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30
May

Eurozone M3 money supply, U.S. HPI and CB Consumer Confidence

calendar 30/05/2023 - 07:53 UTC

The U.S. dollar continues to trade sideways against most major currencies on Monday, with the USDX ending the day almost unchanged. Against the Turkish lira, the greenback gained 0.74% on Monday and is seen moving higher into positive territory early on Tuesday, trading at 20.30 as at 07:10 AM GMT. Other emerging market pairs such as the USD/ZAR, the USD/INR and the USD/MXN ended the session almost unchanged against the greenback.

Progress is expected in the long-awaited deal to raise the U.S. debt ceiling, as President Joe Biden said on Saturday that him and McCarthy reached a budget agreement on the basis of lifting the $31.4 trillion debt ceiling until January 2025 in exchange for limits on spending and cuts in government programs. It remains to be seen if this will go through both houses of a divided Congress.

With the U.S. debt deal in the spotlight, investors appear to be waiting on the side-lines for further developments on the U.S. debt situation. The main U.S. stock market indices showed little movement on account of Memorial Day yesterday. In particular, the US 500 fell by a mere 0.20%, the US 30 dipped by 0.23% and fell by 0.21%. Trading is also subdued in Europe where the Germany 40 fell by almost 0.30%, the France 40 fell by 0.34% and the Spain 35 dropped by 0.37%.

Negative sentiment is observed in the metals market on Tuesdays open, with gold and silver dropping by 0.31% and 0.77% respectively as at 07:30 AM GMT following a plunge early last week, with investors looking ahead to nonfarm payrolls data on Friday, to gauge just how much more the Fed could potentially hike rates.

On Tuesday, markets will be watching closely on data indicating the total quantity of euros in circulation and deposited in banks, a significant gauge for ECB’s interest rate decisions. Later in the day the U.S. will publish data on housing prices and consumer confidence. In the week ahead, the focus will shift to U.S. job openings and non-farm payrolls data.

EUR/USD

The pair EUR/USD remains depressed at 10-week lows surrounding the 1.0700 pressured by a hawkish Federal Reserve and doubts about the European Central Bank’s ability to lift the rates further. The Euro lagged on Monday and did not manage to break a negative streak versus the dollar.

Market participants are waiting for further developments, following the weekend's agreement in Washington to suspend the debt limit. However, legislation needs Congress's approval, so the situation still needs attention.

On Tuesday, the US will report housing data and consumer confidence.

EUR/USD

Gold

Gold prices fell slightly on Tuesday, posting a decline of 0.11% sticking to more than two-months lows. The precious metal tumbled from record highs hit earlier this month as several hawkish signals from Fed officials saw investors pivot into the dollar.

In addition, rising uncertainty deriving from a possible U.S. debt default failed to provide significant support to the precious metal. But with policymakers now signalling that they had reached a tentative agreement to raise the debt ceiling and avert a potentially crippling default, gold faces even more pressure.

Focus this week is now on more U.S. economic cues, particularly nonfarm payrolls data for May.

Gold

WTI Oil

WTI Oil contract ended the session 0.47% lower on Monday, paring back earlier gains, as optimism over the debt ceiling agreement was eased by renewed expectations that the Federal Reserve will carry on with its long-running campaign of interest rate hikes.

Anticipation of more economic cues from major oil importer China also kept traders on edge, ahead of key manufacturing and service sector data for May due on Wednesday.

Focus is also on a string of U.S. economic readings this week, most notably nonfarm payrolls data for May due on Friday. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, are due to meet on June 4.

WTI Oil

US 500

U.S main indices where trading between minor gains and losses on Monday as U.S markets were shut on account of Memorial Day yesterday. However, the main indices were trading higher at the start of the session following the news of a tentative deal between the Joe Biden administration and Republican lawmakers. The agreement comes just days before the so-called “X date” on June 5, which is the earliest date the Treasury Department has signalled the U.S. could default on debt obligations.

US Tech 100 and US 500 at the end of the session posted minor losses of 0.21% and 0.20% respectively, while US 30 ended the session 0.23% lower.

Ahead in Tuesday's trade, market participants will be monitoring Fresh housing price index and CB consumer confidence data.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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