A few hours ago, an agreement to resolve the US debt ceiling crisis was reached between the presidency and the House of Congress, raising hopes that it will give an impetus to the rise in risk in the market.
- Markets are dominated by news that the US presidency and the House of Congress agreed yesterday on a deal that will definitively end the debt ceiling crisis. The deal provides for both spending cuts and raising the debt limit, and makes it clear that the US will not meet the 5.Thursday June. Risky assets were slightly higher on the newsafter some stock markets saw very strong gains at the end of last week, esp the NASDAQ 100 index which broke strongly and reached a new 1-year high price. Attention is now likely to turn to the Fed’s next meeting in June.
- In the forex market, the US dollar sold weaklyagainst its long-term trend. Action today was dominated by weakness in the Swiss franc and strength in the Australian dollar – both of which make sense in terms of rally risk. Trend traders will likely look for long trades in USD/JPY currency pair (the Asian session saw another new 6-month high being reached) while short NZD/USD it can also be attractive. The Kiwi remains weak after the RBNZ last week signaled its cap rate had been reached in a surprise move.
- Turkish President Erdogan has won the second round of the presidential election after being forced into a runoff against his main rival. Markets have responded by continuing to sell off the Turkish lira as there is generally little confidence in the president’s monetary policy, with the lira hitting new all-time lows against the US dollar almost every day.
- There is very likely to be little liquidity in the markets today as it is a public holiday in both the US and the UK, two major markets, especially Forex.
- Later today, US central bank consumer confidence data will be released (expected to show a small decline).
- Australia’s CPI (inflation) data will be released tomorrow, with the annualized rate expected to rise slightly from 6.3% to 6.4%.