JASPER’S MARKET SQUAWK 11-09-2023
Upcoming Data Keep Markets on Edge
Indices moved modestly higher on low news flow but saw upward momentum curtailed by stronger global yields as investors weighed a barrage of key data this week as ECB and Fed speakers enter the pre-rate decision blackout period. The dollar capped a week of solid performance.
Chart: USDJPY
Key Factors for Today
- Markets Nervous as Data Deluge Approaches
- Gold Holds Steady Despite Fed Hike Speculation
- Yen Surges as BOJ Hints at Easing Policy Shift
- German Inflation Data Dampens Expectations of ECB Rate Hike
- Canadian Dollar Boosted as Unemployment Numbers Surprise
Gold Flat Despite Further Indications of Fed Hike
The US yield curve flattened on Friday as investors priced in a higher chance of a rate hike later this year, with chances of a November hike rising to 47% from 35% last week. Gold closed somewhat mixed below $1920 despite spiking to $1930 an ounce but trades near Friday’s peak early Monday. A strike at automakers by UAW this week is seen as increasingly likely and may hurt risk appetite, bringing $1935.oz into focus.
Yen Spikes After BOJ Hints that Easing Could End This Year
In an interview with the Japanese press over the weekend, BOJ governor Kazuo Ueda said there might be sufficient information by year-end to judge if wage-price pressures continue, which is a key factor for the decision to end the bank’s ultra-easing policy. The yield on the 10-year JGB jumped 5bps to the highest level since 2014, sending USD/JPY towards 146 and leaving 147 as resistance.
German Inflation Confirms Lower Chance of ECB Hike
German final August CPI was confirmed at an annual rate of 6.1%, compared to 6.2% in July. Markets are seen pricing in a 35% chance of a rate hike when the ECB meets later in the week. EUR/USD was mixed on Friday but peaks up early Monday with the potential of reaching $1.0766 rising. $1.0686 is expected support.
Loonie Bid After Canada Unemployment Surprises
August net change in employment nearly doubled forecasts at 39.9K compared to 20K expected, with the unemployment rate dropping to 5.5% compared to the 5.6% forecast. The Canadian dollar strengthened, leaving behind resistance at $1.3685 and currently flirting with $1.36.
On The Docket
- IT Industrial Production
- BOE Pill Speech
- BOE Mann Speech
- Westpac Consumer Confidence Change
- NAB Business Confidence
- New Yuan Loans
FX 1-Day Relative Performance (USD)
- Aussie and Kiwi up by 0.97% and 0.79%
- Euro 0.32% higher, Pound leads at +0.43%
- Yen 1.08% upbeat, Franc 0.17% higher
- Canadian dollar 0.26% higher
- Gold and Silver are up by 0.40% and 0.80%
- Crude 0.37% lower down, while Brent flat
- Natural gas 2.15% in the red
