflation data in the US and now the UK and EU seem to support investor sentiment as it increases the likelihood of peak rates and offers a solution to higher US yields. The latest data points in the US were seen contributing to the soft landing narrative, but markets ended Wednesday somewhat mixed, with the dollar slightly up on a likely technical correction.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-27056 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6.png" alt="" width="1916" height="914" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-6-1536×733.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>Chart: WTI</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Slowing Inflation in US, UK, and EU Reinforce Peak Rate Expectations</li>
<li>Consumer Spending Slows, Online Shopping Shows Signs of Strength</li>
<li>UK Inflation Drop Sends Cable Lower, BOE Tightening Uncertain</li>
<li>German Data Indicates Easing Inflationary Pressures</li>
<li>WTI Slides Over 2% on Weak Chinese Demand and Supply Concerns</li>
<li>Sluggish Japanese Trade Data Adds to Recession Fears</li>
<li>Australian Jobless Rate Reduces Chances of RBA Hike</li>
</ul>
<h2>Gold Barely in Red on Slightly Stronger Dollar</h2>
<p>Retail sales dipped to -0.1% in October but missed expectations of -0.3%, showing a slowdown in consumer spending following the summer surge while revealing signs of strength in online shopping. Producer prices also fell to -0.5% for the same month, primarily due to gasoline costs contributing to the downward inflation trend, as analysts expected an increase of 0.1%. The data combo added to the recent soft landing narrative; however, Fed’s Mary Daly (non-voter) said it’s still too early to “declare victory”. Meanwhile, the House of Reps approved stop-gap legislation to keep the US government open till early 2024. Gold closed the session in the red after hitting rejection at $1975 an ounce, with a focus on $1950 next.</p>
<h2>UK Inflation Drop Send Cable 0.65% Lower</h2>
<p>UK inflation slowed to 4.6% from 4.8% in October due to a drop in household energy prices. The core also dropped 10bps, strengthening investor bets that the BOE might avoid further tightening. British Chancellor of the Exchequer, Jeremy Hunt, is shifting his attention to stimulating economic growth following the CPI print, considering tax relief for voters and businesses in the upcoming budget. Meanwhile, house prices fell in September for the first time since 2012, while rents rose sharply in October, highlighting the weak state of the housing market. The British pound declined to 1.2416 Wednesday, down from a peak at 1.25. Next support can be seen around 1.2362.</p>
<h2>German Data Also Hint to Easing Inflation</h2>
<p>German wholesale prices saw a stip fall not seen in almost three-and-a-half years in October at -0.7%, suggesting easing inflationary pressures. The European Commission said in its Autumn Forecasts on Wednesday that the German economy is expected to shrink by 0.3% in 2023 due to high inflation, tightening financing conditions, and a loss in purchasing power but improve from next year, driven by a real wage increase and recovering foreign demand. The euro dropped slightly on the back of a firmer dollar but stayed near the recent top at 1.0888. If prices decline further, bulls may step up their game around 1.078 should 1.08 gives way.</p>
<h2>WTI Slides Over 2% on China Data, EIA Build</h2>
<p>Oil fell over 2% to 76.55 a barrel on Wednesday due to concerns about strong US supply and weak energy demand from China. China’s slowing oil refinery runs in October, and concerns about its property market downturn further weighed on the market. Crude was also impacted by a crude build of 3.6 million barrels, covering two weeks of EIA reports due to a lack of data the week before. Meanwhile, WTI’s front-month contract indicated a contango, suggesting investor expectations of future price increases as Saudi Arabia said it’s considering extending its voluntary cuts into H1 2024. 75 seems to be exposed now, with 73.90 lower down unless the bulls reclaim 77.50.</p>
<h2>Sluggish Japan Trade Data Weigh on Recession Fears</h2>
<p>Japanese exports grew by 1.6% year-on-year in October, but the pace slowed significantly due to declining shipments to China and weakening external demand. Despite the slower export growth, the trade balance swung back into deficit. Coupled with sluggish domestic demand and yesterday’s GDP contraction, it further added to concerns that the country may enter a technical recession. The Japanese yen ended Wednesday 0.65% weaker against the dollar, but it seems mixed following Thursday’s data. 150.86 and 152 are the sweet spots for trades.</p>
<h2>Australian Jobless Rate Reduces Chances of RBA Hike</h2>
<p>Australia’s employment rebounded in October, exceeding expectations with a net increase of 55K jobs, but driven by part-timers. Despite the positive print, Australia’s jobless rate increased to 3.7%, with the participation rate reaching an all-time peak of 67%. Markets see little reason for the RBA to follow up with another hike in December, with AUDUSD expressing sentiment more than 70% down on Thursday. At the time of writing, Aussie trades near 0.6480, with 0.65 and 0.6460 as resistance and support to watch.</p>
<h2>On The Docket</h2>
<ul>
<li>ECB President Lagarde Speech</li>
<li>Fed Barr Speech</li>
<li>Fed Mester Speech</li>
<li>Initial Jobless Claims</li>
<li>Philadelphia Fed Manufacturing Index</li>
<li>Industrial Production</li>
<li>Fed Willimas Speech</li>
<li>NAHB Housing Market Index</li>
<li>Fed Waller Speech</li>
<li>Fed Cook Speech</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.46% and 0.64% lower</li>
<li>Euro 0.087 down, Pound at -0.16%</li>
<li>Loonie down by 0.1%, Frank at -0.06%</li>
<li>Japanese yen barely moved</li>
<li>Gold up by 0.1, Silver 0.1% down</li>
<li>Crude and Brent down by about 0.62%</li>
<li>Natural gas 0.94% in the red zone</li>
</ul>
<p>&nbsp;</p>
<p>The post <a href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-16-11-2023-27052/">JASPER’S MARKET SQUAWK 16-11-2023</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>