JASPER’S MARKET SQUAWK 20-09-2023

<h2>Market Jitters Ahead of Fed Day as Fiscal Uncertainty Rises</h2>
<p>Risk appetite waned ahead of the big Fed Day while fiscal uncertainty was seen rising from a potential government shutdown. Yields tilted higher despite most expecting the Fed to hold, as the chances of another 25bps by the end of the year remain relatively high at 40%. Gold and crude ended their short-term runs.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25732 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97.png" alt="" width="1760" height="842" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97.png 1760w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97-1024×490.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-97-1536×735.png 1536w" sizes="(max-width: 1760px) 100vw, 1760px" /><em><strong>Chart: EURUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>US Housing Market Faces Challenges as Mortgage Rates Reach Highest Levels Since 2007</li>
<li>Europe&#8217;s Disinflation Narrative at Risk as Core Inflation Experiences Unexpected Expansion</li>
<li>Canadian Inflation Figures All Higher, Boosting the Canadian Dollar Against</li>
<li>WTI Prices Retreat from 10-Month High Despite Crude Stocks Drawdown</li>
</ul>
<h2>US House Starts Sink as Mortgage Rates Continue to Rise</h2>
<p>Housing starts in the US came out worse than expected, with the fast component falling to 11.3% when a 2% expansion was expected. That was the 5th month this year alone that it sunk. With the 2-year yield spiking to its highest since 2006 Tuesday and the 10-year rise sending mortgage rates to their highest since 2007, at 4.366%, the housing market may remain under pressure. The dollar&#8217;s rise saw gold ending its 3-day streak shy of $1940 an ounce, opening the door towards $1923.</p>
<h2>Europe Disinflation at Risk After Fast Core Expansion</h2>
<p>Annual inflation in Europe received a downward revision from 5.3% to 5.2%, the lowest reading since 2022, but the cost of services remained elevated, and CPI was far from the 2% target. Core inflation slowed down from 5.5% to 5.3%. However, the fast reading rotated back into an expansion of 0.3% from -0.1%, killing the disinflation narrative. EUR/USD bulls failed to get through $1.07, exposing the support at $1.0643 again.</p>
<h2>Canadian Inflation Higher on All Fronts, Boosts CAD</h2>
<p>Canada’s inflation soared to 4% on an annual basis from 3.3%, while economists expected an expansion of 3.8%. Core inflation also rose ten basis points annually, with the fast reading showing an increase of 0.4% from an expected 0.3%. The hotter data sent USD/CAD to a low of 1.3380 Tuesday, but price action recoiled by the session’s end to 1.3448. Moving higher can bring 1.3485 back into focus.</p>
<h2>API Crude Shows 5th Week of Declines, WTI Still Falls</h2>
<p>Crude stocks showed a significant drawdown of 5.25 million barrels, the 5th drawdown over the past six weeks, far from analysts’ estimates of a 2.667M build. Still, WTI oil fell after hitting a 10-month high of $92.65 a barrel Tuesday, losing 1.59% by the close after retesting the $90 handle, as investors secured some profits ahead of FOMC. Pressured early Wednesday, WTI could revisit $88.80 and $87.80/bbl unless the bulls regain momentum.</p>
<h2>On The Docket</h2>
<ul>
<li>GB Inflation</li>
<li>ECB Schnabel Speech</li>
<li>EIA Crude Oil Stocks Change</li>
<li>BOC Summary of Deliberations</li>
<li>Fed Interest Rate Decision</li>
<li>Fed Press Conference</li>
<li>NZ GDP Growth</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.03% down, while Kiwi 0.5% up</li>
<li>Euro 0.02% higher, Pound unchanged</li>
<li>Yen muted, Swissy 0.02% lower</li>
<li>Canadian dollar down by 0.07%</li>
<li>Gold 0.13% lower, Silver at -0.43%</li>
<li>Crude 0.88% down, Brent 0.91% in red</li>
<li>Natural gas nosedives 3.2%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-20-09-2023-25728/">JASPER&#8217;S MARKET SQUAWK 20-09-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>