JASPER’S MARKET SQUAWK 26-06-2023

<h2>Recession Fears Weigh On Markets</h2>
<p>Friday saw the second-worst performance in US indices since the SVB debacle in March, as markets priced in the effects of global monetary tightening shown in PMIs. US bonds rallied, and the dollar enjoyed safe-haven flows. Aussie was among the most affected by demand worries from China.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-23870 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32.png" alt="" width="1916" height="913" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/06/Untitled-design-32-1536×732.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><em><strong>Chart: EURUSD</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Recession fears weigh on markets, US indices suffer second-worst performance</li>
<li>Global Flash PMIs disappoint, pushing EUR/USD down due to run to safety</li>
<li>Aussie tumbles 1.22% as Australia faces headwinds from Chinese demand worries</li>
<li>WTI plunges 3% following BOE, PMIs but recovers it back by weekly close</li>
<li>UK retail sales help offset some of the PMI drop in Cable</li>
</ul>
<h2>Global Flash PMIs Disappoint, EURUSD Takes A Dive</h2>
<p>June Flash Manufacturing PMIs from Germany, France, Eurozone and the UK were below expectations and slipped deeper into contraction territory. Eurozone Manufacturing PMI dropped to 43.6, well below the 44.8 expected, the worst since the covid contraction. Higher borrowing costs were blamed for the drop. The sobering results were seen weighing on investor sentiment across the board. US June Flash PMI also advanced into negative territory to 46.3, below the 48.7 expected. EUR/USD fell more than 1% on Friday to reach $1.0840 but recovered some losses to close 0.60% lower at $1.0890. The regional low is short-term support above $1.0825, while Friday’s open is resistance.</p>
<h2>Aussie Tumbles 1.22% As Australia Faces Headwinds</h2>
<p>A combination of rising interest in the greenback and growing worries over the outlook for Chinese raw material import demand contributed to the Aussie dollar being among the worst performers on Friday. The AUD/USD pair closed 1.22% lower at $0.6674, opening up next support at $0.6615 unless bulls reclaim 67 cents.</p>
<h2>WTI Plunges 3% Only to Recover It Back</h2>
<p>The recent stimulus package from Beijing was expected to boost oil demand, but the impact has been overwhelming and led to a decline in oil prices. China’s economic recovery has been slow, and the industrial and transport sectors have not shown significant improvement, leading to speculative funds continuing to short the market. On Friday, prices fell to $67.40/bbl, 3% below the open of $69.50/bbl, as demand worries were exacerbated following BOE’s double hike and PMI contraction. Weekly-close flows must have supported the prices back up.</p>
<h2>UK Retail Sales Help Offset PMI Drop in Cable</h2>
<p>Consumers in the UK were reported to be more resilient than expected in May, with retail sales growing 0.3% compared to the -0.3% expected. This helped offset some of the drop in the UK composite PMI, which revealed a decline to 52.8 from 54.0, compared to the 53.2 expected. Both Services and Manufacturing fell, with the latter advancing into contraction to 46.2 compared to the 46.5 expected. Cable tapped into the territory under the $1.27 handle but managed a $1.2715 close, still below the open at $1.2748. An attempt at $1.28 could accelerate the currency unless the support is lost, exposing $1.2661.</p>
<h2>On The Docket</h2>
<ul>
<li>Ifo Business Climate</li>
<li>CBI Distributive Trades</li>
<li>Dallas Fed Manufacturing Index</li>
<li>ECB President Lagarde’s Speech</li>
<li>ECB Forum on Central Banking</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie is 0.12% higher, while Kiwi at +0.47%</li>
<li>Euro and pound 0.10% and 0.13% higher</li>
<li>Yen is 0.22% higher, Franc at +0.09%</li>
<li>Canadian dollar is up by 0.13%</li>
<li>Gold is 0.30% higher, while silver is at +1.82%</li>
<li>WTI is up by 0.23%, while Brent is by 0.30%</li>
<li>Natural gas is off to a good start at +5.53%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-26-06-2023-23863/">JASPER’S MARKET SQUAWK 26-06-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>