JASPER’S MARKET SQUAWK 23-06-2023
<h2>Central Banks Weighs on Markets</h2>
<p>BOE and Norges hiked more than expected, and Fed Chair Powell continued to support more tightening before Congress. US weekly jobless numbers hit a multi-year high, with yields rising.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23817 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31.png" alt="" width="1916" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-31-1536×732.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><em><strong>Chart: XAUUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Central banks continued tightening add to dollar bids</li>
<li>US weekly jobless claims rise to the highest level in years</li>
<li>Crude slides some 4% under $70/bbl on Iran deal rumours</li>
<li>Japan’s core inflation hits a 40-year high, yen bulls far from sight</li>
<li>Aussie tumbles as traders rush to dollar safety</li>
</ul>
<h2>BOE Hikes by 50bps, But Pound Falls</h2>
<p>Most economists were predicting only a quarter of a point hike from the BOE, but the subsequent weakness in the pound implies that markets had already priced in the double hike after Wednesday’s CPI figures. Concerns over UK’s economic strength lead to a drop in the longer end of the yield curve, contributing to weakness in sterling. Cable traded at $1.2842 but closed Thursday at $1.2747 and under pressure. $1.2661 is major support bulls must defend, with $1.2771 acting as potential resistance.</p>
<h2>Jobless Claims at Highest Levle since 2021</h2>
<p>Weekly jobless claims came in above expectations at an unchanged 264K, compared to the 260K forecast, with the prior week revised higher to a level not seen since October 2021. The relative strength of the jobs market in the US was seen as a key element of the soft landing narrative. Combined with comments from Fed’s Powell suggesting the majority of FOMC members agree that two more hikes are likely, markets took on a defensive tone, resulting in a Gold drop to a 3-month low of $1912/oz and opening up $1890/oz unless bulls reclaim $1925/oz.</p>
<h2>Crude Losses 4% on New Iran Deal Rumors</h2>
<p>Press reports circulated that the US was still looking to make a nuclear deal with Iran, outweighing an unexpected drawdown in DOE inventories of -3.8M bbl compared to expectations they would remain unchanged. Gasoline inventories grew by 0.5M bbl compared to the -0.5M forecast. Weekly EIA natural gas inventories saw a build of 95B cf, above the 89-93B cf anticipated. WTI crude slid 4% from a high of $72.40/bbl to a low of $69.50/bbl and continues its descent early Friday, exposing $67.30/bbl and turning $70/bbl to resistance.</p>
<h2>Japan Core Inflation Hits Highest since 1981</h2>
<p>Japan’s May headline CPI aligned with expectations at 3.2%, falling from 3.5% in the prior month. But core (excluding fresh food and energy) inflation rose to 4.3%, above the 4.2% expected and the 4.1% reported in April. June preliminary Japan Manufacturing PMI was also registered at 49.8 compared to 50.6 prior, breaking a four-month streak of upside and returning into contraction territory. Services also fell but remained in expansion for the 8th consecutive month. JGB yields fell to the lowest level since November of 2022, sending USD/JPY to a 7½ month high shy above 143.00, where it continues to float. The next significant resistance appears near 144.00, with support at 142.40.</p>
<h2>Aussie Tumbles as Traders Seek Dollar Safety</h2>
<p>The rush towards the dollar, driven by firmer US Treasury bond yields and major central bank rate hikes, has also exerted downside pressure on the AUD/USD pair despite manufacturing coming in somewhat mixed. Aussie dropped from 68 cents to a low of $0.6690 early Friday, a loss of 1.50%, with bulls focusing on $0.6680. $0.6740 may act as resistance on the way up.</p>
<h2>On The Docket</h2>
<ul>
<li>France Manufacturing and Services PMI</li>
<li>Germany Manufacturing and Services PMI</li>
<li>Euro Area Manufacturing and Services PMI</li>
<li>S&P Global/CIPS Manufacturing and Services PMI</li>
<li>Fed Bullard Speech</li>
<li>Fed Bostic Speech</li>
<li>S&P Global Manufacturing and Services PMI</li>
<li>Fed Mester Speech</li>
<li>Fed Williams Speech</li>
<li>BOJ Summary of Opinions</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie nosedive at 0.86%, Kiwi at -0.61%</li>
<li>Euro and pound 0.23% and 0.30% lower</li>
<li>Yen is down by 0.15%, Franc at -0.30%</li>
<li>Canadian dollar 0.28% in red</li>
<li>Gold is 0.08% higher, silver at -0.59%</li>
<li>WTI and Brent lower by 1.12% and 1.03%</li>
<li>Natural gas is down by 0.31%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-23-06-2023-23813/">JASPER’S MARKET SQUAWK 23-06-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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