Market Update – May 16 – US Debt Limit Uncertainties Leave Treasuries & Wall Street mixed!

May 16, 2023

The USDIndex fell to 102.382 from an overnight high of 102.752. It was weaker against all its G10 peers except for JPY. Stocks advanced slightly yesterday but reverted losses this morning. A weaker than expected Empire State report supported expectations the Fed will pause in June, though Fedspeak was mixed on that. Today across Asia and Europe stocks moved broadly lower. UK ILO unemployment rate unexpectedly lifted to 3.9% in the three months to March from 3.8% in the prior period.

Overnight – RBA minutes signal rates may rise again. Topix hits 33-year high amid hopes for Japan stocks revival. FT: “Buyers have been drawn to Tokyo stocks by potential improvements to corporate governance, a return to wage inflation and the perceived stability of the market compared with geopolitics-driven Chinese stocks.” Chinese retail sales and industrial production both fell short of expectations in April. – Instability.

FX – USDIndex closed lower at 102.18. EUR steady within 1.1860-1.0880. JPY failed to break 136.40. Sterling steady for 3 days at 1.2450-1.2530.
Stocks – The US100 rallied 0.65%, while the US500 and the US30 were up 0.30% and 0.14%, respectively.
Commodities – USOil – rose 0.41% to $71.40 per barrel. Gold pullback to 2002.57 this morning.
Cryptocurrencies – BTC steady within $26600-27600.

Today – President Biden and Speaker McCarthy have scheduled a meeting on the debt limit. EU GDP and German ZEW, US Retail Sales and Canadian Inflation. Speeches: Fed’s Bostic, ECB Lagarde, Fed’s William, Logan and Mester.

Biggest FX Mover @ (06:30 GMT) EURGBP (+0.50%). Spiked to 0.8718 from 0.8683. MAs aligned higher, but MACD histogram & signal line remain below 0, RSI 72 & rising. H1 ATR 0.00057, Daily ATR 0.00473.

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Andria Pichidi

Market Analyst

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