JASPER’S MARKET SQUAWK 27-01-2023
Gold Reverses on Better US GDP
The quarterly growth rate in the US rose above economists’ and analysts’ expectations on Thursday, albeit lost momentum quarter–on-quarter. The data pointed to a more resilient than anticipated US economy, only a few days from the Fed’s policy meeting, sending gold 0.95% down.
Chart: EURUSD
Key Factors for Today
- US GDP better than expected, boost US yields up, gold down
- Nat Gas at new low before nearly-full reversal
- Crude remains above $80/bbl handle on data, Lunar year
- Brexit talks at new level, with progress on both sides
Series of US Data Boost US Yields Higher
Advance Q4 GDP from the US topped expectations at 2.9% compared to the 2.6% expected, though personal consumption was below forecast. Durable goods orders increased more than expected, and initial jobless claims were lower than expected, offering yields and the DXY a 0.23% boost.
Gold was impacted mostly due to its extended rally recently, with USD/JPY and EUR/USD all in the red. The metal could see some respite closer to $1900/oz unless $1950/oz is breached. The yen, 0.50% weaker than the greenback, struggles to get past 130.00, and the euro, down 0.23% against the dollar, trades in a narrow 50-pip range with a peak at $1.09
Crude Prices 1.15% Higher on US Data, China
Following the higher-than-expected GDP number, crude prices increased to $82/bbl. This was despite rising yields contributing to a stronger dollar and likely supported by pent-up demand from travelling to China for the seven-day Lunar Year.
US Natural Gas Inventories Fall Again
The weekly EIA Natural Gas inventories were lower than expected as Freeport LNG received FERC approval to restart its plant in Texas. Reports also surfaced that the EU is considering a $100/bbl price cap on Russian diesel. Australia’s competition regulator warned that it was still possible there could be a natural gas shortfall this year. Prices spiralled 4% lower at $2.70/cf to an April low on Thursday but were able to turn the tide with a ‘hammer’ daily bar, eying $3.00/cf.
Irish Foreign Minister says Brexit talks at “new level”
In an interview on Bloomberg TV, Irish Finance Minister Michael McGrath said the EU is “very anxious” to reach a deal on Northern Ireland. The Irish FM also met UK’s Jeremy Hunt on Thursday and said that trading talks between Ireland and UK are at a “new level”. GBP/USD was nearly unchanged and remains below the top of $1.2450. $1.2340 is a short-term support.
On the docket
- ECB President Lagrade Speech
- US Core and Headline PCE
- Home Sales and Michigan Consumer
FX 1-day relative performance (USD)
- Yen, Kiwi and Aussie nearly unchanged vs USD
- Franc and pound 0.25% lower against greenback
- Euro and loonie down 0.18% compared to dollar
- Gold and silver 0.32% and 0.58% lower
- Crude and brent 0.36% higher, each
- Natural gas up by 1.30%
