Photo - Andreas Zanin
Andreas Zanin
Analysis, Market Analysis | September 18, 2023

JASPER’S MARKET SQUAWK 18-09-2023

Dampened Risk Appetite Weighs on Markets

Stocks gave back Thursday’s gains on Friday as traders digested a triple witching day and the UAW’s strike against automakers. Gold soared during the relatively harsh environment, backed by a surprising upbeat in the NYES Manufacturing Index that saw ‘price paid’ as non-inflationary.

Chart: GOLD

Key Factors for Today

  • Gold Prices Soar from on NY Manufacturing Component Amidst UAW Strike
  • Strong US and China Industrial Data Boost WTI to Fresh November High
  • Post-ECB Reaction Sees Euro Bears Take a Breather Before Next Move
  • Natural Gas Prices Spike in EU and US Following Chevron LNG Strike

Flat ‘Price Paid’ and UAW Strike Bolster Gold Prices

The New York Federal Reserve’s Empire State Manufacturing index rose to 1.9 in September, higher than the -10 expected and in expansionary territory compared to August’s reading of -19. The report showed that the ‘price paid’ component remained unchanged while ‘prices received’ improved substantially. Coupled with a risk-off appetite from UAW’s strike against the Big Three automakers, gold prices soared 0.70% to $1925/oz on Friday, leaving behind support at $1905/oz to march -potentially- towards $1940/oz.

Industrial Data Send WTI to Fresh November High

Industrial production improved in both the US and China, exceeding expectations and suggesting increasing demand. US Industrial production advanced to 0.2% from 0%, while economists had forecasted a -0.5 contraction. China’s release showed a figure of 4.5% compared to the 3.9% expected. WTI has been on an upward spiral, boosted by OPEC+ cut extensions and Storm Daniel affecting Libya’s export terminals, and continued to rise on the improving economic data. The next resistance lies at $93.80 a barrel, with support being the $90/bbl handle.

Post-ECB Reaction Gives Euro Bears Room for Breathing

After sliding to a 6-month low following the ECB’s signal to end its hiking cycle on Thursday, EUR/USD bears took a breather on Friday as the broader US index was also seen experiencing a slight drop. Although the currency took a beating following Lagarde’s remarks, traders appeared to be securing some gains ahead of the weekend close and this week’s widely anticipated FOMC. Next support is expected at $1.06, with resistance near $1.0730.

Natural Gas in the EU and US Spike After AU LNG Strike

On Friday, Chevron workers in Australia also went on a strike, adding to an appetite for natural gas on disagreements over pay, overtime, security, and schedules. European gas prices rose 9% as leading importers of Australian LNG, with the US counterpart up 2.90% by the session’s end. With Chevron confirming the end of negotiations, prices could accelerate towards or past the $3/cf barrier unless bulls fail to defend $2.40/cf.

On The Docket

  • ECB Guindos Speech
  • Bundesbank Monthly Report
  • CA Housing Starts, PPI
  • ECB Panetta Speech
  • Bundesbank Mauderer Speech

FX 1-Day Relative Performance (USD)

  • Aussie and Kiwi 0.29% and 0.34% up
  • Euro 0.11% up, Pound 0.15% higher
  • Yen 0.12% higher, Franc by +0.09%
  • Canadian dollar up by 0.09%
  • Gold and Silver 0.16% and 0.17% in green
  • Crude and Brent 0.64% and 0.57% higher
  • Natural gas barely higher at 0.08%
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