JASPER’S MARKET SQUAWK 27-11-2023
<h2>Upside Continues During Truncated Week</h2>
<p>Investors continued sitting on hefty gains for another week during a truncated session due to rising chances of Fed rate cuts. December’s rate chances have remained unchanged, but recent data point to 80bps of cuts in 2024, marking the Fed’s next move as a cut.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-27296 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13.png" alt="" width="1914" height="914" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13.png 1914w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13-1024×489.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13-768×367.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/11/Template-Daily-13-1536×733.png 1536w" sizes="(max-width: 1914px) 100vw, 1914px" /></p>
<p><strong>Chart: GOLD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Gold Soars to a 6-Month High as Investors Brace for Rate Cuts</li>
<li>German GDP Contracted, But Business Sentiment Surged</li>
<li>Pound Gains Ground, Nears 3-Month High on Rising Optimism</li>
<li>Japan’s Service Inflation Rises Chances of BOJ Exit from Loose Policy</li>
<li>China’s Industrial Profits Dipped Amidst Costs and Power Shortages</li>
</ul>
<h2>Gold to a 6-Month High as Rate Cut Looms</h2>
<p>Despite disruptions, US business activity remained steady in November at 50.7, but services contracted and private employment declined. However, Black Friday sales saw a 2.5% rise from last year, signalling a promising start to the holiday shopping season. The dollar closed lower on Friday on rising chances of Fed cuts (brought forward to May now), with the gold also supported on Monday as it hit $2020 an ounce, leaving behind the $2K support.</p>
<h2>German GDP Contracts, But Business Sentiment Improves</h2>
<p>The German economy saw a slight contraction of 0.1% in Q3 amid supply chain disruptions and rising energy prices. However, business sentiment improved to 87.3 in November, indicating potential growth in Q4 despite missing expectations of 87.5. Meanwhile, ECB’s Holzmann has expressed his desire to cut the PEPP reinvestments in March, inciting debates on the economic recovery strategies post-pandemic. Germany’s court ruled that the government’s relocation of 60B euros of unused pandemic debt to the climate fund was illegal, causing a budget crisis. Eurodollar was on the rise Friday, securing $1.09 but failing to get past $1.09 for an attempt at $1.10.</p>
<h2>Pound Nears 3-Month High as Optimism Raises</h2>
<p>UK consumers exhibited greater optimism from the still bad -28 consensus, with the GfK release coming in at -24 instead. Advertised salaries also hit their lowest level in six months in October, indicating easing inflation pressure. The British pound rose to $1.26 on Friday and is on its way towards $1.2673 while trading above the round support. However, further gains may be limited with the CBI data out at -36 versus -30.</p>
<h2>Japan’s Service Inflation Rises, Indicating Price Pressures</h2>
<p>Japan’s corporate service inflation witnessed a climb in October as services PPI rose from 2% to 2.3%, weighing on the chances of a sooner BOJ exit from its ultra-loose monetary policy. However, BOJ Governor Kazuo Ueda highlighted that the higher inflation was a product of cost-push factors and not demand-driven to warrant policy normalisation, pushing the breaks on USD/JPY’s drop just below 149. 148.40 and 149.90 continue to be major levels of short-term direction.</p>
<h2>China’s Industrial Profits Dip Amidst High Costs and Power Shortages</h2>
<p>Despite still growing, China’s industrial sector has seen a 7.8% drop in profits from January to October, marking a significant downturn from the 66.9% surge reported in the previous year. High raw material costs and power shortages were among the contributing factors to this decline. The Chinese Yuan lost some 0.30% in early Monday trading, bringing the USDCNY rate to a high of 7.1645 to form intraday resistance. 7.1284 remains a regional support in case of a surprise. Also, the PBOC was seen setting the midpoint rate at 7.1159, the first weakening in five sessions.</p>
<h2>On The Docket</h2>
<ul>
<li>ECB President Lagarde Speech</li>
<li>New Home Sales</li>
<li>Dallas Fed Manufacturing Index</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie up 0.05% while Kiwi 0.07% down</li>
<li>Euro and Pound 0.16% and 0.19% higher</li>
<li>Loonie 0.14% in the red, Frank at -0.06%</li>
<li>Japanese yen 0.31% in the green zone</li>
<li>Gold 0.38% up, Silver at positive 1.33%</li>
<li>Crude and Brent down 0.67% and 0.77%</li>
<li>Natural gas 3.17% in the red zone</li>
</ul>
<p>The post <a href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-27-11-2023-27292/">JASPER’S MARKET SQUAWK 27-11-2023</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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