Market Drivers – US Session – 29/05/2023

Mohamed Abdelhamid 30 May, 2023 3:08 am Forex Market, Market Update

Tuesday is likely to see bigger market moves after a quiet Monday. Following an agreement in principle between US President Biden and Speaker Kevin McCarthy to raise the debt limit for two years, there was more activity over the weekend than on Monday.

Key Developments

The debt related compromise must now be approved by both the House and the Senate before the June 5 deadline. The US might run out of money on that day, according to Treasury Secretary Janet Yellen. On Wednesday, the Congress is anticipated to vote.

Although price activity was muted because many European markets and Wall Street were closed, the US deal bolstered the market sentiment on Monday. Despite a slight decrease in the US dollar, the decline in the EUR/USD helped the DXY conclude with moderate gains.

Gold fluctuated in price around $1,940, while Silver lost a small amount of Friday’s gains and dropped to $23.15. Bitcoin/USD increased to $27,650 while Ethereum increased by 2.10% to $1,893.

On Monday, the euro underperformed, with the EUR/USD pair retreating from 1.0740 towards 1.0700 and the EUR/GBP pair posting the lowest daily finish since November below 0.8670. GBP/USD closed in a flat position, circling 1.2350. The preliminary Consumer Price Index (CPI) figure for April will be made public on Tuesday in Spain.

At 140.90, the USD/JPY reached new monthly highs before losing steam and declining to 140.00. Tuesday marks the release of the April unemployment rate in Japan.

USD/CHF dipped to around 0.9030 before reversing course and moving back towards 0.9050. The lowest since October 2022, EUR/CHF finished at 0.9685. Tuesday will see the announcement of Q1 GDP figures from Switzerland.

NZD/USD remained under pressure, and was seen hovering around 0.6050. The pair is consolidating recent losses and is trading 225 pips below the level it had a week ago. Building permits data is also due in New Zealand.

USD/CAD dropped below 1.3600, with the Loonie favored by the better mood across the markets and also by stronger crude oil prices.

A record low closing was achieved by the Turkish lira. After Recep Tayyip Erdogan won the Turkish presidential runoff election on Sunday, the USD/TRY exchange rate crossed the 20.00 mark for the first time.

What to watch on Tuesday

During the Asian session, Japan will report April’s unemployment rate, while New Zealand and Australia will release April’s building permits data. In Europe, Spain will release preliminary inflation figures. In the US, attention turns to Congress after the debt-limit deal. On Tuesday, US data will include consumer confidence and housing numbers. Friday will see the release of the NFP report.

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