JASPER’S MARKET SQUAWK 21-08-2023

<h2>Markets Slide on Hawkish Concerns, China</h2>
<p>Global equities trended lower on Friday, closing the week with losses despite the yield on the 10-year bond backing off a 15-year high, as investors got concerned that the US economic strength could lead to further Fed action.</p>
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<p><strong>Chart: GBPUSD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Global equities slide despite bond yield retreat, fueled by Fed and China concerns</li>
<li>S&amp;P 500 suffers third consecutive week of losses amid higher interest worries and China</li>
<li>UK retail sales disappoint, pound falls as consumer narrative weakens</li>
<li>Euro records 6-day decline after CPI confirmation, ECB rate hike expectations intact</li>
<li>Chinese intervention unable to halt yuan slide as property sector concerns persist</li>
<li>New Zealand trade deficit widens, Kiwi extends losing streak to 9 days</li>
</ul>
<h2>S&amp;P Down for 3rd Week Amid Higher-For-Longer Narrative</h2>
<p>The S&amp;P 500 lost 0.80% on Friday due to rising yields to close the 3rd week of consecutive losses as investors got concerned about the Fed’s potential to maintain higher interest rates for longer while monitoring potential spillover effects from China. Breaking 4370 can open the door to 4200, with a rebound seeing potential respite towards 4430.</p>
<h2>UK Retail Sales Surprise to the Downside, Cable in Red</h2>
<p>Retail sales figures in the UK contradicted the stronger consumer narrative in the early part of last week, showing a monthly drop of 1.2% compared to -0.3% expected. UK retail sales are down -3.2% for the year, compared to -1.9% expected. The pound fell against the dollar, marking the first red session after three consecutive days of gains, with the pullback to $1.2689 marking support. Bullish price action could see an uptick towards $1.2766 but unlikely $1.28.</p>
<h2>EUR/USD Records 6-Day Decline After CPI Confirms Forecasts</h2>
<p>The final reading of Eurozone July CPI showed headline prices grew at 5.3% annually, and core was up 5.5%, despite monthly CPI slipping -0.1%. The data left intact expectations that the ECB would go through with at least one more hike in September. Euro recorded a 6-day loss on Friday, with a June low at $1.0845 offering a chance at $1.09 early Monday. Failing to get past it might see the eurodollar slide under $1.08.</p>
<h2>Reported Intervention Doesn’t Seem Able to Stop Yuan Slide</h2>
<p>Friday’s price action saw the dollar rising again despite a much stronger PBOC fix, while reports circulated that Chinese state-owned banks were selling dollars. State-backed property developers now warn of major losses, as concerns over the country’s property sector drove markets. Reports also circulated that Chinese officials are considering more drastic measures, such as cutting the FX reserve requirement ratio. USD/CNY is seen heading back to 7.35 early Monday unless China reclaims 7.30.</p>
<h2>9-Day Losing Streak for Kiwi After Trade Deficit Widens</h2>
<p>The July Trade Deficit for New Zealand expanded to -1.1B from -0.1B in the prior measure as exports dropped and imports increased. The prior trade balance was revised down to a deficit. New Zealand’s Prime Minister Chris Hipkins warned that the budget faced pressure and sought “savings”. Kiwi remains comfortably below the 60-cent barrier, with next support expected near $0.5875. If the 0.59 handle turns firm, bulls could attempt $0.5950 next.</p>
<h2>On The Docket</h2>
<ul>
<li>German Wholesale Prices</li>
<li>Japan GDP Growth Rate</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie unchanged, Kiwi down by 0.05%</li>
<li>Euro 0.13% higher, Pound 0.06% down</li>
<li>Yen and Swissy see no change</li>
<li>Loonie 0.04% higher up</li>
<li>Gold up by 0.27%, Silver 0.73% higher</li>
<li>Crude and Brent higher by 0.58% each</li>
<li>Natural gas up by 1.53%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-21-08-2023-25096/">JASPER’S MARKET SQUAWK 21-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>