Markets Mixed Ahead of More Debt Talks
US markets had a mixed day yesterday as they waited on any updates on the debt ceiling issue. The Dow closed down 0.42%, the S&P up 0.02% and the Nasdaq finished up 0.5% on the day. We did hear from House Republican Speaker Kevin McCarthy after the close but there was little in the way of fresh details for investors as he confirmed that talks will continue and they are on “the right path’. The dollar remained trading near recent highs and short end treasury yields maintained their bid tone as Fed officials once again leaned more on the hawkish side of recent arguments.
Currencies Looking to Break New Ground
Major currencies have remained trading to the lower end of recent ranges against the dollar as traders await the next fundamental updates – and these could come at any point in the next few days. Fed officials seem to be a lot more hawkish than market pricing now and unless data turns soon then expect this to be corrected across currency markets. UsdJpy has already seen a significant technical break higher and both the Cable and Euro are now sitting close to strong support levels. The stalemate on US debt is occupying many traders’ attention at the moment but for those looking at the interest rate differentials then the chances of another hike in June, or a strong reduction in the likelihood of cuts later this year could lead to a break lower against the greenback.
First Data of the Week to Hit Markets
US markets did little to inspire traders yesterday as they gave mixed messages into what could be a very busy rest of the trading week. We are scheduled to get our first round of data today and will be hit by a plethora of PMI numbers, both Manufacturing and Services. The European sector see’s the release of French, German, British and Eurozone data over the course of the first couple of hours of the trading session and then we have the Flash PMI numbers out of the states after the New York open. Once again though expect the US debt talks to dominate sentiment as we move through the later sessions.
