JASPER’S MARKET SQUAWK 25-10-2023

<h2>Dollar Clips Higher on Manufacturing Expansion</h2>
<p>The US dollar index rose as US business activity and service sector expanded in October, indicating resilience against Europe and the UK. Earnings were a mixed bag overall, but blue-chip beats lifted investor appetite.</p>
<p><img decoding="async" fetchpriority="high" class="aligncenter wp-image-26527 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3.png" alt="" width="1913" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3.png 1913w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Untitled-design-2-3-1536×732.png 1536w" sizes="(max-width: 1913px) 100vw, 1913px" /></p>
<p>Chart: GBPUSD</p>
<h2>Key Factors for Today</h2>
<ul>
<li>Investor Confidence Boosted by Manufacturing Return, Blue-Chip Upbeat Earnings</li>
<li>Eurozone Faces Slump as Weak Manufacturing Data Point to Recession</li>
<li>Oil Falls on Weak European PMIs and Conflict De-escalation, Stabilises on API</li>
<li>UK Manufacturers Report Weak Orders, Raising Recession Concerns</li>
<li>Australian Dollar Hits 2-Week High on Hawkish CPI Report, China Support</li>
</ul>
<h2>Dollar Advances as Manufacturing Returns to Expansion</h2>
<p>US data showed an increase in business output, indicating a stronger economy. Notably, the S&amp;P Global Manufacturing PMI returned to expansion at 50 after five months of contraction against expectations of continued contraction. Services also managed to beat contractions forecasts at 50.9 vs 49.8 exp and 50.1 prior. The relative strength lifted the dollar index 0.60% up to 106.25, paving the way to 106.54 next unless bulls lose 105.95.</p>
<h2>EUR/USD at Weekly Low After Weak Manufacturing PMI</h2>
<p>Eurozone business activity declined more than expected in October, suggesting the bloc may slip into a recession. German readings suggested that the country is already in a recession. Its business activity contracted for the fourth straight month, with services unexpectedly contracting to 48. EUR/USD was seen falling into a loss for the week, dipping to $1.0589. If bulls hold the $1.06 line, the pair could advance towards $1.065. Otherwise, provoke bets towards $1.0559.</p>
<h2>WTI Records 3-Day Losing Strike on Weak EU PMIs</h2>
<p>Oil prices fell due to the weak economic data from Europe and from fading risk-premium in the Israel-Hammas conflict. But prices have stabilised on the back of an API draw. WTI lost another 2.92% on Tuesday, reaching $83 a barrel and exposing the early October low of $81.60. Meanwhile, US inventories fell by 2.668M barrels for the week ending October 20, following a 4.383M drop in the week prior and expectations of a 1.55M build.</p>
<h2>Recession Risks Rise Following Poor Manufacturing Data</h2>
<p>UK manufacturers reported the weakest orders since January 2021 in October, raising the risk of a recession despite the PMI coming in at 45.2 vs 44.7 expected. Industrial orders balance also dropped to -26 in October from -18, the weakest in nearly three years, with the quarterly business optimism down to -15 from July&#8217;s reading of 6, the lowest since October 2022. The barrage of poor data weighed on the pound, reversing all weekly gains 0.73% lower to $1.2160. Below $1.22100, the chances of further declines remain high, with $1.2090 back into focus.</p>
<h2>Aussie at 2-Week High On the Back of Hawkish CPI Report</h2>
<p>Australian inflation was higher than expected at 1.2% versus forecasts of 1.1% in Q3, increasing the odds of a hike in November as both Core and Annual CPIs also exceeded expectations. The Australian dollar rose to 0.64c in the immediate aftermath and remains supported also by China&#8217;s issuing of additional sovereign debt and raising the budget deficit ratio. 0.6365 is near-term support below 0.6414.</p>
<h2>On The Docket</h2>
<ul>
<li>Ifo Bussines Climate, Current Conditions</li>
<li>UK Treasury Guilt Auction</li>
<li>FR Unemployment Benefit Claims</li>
<li>BOC Interest Rate Decision</li>
<li>New Home Sales</li>
<li>NY Fed Treasury Purchases 10-22.5 yrs</li>
<li>ECB President Lagarde Speech</li>
<li>Fed Chair Powell Speech</li>
<li>Building Permits</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie up by 0.31%, Kiwi at positive 0.08%</li>
<li>Euro 0.10% higher, Pound follows at 0.08%</li>
<li>Loonie down by 0.08%, Franc 0.03% higher</li>
<li>Japanese yen 0.05% in the green zone</li>
<li>Gold 0.12% lower, Silver 0.24% down</li>
<li>Crude and Brent both down by 0.33%</li>
<li>Natural gas in the green by 0.42%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-25-10-2023-26523/">JASPER’S MARKET SQUAWK 25-10-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>