JASPER’S MARKET SQUAWK 08-12-2022

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JASPER'S MARKET SQUAWK 08-12-2022

Dollar’s fall minimal to attract trend traders

The yield on the US benchmark treasury fell below 3.5% after a set of mixed data, and downward revisions came in. Despite some geopolitical rumblings, the dollar retreated through the session, and crude fell lower amid rising recession fears.

Key factors for today:

• Dollar and yen come under pressure on poor data


• EZ GDP seen mostly euro-negative on expenditures revision


• UK house index growth slashed in half


• Crude to fresh low but regained control


• BOC dropped rate hike talk despite hiking

Greenback slides on poor data

The US reported Nonfarm productivity and unit labour costs data on Wednesday. Productivity exceeded expectations of 0.6% at 0.8%, but a considerable downward revision of costs caused the dollar to drop.

USD/JPY supported by weak yen

Japan’s final Q3 GDP growth rate was revised upwards by a decimal but remained in contraction. The country reported a surprise current account deficit. The BOJ published a paper urging “further discussion” of stickiness in service prices and the uncertainty of inflation expectations. The USD/JPY rose despite a weaker dollar, as the yen was under increased pressure. 137.87 is the weekly resistance, with 136.00 as short-term support.

Euro largely flat despite a softer dollar

Eurozone’s final Q3 GDP growth reading was revised slightly higher too, but the markets hardly reacted as the positive implications were tempered by the revision showing higher than expected government expenditures. EUR/USD was unchanged despite a weaker dollar, with the $1.045-$1.055 acting as an intraday range.

UK housing woes push cable lower

UK’s November Halifax price index showed that growth slowed to half on an annualised rate, the most significant drop since 2008 and the fifth consecutive decline. The pound weakened as strikes took centre stage ahead of the holidays. PCS Union was the latest to announce the action, with some civil servants going on strike later in the month. $1.23 is major resistance, and $1.21 support.

Crude hits 1-year low on higher inventories

DOE crude drawdown was higher than expected, and gasoline inventories grew faster. The market seemed not to be affected by a ratcheting up of rhetoric by Putin over the war in e after the seaborne oil price cap went into effect. Von der Leyen said she was confident a gas price cap would be agreed on soon.

WTI slid to $72/bbl during Wednesday’s trade but ended 0.76% higher on news of easing restrictions in China. Natural gas bumped 2.78%, eying the $6.00/cf during early Thursday.

BOC hikes, but signals pause

The BOC raised rates by 50bps as expected but dropped mention of further rate hikes in a move that could be interpreted as signalling that there won’t be another hike at the next meeting. In its statement, the BOC pointed to core inflation coming down and that prices might be losing momentum. It also reiterated that expected growth is likely to stall during the start of next year.

FX daily performance in USD terms

• Japanese yen 0.10% lower vs greenback


• Kiwi 0.18% higher compared to the dollar


• Euro, pound, Aussie and Loonie relatively flat

The post JASPER’S MARKET SQUAWK 08-12-2022 appeared first on Key To Markets Blog.

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