JASPER’S MARKET SQUAWK 31-07-2023

<h2>Markets Return to Optimism After Central Banks</h2>
<p>After the Fed and ECB provided more ambivalence about a rate hike in September than expected, markets turned to the upside, including the S&amp;P 500 chalking up a third consecutive weekly gain. Treasury yields weakened, with the dollar gaining primarily on the yen.</p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-24664" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5.png" alt="" width="1915" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5.png 1915w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/07/Untitled-design-5-1536×732.png 1536w" sizes="(max-width: 1915px) 100vw, 1915px" /></p>
<p>Chart: USD/JPY</p>
<h2>Key Factors For Today</h2>
<ul>
<li>Markets Bounce Back as Central Banks Signal Rate Hike Uncertainty</li>
<li>Gold Supported By Dollar Drop As Deflation Concerns Maintain Momentum</li>
<li>BOJ’s YCC Adjustment Announcement Sends Yen Plummeting</li>
<li>Disappointing Eurozone Data Follows ECB’s Dovish Stance</li>
<li>Aussie On Path to Breaking Losing Streak Due To</li>
<li>Hike Speculation</li>
</ul>
<h2>Intact Deflation Narrative Assist Gold Higher</h2>
<p>June core PCE aligned with expectations, decelerating to 4.1% from 4.6% prior, with the University of Michigan consumer sentiment survey showing expectations over the next year unchanged. Personal spending accelerated beyond forecasts, but personal income came in below expectations. Over 50% of the S&amp;P 500 have reported so far, with over 80% beating analysts’ estimates. Gold saw an 0.74% uptick following weakness in dollar, reaching $1960 per ounce. Expected resistance is at $1972, and support is at $1945 per ounce.</p>
<h2>BOJ Tweaks YCC, Yen Tumbles</h2>
<p>Following reports the day before, the BOJ announced it would widen the YCC bands on Friday, softening its borders. This allows Japanese treasury yields to appreciate by 0.5%. The BOJ also said that the band’s limits would be considered guidelines instead of rules, allowing for some flexibility. That would mean the BOJ could occasionally allow yields to rise even higher without automatically triggering bond buying. Meanwhile, Tokyo’s core inflation was reported at 4.0%, the highest since 1982. USD/JPY rose 1.24% on Friday and continues to ascend early Monday. Back above 141.00, the next resistance lies at 142.25, with expected support at 140.90.</p>
<h2>Eurozone Data Disappoints After Dovish ECB</h2>
<p>French and German flash Q2 GDP readings provided mixed results, with French GDP growing less than expected and German GDP contracting less than expected. Germany’s inflation rate aligned with expectations of 6.40%, higher than 6.1% prior. The ECB Survey of Professional Forecasters (SPF) cut its inflation outlook for this year by a decimal, but raised it for next year, effectively seeing inflation remain persistently higher for longer and not reaching target until 2025. EUR/USD crawled slightly above $1.10 again but remains glued around the handle until $1.0975 or $1.1047 give way.</p>
<h2>AUD to End 3-Day Losing Streak Amidst Hike Speculation?</h2>
<p>Polls of economists show a majority support a rate hike despite the recent inflation data, with major Australian banks split on whether there will be a hike at this meeting or the next. AUD is trying to end its 3-day losing streak early Monday after witnessing a 0.95% drop on Friday. If bulls lose $0.6622, next support lies at 66 cents, whereas resistance can be seen at 67 cents upwardly.</p>
<h2>On The Docket</h2>
<ul>
<li>BOE Consumer Credit</li>
<li>EA GDR Growth</li>
<li>EA Inflation</li>
<li>Chicago PMI</li>
<li>Dallas Fed Manufacturing Index</li>
<li>Judo Bank Manufacturing PMI</li>
<li>Japan Unemployment Rate</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.50% and 0.64% down</li>
<li>Euro 0.04% lower, while pound up by -0.02%</li>
<li>Yen 0.54% down, Swissy 0.18% lower</li>
<li>Loonie down by 0.02%</li>
<li>Gold 0.41% down, Silver 0.69% lower</li>
<li>Crude and brent 0.45% and 1.18% lower</li>
<li>Natural gas 0.27% higher</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-31-07-2023-24663/">JASPER’S MARKET SQUAWK 31-07-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>