JASPER’S MARKET SQUAWK 21-06-2023

<h2>Markets Take On Risk-Off Tone</h2>
<p>Investors continued to show disappointment with the underwhelming Chinese stimulus, with a flight to safety pushing down equities and supporting the dollar. German data supported the deflationary narrative. Gold and crude continued to trend lower.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23787 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29.png" alt="" width="1917" height="911" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29.png 1917w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29-768×365.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-29-1536×730.png 1536w" sizes="(max-width: 1917px) 100vw, 1917px" /><em><strong>Chart: XWTI</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Markets uneasy over economic outlook, looking to safe havens in continuation of reaction to latest Chinese government stimulus</li>
<li>ECB officials still debating whether to raise rates at Sept meeting, German PPI lower than expected</li>
<li>US Housing remains strong despite other indicators of the economy slowing</li>
<li>Early start to the hurricane season, with the NHC forecasting the first storm in the Caribbean</li>
<li>BOJ minutes affirm commitment to easing if inflation keeps trending lower through middle of the year</li>
</ul>
<h2>Gold Weakens Over China Economic Concerns</h2>
<p>In a continuation of the reaction to the stimulus offered by the Chinese government on Monday, which was widely interpreted by markets as disappointing, Chinese equities dropped, led by the housing industry. The yuan peaked above the 7.20 level, not seen since November, before lifting covid restrictions. Other economic bellwethers included disappointing results from FedEx, which saw falling demand. The Chinese press speculated that further rate cuts are coming in the near future. Gold prices tumbled 0.8% on a stronger dollar, hovering above the $1,926 support, a break of which would expose $1,900, with resistance at $1,950.</p>
<h2>ECB Officials Disagree on Path Forward</h2>
<p>German May PPI came in at -1.4% below the -0.7% expected, which is the lowest rate in two years, playing into a deflationary narrative. ECB official Gediminas Simkus (Lithuania) said he wouldn’t be surprised to see a rate hike in September, while Francois Villeroy noted that most of the rate-hike path is complete. The contrasting positions reflected the regular division in the shared central bank about how much tightening will be needed. Europe’s currency ended the session overlap mixed, leaving the daily low and high of $1.0892 and $1.0947 as the next levels in focus.</p>
<h2>US Housing Better Than Expected</h2>
<p>New building projects in the US increased by 1.6M compared to 1.4M expected in May; permits were also above expectations at 1.49M compared to the 1.43M forecast, showing resilience in the housing industry. Offsetting the positive news was the American Trucking Association’s monthly activity report, showing that for-hire truck tonnage remained in recession territory after three consecutive declines. Yields on treasuries declined, with the 2-10 year spread returning to -100, although the dollar was stronger based on safe-haven flows. Against the pound, the dollar was higher by some 0.60% on Tuesday, with most of that recovered by the session’s end, bringing cable to a $1.2763 close. Traders will keep a close eye on $1.27 and $1.28.</p>
<h2>First Hurricane of Season Seen Weighing On WTI</h2>
<p>Tropical Storm Bret is seen strengthening into a Hurricane later today or tomorrow, although not expected to reach oil production in the Gulf of Mexico. It’s an unusually early start to the Hurricane season. WTI prices came off the worst level of $69.80/bbl after having risen 1.25% to $72.40/bbl first, ending Wednesday mixed and above the $70/bbl.</p>
<h2>BOJ Minutes Affirm Easing, Yen to Fresh Lows Against USD</h2>
<p>Most BOJ Board members agreed that inflation would continue to decelerate through the middle of the year, with one dissenter Seiji Adachi saying that inflation had increased faster than he expected but still affirming that ultra-easing is the way to go for now. USD/JPY extended to 142.26 before turning lower, a new multimonth high, exposing 141.00 and 140.26 unless the yen weakens towards 143.44.</p>
<h2>On The Docket</h2>
<ul>
<li>ECB officials Fabio Panetta and Isabel Schnabel to speak</li>
<li>UK CBI industrial trends orders</li>
<li>US MBA Mortgage rate</li>
<li>Canada Retail Sales</li>
<li>US Redbook</li>
<li>Fed Chair Powell to speak before House</li>
<li>FOMC nominees Cook and Jefferson to provide testimony before Senate</li>
<li>API Crude oil stock change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie rose 0.06%, Kiwi up 0.38%</li>
<li>Euro is marginally down, while the pound is up 0.04%</li>
<li>Yen is down 0.29%, Franc is down 0.05%</li>
<li>Canadian dollar is up by 0.12%</li>
<li>Gold is down 1.2%, silver is down 0.43%</li>
<li>WTI is up 0.60%, Brent up 0.47%</li>
<li>Natural gas is 0.12% higher</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-21-06-2023-23786/">JASPER’S MARKET SQUAWK 21-06-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>