JASPER’S MARKET SQUAWK 15-12-2022

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JASPER'S MARKET SQUAWK 15-12-2022

Dollar on the rise after Fed

Fed hiked by 50bps as expected but also raised the median forecast for the Fed funds to 5.1%, leaving a disconnect between the market and the Fed.

Key events for today:

• Risk assets down after Fed’s 50bps as terminal rate goes up


• WTI continues to swing following a weekly API build


• Euro and pound slide on data, strikes, despite slowing inflation

JP sends dollar a little higher amid hawkish tone

FOMC Chair Jerome Powell reiterated that the full effects of tightening have yet to be felt and that there was still a ways to go with rates. With the markets having priced in a terminal rate below 4.85% and the median forecast changed to 5.1%, Powell’s hawkish tone led risk markets lower and supported the dollar. The Dollar index closed the NY session 0.12% higher but remains in a tight range between 103.40 and 104.00.

Crude rises but reverses following API report

The weekly DOE report showed an unexpected build in crude and gasoline inventories, the largest build since early 2021, curbing the upward trend that fuel prices had been maintaining. The marginally stronger dollar also weighed on the price towards the end of the session, sending prices to a 0.82% loss. $80/bbl remains a firm resistance while $75/bbl support.

Euro 0.24% lower on fall through most of session

Eurozone industrial production data showed a larger drop than expected after falling to -2% instead of -1.2%, with the previous month’s measure also revised. Von der Leyen repeated the line from many other European leaders that the US inflation reduction act posed a risk to a level playing field. EUR/USD ended 0.24% lower, with $1.063 and $1.07 forming Thursday’s range.

UK strikes intensifying seem more disturbing

UK news was dominated by an increasing number of unions going on strike around the holidays, with it being the main subject of PMQs. Reports circulated that Rishi Sunak was considering an anti-strike bill. UK monthly inflation finally came in below expected, with the annual rate falling below 40-year highs. Core CPI also came in below expectations, but cable finished the trading day 0.26% lower after receiving rejection at $1.2450. $1.2360 is intraday support bulls must defend to keep the tide upwards.

Speculation China to push internal demand

Chinese media reported that the government will release a plan to expand domestic demand through 2035, noting that the country faces many constraints in expanding the internal economy. Chinese industrial production came in below expectations and at the slowest pace since May. In parallel, retail sales contracted more than expected, also the worst performance since May. USD/CNY was trading up for most of Thursday and ended 0.17% higher.

On the docket

• BOE interest rate decision


• ECB interest rate decision


• US retail sales, Philly manufacturing and jobs claims


• EIA weekly inventory report

FX daily performance

• Aussie and kiwi plunged 0.45% and 0.28%


• USD/ZAR surges to a 0.39% close


• Silver takes a nosedive 2.80% lower, with gold suffering losses of 0.84%


• Natural gas surprises with an uptick of 0.73%

The post JASPER’S MARKET SQUAWK 15-12-2022 appeared first on Key To Markets Blog.

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