US Debt Ceiling Agreement Reached, Earnings Reports Awaited

　　

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On Monday, the U.K. markets were closed for a bank holiday, while U.S. markets were closed for Memorial Day. European stocks had a turbulent week, with the Stoxx 600 index hitting an eight-week low but recovering some losses on Friday due to a rally in tech stocks, driven by Nvidia’s impressive results.

In the U.S., political leaders are working to secure bipartisan support for the debt ceiling bill in Congress before the June 5 deadline to prevent a federal default. The U.S. House of Representatives could vote on the bill as early as Wednesday, followed by the Senate later in the week. Market concerns are expected to ease if the debt ceiling deal is approved, allowing investors to shift their focus to the economic outlook and interest rates.

The Federal Reserve, European Central Bank, and Bank of England were anticipated to pause rate hikes and assess when to change direction, but recent data has complicated the situation for all three institutions. In Asia-Pacific markets, there was a mixed performance, with Japan’s Nikkei 225 reaching its highest levels since July 1990.

Over the weekend, President Joe Biden and House Majority Leader Kevin McCarthy reached an agreement to raise the debt ceiling and avoid a default. The legislation will be voted on by Congress as early as Wednesday. Both Republican and Democratic support is crucial for the bill to pass. The agreement came just before the “X date” on June 5, which was the earliest potential default date signaled by the Treasury Department. The prolonged negotiations between the White House and congressional leaders had concerned investors, who were already dealing with inflation and a banking crisis.

Investors will also focus on May jobs data to be released on Friday, as well as the April Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics on Wednesday. Additionally, corporate earnings from HP Inc. and Salesforce are expected on Tuesday and Wednesday, respectively.

Major Pair Movement

On Monday, the US markets remained closed in observance of Memorial Day, resulting in a subdued atmosphere in the currency market. With limited trading activity, volatility was relatively low. The Dollar Index managed to register a slight rise of 0.05%, indicating a modest strengthening of the US dollar compared to a basket of other major currencies. Among the currency pairs, the EURUSD experienced a slight decrease of 0.08%, reflecting a slight weakening of the euro against the US dollar. Surprisingly, the GBPUSD pair showed a rise of 0.13%, despite the closure of the UK market. This suggests that market participants may have responded to other factors, such as economic news or geopolitical developments. Meanwhile, the USDJPY pair saw a minor decline of 0.10%, signaling a marginal decrease in the value of the US dollar compared to the Japanese yen. Conversely, the AUDUSD pair demonstrated an upward movement, rising by 0.26%, indicating a relative strengthening of the Australian dollar against its US counterpart.

In terms of commodities, gold remained relatively stable, exhibiting a marginal increase of 0.05%. The price of gold often serves as a safe-haven asset during uncertain times, and its modest rise may reflect investors seeking stability amid the subdued market conditions. On the other hand, USOUSD (WTI), which represents the price of West Texas Intermediate crude oil, experienced a decline of 0.16%. This dip could be attributed to various factors, including global supply and demand dynamics, geopolitical tensions, or market sentiment regarding the energy sector. Overall, with the closure of US markets and limited trading activity, the currency and commodity markets displayed muted movements on Memorial Day.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
USD	CB Consumer Confidence	22:00	99.1

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