JASPER’S MARKET SQUAWK 18-10-2023

<h2>Flat Curve Weighs on Dollar Slightly</h2>
<p>Short-dated yields rose to historic highs after strong US Retail Sales and an upward US GDP revision, but the yield curve flattened by the close, leaving the dollar in the backseat.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone size-full wp-image-26362" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1.png" alt="" width="1913" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1.png 1913w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-8-1-1536×732.png 1536w" sizes="(max-width: 1913px) 100vw, 1913px" /></p>
<p>Chart: EUR/USD</p>
<h2>Key Factors for Today</h2>
<ul>
<li>Dollar Takes Backseat as Yield Curve Flattens Despite Optimism</li>
<li>US Retail Sales and GDP Revisions Mean Less Debt Issuance</li>
<li>China’s Upbeat Data Sparks Optimism, Keeping Gold At Bay</li>
<li>WTI Oil Prices Surge on API Draw and Israeli-Hamas Conflict</li>
<li>Impasse at Chevron LNG Resolved, Aussie Supported by Union Deal</li>
</ul>
<h2>Markets Neglect(?) US Retail Sales and GDP Revision</h2>
<p>US Retail Sales came in at 0.7% compared to 0.3% expected, and core Core at 0.6% versus 0.2%. Both were revised higher. The dollar closed slightly lower despite increased Fed hike expectations (37% vs 50% Jan) and upward revisions in GDP from Atlanta Fed GDPNow, from 5.1% to 5.4%, as investors weighed in reduced term premium on bonds from less debt issuance. However, European yields were up with a drop in the bid-to-cover, driving EUR/USD a tad higher from $1.056 to $1.0578, exposing $1.06.</p>
<h2>Chinese Data Upbeat on All Fronts, Raising Optimism</h2>
<p>China’s economy grew faster than expected in Q3, indicating that recent PBOC measures helped support the country’s recovery. Year-on-year, GDP grew 4.9% compared to 4.4% forecasted, with the quarterly print rising 30bps to 1.3%. Industrial data and Retail Sales also beat expectations in September. However, headwinds remain as Country Garden, China’s largest private property developer, is at risk of defaulting on its offshore debt. Metal gold was seen trading a little higher on the better data, with a 1% gain added early Wednesday, supported by safehaven flows. $1953 is next resistance while trading above $1923 an ounce.</p>
<h2>API Draw and Renewed Israeli-Hamas Conflict Boosts WTI</h2>
<p>US crude stocks fell by 4.38M barrels on Tuesday, steeper than the 1.26M expected, sending oil prices 0.75% higher. The rally continues on Wednesday, with oil prices having spiked some 1.5% after investors factored in an air strike at a Gaza hospital, raising fears of supply cuts. Bears rejected $89 a barrel, but WTI is still treading shy of $90, with support at $87.20.</p>
<h2>Chevron LNG Impasse Ends After Deal, Seen Supporting Aussie</h2>
<p>The Australian union alliance has reached an agreement to endorse pay and conditions deals at Chevron’s LNG, ending an impasse that had led workers to threaten renewed strikes in the upcoming days. The agreement is expected to eradicate the risks of additional strikes, taking the edge off European gas prices and currently seen as supporting the Aussie. AUD/USD was up 0.37% yesterday and another 0.20% early Wednesday to 0.6376, exposing 64 cents. Support is expected to be near 0.6550.</p>
<h2>On The Docket</h2>
<ul>
<li>GB Inflation Rate</li>
<li>ECB President Lagarde Speech</li>
<li>EA Inflation Rate</li>
<li>US Housing Starts</li>
<li>EIA Crude Oil Stocks Change</li>
<li>Fed Waller Speech</li>
<li>Fed Bowman Speech</li>
<li>Fed Harker Speech</li>
</ul>
<h2>Fx 1-Day Relative Performance (USD)</h2>
<ul>
<li>Kiwi 0.18% up, Aussie 0.21% higher</li>
<li>Euro 0.01% up while Pound 0.02% down</li>
<li>Yen and Franc up by 0.08% and 0.12%</li>
<li>Loonie lower down, at -0.08%</li>
<li>Gold 0.83% higher, silver soars 1.18%</li>
<li>Crude and Brent spike 2.22% and 1.98%</li>
<li>Natural gas barely moved at -0.06%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-18-10-2023-26361/">JASPER’S MARKET SQUAWK 18-10-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>