JASPER’S MARKET SQUAWK 21-07-2023

<h2>Bulls Take A Break</h2>
<p>Equities saw a little pullback in what was seen as profit-taking following some discouraging tech earnings, with the dollar rising. Meanwhile, the EU avoided a technical recession, and the US business outlook disappointed.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24352 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57.png" alt="" width="1922" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57.png 1922w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57-300×142.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57-1024×486.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57-768×364.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-57-1536×729.png 1536w" sizes="(max-width: 1922px) 100vw, 1922px" /><em><strong>Chart: USDJPY</strong></em></p>
<h2>Key Factors For Today</h2>
<ul>
<li>Market Pullback As Bulls Take Break Following Downbeat Tech Earnings</li>
<li>EU Avoids Technical Recession by Narrow Margin, Euro Weakens</li>
<li>US Business Outlook Disappoints, Inflation Concerns Remain</li>
<li>BOE Considers Aggressive Tightening Amid Persistent Inflation</li>
<li>Japan’s Inflation Rises, BOJ Expected to Hold Policy Steady</li>
</ul>
<h2>EU Avoids Technical Recession By Bare Minimum</h2>
<p>Final Eurozone Q1 GDP was revised up to 0.0% from -0.1%, allowing the shared economy to avoid a technical recession. ECB official Yannis Stournaras said that inflation is falling and more tightening would hurt the economy, arguing that one more hike next week would be enough. EUR/USD slid 0.62% to $1.1128, registering a 3-day losing streak and exposing the $1.10 handle. Resistance is expected at $1.1175.</p>
<h2>US Business Outlook and Tech Earnings Disappoint</h2>
<p>The July Philadelphia Fed business outlook survey fell -13.5 compared to the -10 expected. Prices received jumped 23.0 compared to 0.1 prior, elevating worries that inflationary pressures are not over. On the other hand, weekly jobless claims in the US fell more than expected. The yield spread widened, and tech shares were impacted following a disappointing outlook from TSMC. Gold reached a 2-month high at $1988/oz before reversing to $1969 for a negative session, opening up $1955/oz. Recapturing $1977/oz may flip sentiment again.</p>
<h2>BOE Could Tighten More Aggressively</h2>
<p>BOE’s Deputy Governor Dave Ramsden said that inflation has begun to fall significantly, although it remains too high. Further tightening would be required if it remains persistent, suggesting that the BOE could increase the rate at which it shrinks the balance sheet (more QT). Said the effect of QT on the economy was slight. UK July Consumer Confidence was below expectations at -30 compared to the -25 forecast. Cable added another day to its losing streak, falling 0.57% to $1.2865, distancing itself from the $1.30 resistance for a bearish chance at $1.2760.</p>
<h2>Japan Inflation Faster But No Policy Changes Expected</h2>
<p>Inflation in Japan rose to 3.3% annually, compared to expectations that it would remain unchanged at 3.2%. The core rate also rose to the same level. Former Japanese vice minister of Finance Mitsuhiro Furusawa said that it was unlikely that the BOJ would modify its YCC facility at next week’s policy meeting. The Japanese government cut its growth forecast for this fiscal year to 1.3% from 1.5% prior and raised its outlook for CPI to 2.6% from 1.7% (above the BOJ’s 2% target). USD/JPY bulls attempt to reclaim 140.00, with a takeover clearing the path towards 141.32 and a failure opening the door to 139.00.</p>
<h2>On The Docket</h2>
<ul>
<li>UK Retail Sales</li>
<li>Canada Retail Sales</li>
<li>Canada New Housing Price Index</li>
<li>Spain’s Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie unchanged while Kiwi 0.14% lower</li>
<li>Euro 0.10% higher, Franc also up by 0.05%</li>
<li>Loonie flat, Cable leads 12% higher</li>
<li>Japanese Yen 0.05% lower</li>
<li>Gold 0.06% higher, Silver beats at +0.19%</li>
<li>Crude and Brent oil are up by 0.28% each</li>
<li>Natural gas is down by 0.58%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-21-07-2023-24348/">JASPER’S MARKET SQUAWK 21-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>