JASPER’S MARKET SQUAWK 20-07-2023

<h2>Markets Advance on Data, Earnings</h2>
<p>The UK was the latest to have an inflation surprise to the downside yesterday, supporting the dollar index higher on its drop. Upbeat earnings from US regional banks supported risk appetite.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24338 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56.png" alt="" width="1916" height="915" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-56-1536×734.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><em><strong>Chart: GBPUSD</strong></em></p>
<h2>Key Factors For Today</h2>
<ul>
<li>Markets Rally on Data and Earnings Boost</li>
<li>CPI Inflation in UK Drops, Fueling Speculation of BOE Slowdow</li>
<li>US Housing Starts Align with Expectations, Banks Offer Positive Guidance</li>
<li>EIA Reports Small Drawdown in Crude Inventories, WTI Falls</li>
<li>EUR/USD Slightly Lower Despite Revised EU CPI Higher</li>
<li>Australia’s Unemployment Rate Falls, Aussie Surges 1%</li>
</ul>
<h2>Cable Flops As UK Inflation Fell More Than Expected</h2>
<p>CPI inflation fell to its lowest in 15 months in the UK, easing to 7.9% in June compared to a forecast of 8.2% and a headline figure of 8.7% the month prior. Core inflation also dropped from 7.1% to 6.9%. The decline improved optimism that the BOE will slow down its aggressive hiking, with peak rates now expected to stay below 6% and markets pricing in just a quarter of a point hike at the next BOE meeting. Lower yields on girls helped send the pound 0.75% lower against the dollar. $1.29 held firm as it offered rejection, with expected resistance at $1.30 unless bearish bets accelerate towards $1.2850.</p>
<h2>US Housing Starts Align With Expectations</h2>
<p>June housing starters were reported as 1.43M new homes compared to 1.48M expected. The market seemed to focus more on reports from US banks, which offered positive guidance for the year, allaying fears that better performance among major financial institutions came at the cost of smaller banks. Goldman Sachs reported an uptick in M&amp;A activity. The yield curve flattened, with gold pretty much unchanged. $2k is near-term resistance, so long bulls defend the $1970/oz support.</p>
<h2>EIA Reports Small Drawdown, WTI Still Falls</h2>
<p>US crude inventories fell -0.7M bbl last week compared to -0.2M bbl expected, with refinery utilisation rising to 94.3% from 93.6%. Total petroleum exports from the US also increased to 10.4M bbl from 9.2M bbl. WTI ended the session in the red as it fell to $75.30/bbl, opening up $74/bbl again unless bulls can reclaim $76.90/bbl.</p>
<h2>EUR/USD Slightly Lower Even After EU CPI Revised Higher</h2>
<p>The final reading for June CPI change in the Eurozone was kept at 5.5%, affirming the strong decline from 6.1% prior. However, the core rate was adjusted higher to 5.5%, up from the preliminary reading of 5.4%, which was already higher than the 5.3% reported in May. ECB Official Joachim Nagel (Germany) said it was very likely the ECB would hike by 25bps at the next meeting. Euro tested $1.12 against the dollar, with today’s price action determining whether the attempt at $1.13 concluded weak or recent declines continue towards $1.1128.</p>
<h2>Australia Unemployment Falls, Bolstering Aussie 1%</h2>
<p>Australia added 32.6K jobs in June, more than doubling expectations of 15K adds, helping bring the unemployment rate down to 3.5% compared to the 3.6% expected and the Aussie back above $0.68 this morning. Holding the line of defence might see the pair rise towards $0.6870, with a reversal of the gains unlikely at this stage. Support is expected at $0.6786, though.</p>
<h2>On The Docket</h2>
<ul>
<li>TCMB Interest Rate Decision</li>
<li>Initial Jobless Claims</li>
<li>Philadelphia Fed Manufacturing Index</li>
<li>South Africa Interest Rates Decision</li>
<li>Existing US Home Sales</li>
<li>Gfk Consumer Confidence</li>
<li>Japan’s Inflation Rate</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi up by 0.78% and 0.50%</li>
<li>Euro and Franb both 0.15% higher</li>
<li>Loonie 0.10% higher, while Cable at -0.08%</li>
<li>Japanese Yen 0.10% higher</li>
<li>Gold is 0.29% higher, whereas silver is 0.05% lower</li>
<li>Crude oil is flat, while Brent oil is 0.03% down</li>
<li>Natural gas rose 1.15%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-20-07-2023-24334/">JASPER’S MARKET SQUAWK 20-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>