Biden, McCarthy need bipartisan support

BY Janne Muta

|May 30, 2023

Investor sentiment in the US has been positive when it comes to AI stocks. There’s also some optimism over a potential debt ceiling agreement, which could lead to the suspension of the debt limit. President Biden and House Speaker Kevin McCarthy are on track to gain enough bipartisan support to suspend the debt limit. However, Biden and McCarthy have several hoops to jump through before the debt ceiling issues can be forgotten.

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The bill goes before the House Rules Committee today, where two conservative Republicans and progressives on the left have already expressed opposition. Then the Senate needs to give its approval too so the timeline is going to be tight. The US faces an impending cash shortage as the Treasury Department projects running out of funds by June 5th.

The strength of the US dollar against major currencies reflected this positive outlook, contributing to the performance of risk assets and bond yields. The main equity indices traded mostly sideways with the DJ (0.06%) closing almost unchanged while NAS inched higher by 0.29%. The German DAX declined by 0.28%. In Japan, the Nikkei 225 reached a new 33-year high, driven in part by the depreciation of the Japanese yen (JPY). The weaker yen enhanced the competitiveness of Japanese exports and benefited companies heavily reliant on international trade, thereby boosting stock prices in the market.

USOIL (-0.43%) slipped in the Asian session today. There is considerable uncertainty surrounding whether OPEC+ will choose to expand their production cuts in response to the recent decline in prices. Today’s main risk event is the release of the CB Consumer Confidence numbers. The release has the potential to create additional volatility. Additionally, market participants will be monitoring the upcoming speech by the Fed's Barkin and Germany's state CPI inflation data for May.

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USDCHF is bullish above 0.9018. Below the level, the market could trade down to 0.8996 and then possibly to 0.8940.

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NZDUSD remains bearish below 0.6070. Above the level, the market might trade to 0.6120.

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NZDCAD is bearish below 0.8253. Above the level, look for a move to 0.8305.

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Gold remains bearish below 1957.26. Above the level, the market probably trades up to 1949.80.

The Next Main Risk Events

  • EUR Spanish Flash CPI
  • USD CB Consumer Confidence
  • AUD RBA Gov Lowe Speaks
  • CNY Manufacturing PMI
  • CNY Non-Manufacturing PMI
  • EUR German Prelim CPI
  • EUR ECB Financial Stability Review
  • USD JOLTS Job Openings
  • CHF SNB Chairman Jordan Speaks
  • USD FOMC Member Harker Speaks
  • EUR CPI Flash Estimate
  • EUR Core CPI Flash Estimate
  • EUR ECB President Lagarde Speaks
  • USD ADP Non-Farm Employment Change
  • USD Unemployment Claims
  • USD ISM Manufacturing PMI
  • USD ISM Manufacturing Prices
  • USD FOMC Member Harker Speaks
  • USD Average Hourly Earnings
  • USD Non-Farm Employment Change
  • USD Unemployment Rate

For more information and details see the TIOmarkets economic calendar.

Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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