Market Update – May 22 – US Debt Ceiling Issues Focuses Minds & Markets

By
Analysis Team
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The USDIndex has declined into 103.00 as the problems over the US debt ceiling enter a crunch week – President Biden to meet Kevin McCarthy today- with the US Treasury set to run out of cash on June 1. The solid front displayed at the G7 meeting saw China put on notice (despite Biden saying that US-China relations should improve “very shortly”) and unified pressure on Russia. In response China, banned chips from Micron. US stocks were flat into close on Friday, with Futures & Asian markets also directionless on little economic data today.  The US500 failed to hold the 4200 level after testing 4212, has not closed at 4200 since August. All three were higher for the week.  Yields are mixed with very short-term rates higher but 2yr and 10yr lower.  
This Week – Global PMI’s, RBNZ, FOMC Minutes, US GDP Durable Goods & Personal Income/Spending.  
  • FX – USDIndex declined under 103.00 earlier from 103.50 highs on Friday. EUR tested into 1.0750 and weekly lows on Friday back to 1.0820 now. JPY breached over 138.50 again on Friday, before sinking to 134.50 and back to 138.00 now. Sterling collapsed to test under 1.2400 on Friday but trades at 1.2450 now.   
  • Stocks- US markets closed flat on Friday (-0.14% to -0.33%). FL -27.24 after poor Earnings & weak outlook. US500 closed -6.07pts, 4191, FUTS are trading at 4200, above the key resistance at 4175. 

  • Commodities – USOil – Futures have lost close to $3 a barrel from Friday’s high, at $73.50 to $70.700 today, over debt ceiling concerns and US/China mixed messaging. Gold – reclaimed $1975 into close on Friday from a test into the $1950 zone, and holds the $1975 level to start the week. 
  • Cryptocurrencies – BTC continued to decline, today testing $26.5k lows from Thursday but trades at $26.8k now.  

Today – EZ Consumer Confidence (Flash), Speeches from Fed’s Bullard & Barkin, ECB’s Lane, de Guindos & Elderson.

Biggest FX Mover @ (06:30 GMT) NZDCAD (+0.30%). From last week’s breach of  0.8370 lows the pair is once again testing 0.8500 at 0.8480 now. MA’s aligned higher, MACD histogram & signal line positive but falling, RSI 62.35 & rising, H1 ATR 0.00118, Daily ATR 0.00717.

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Stuart Cowell

Head Market Analyst

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