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23
May

Eurozone, U.K. and U.S. business PMIs, U.S. New Home Sales

calendar 23/05/2023 - 08:05 UTC

The U.S Dollar gained on Monday, with risk sentiment on the slide as the debt ceiling impasse continued and following hawkish comments from fed officials. The USDX ended the day with a moderate 0.19% gain at 103.141, not far from last week’s two-month high. A similar move was observed among emerging market pairs, with USD/CHN pair and USD/MXN pair gaining 0.35% and 0.76% respectively while USD/ZAR posted losses with a 0.82% decline.

The main stock market indices in the U.S showed mixed results as investors refrained from big bets ahead of a fresh round of talks about raising the U.S debt ceiling. Asian stocks gave up early morning gains on Tuesday after creeping to two-week highs, as investors stayed cautious amid the standoff over the U.S. debt ceiling, while awaiting industrial sector surveys in Europe and the United States.

As the Biden administration continues to negotiate with Congress to reach common ground, the stock market sits in a worry of impending doom. This fear is potentially also spreading to the crypto market. Bitcoin and Ethereum were trading between gains and losses yesterday, ending up with 0.39% and 0.69% recovery gains respectively.

Market focus on Tuesday will shift to a series of business PMI reports expected from the eurozone, the U.K and the U.S. while later in the day U.S. will publish new home sales data.

EUR/USD

The EUR/USD pair was trading on Monday’s session between minor gains and losses and ended the session with a 0.11% decline at 1.08109. The pair is struggling for a clear direction amid a broadly firmer US Dollar while awaiting for eurozone and U.S. business PMI reports.

US President Joe Biden and House Speaker Kevin McCarthy ended discussions on Monday with no agreement on how to raise the US government's $31.4 trillion debt ceiling and will keep talking, while expectations for more interest rates hikes by the European central bank lifted by ECB president comments on Monday, saying that the journey toward taming inflation and bringing it back to the target is not over yet.

Market participants now look forward to the release of the flash PMI prints from the EU and the U.S. for a fresh impetus. The US economic docket also features New Home Sales data and the Richmond Manufacturing Index.

EUR/USD

Gold

Gold prices ticked lower on Monday, posting a decline of 0.56%, negating a short-lived recovery as markets remained focused on negotiations over raising the U.S. spending limit.

Positive comments from Democrat and Republican lawmakers overreaching a potential deal also kept safe-haven demand for the yellow metal limited, as House Speaker Kevin McCarthy said that a U.S. default was unlikely.

Focus this week is now on more U.S. economic indicators, as well as the minutes of the Fed’s May meeting, which are due on Wednesday.

Gold

WTI Oil

Oil prices edged up 0.70% on Monday with a rise in U.S. gasoline futures and forecasts for oil demand to rise in the second half of the year, while supplies from Canada and OPEC+ declined in recent weeks.

The debt ceiling has been a key source of concern for markets over the past few weeks, but despite the positive cues, oil prices are still trading lower so far in 2023, hit chiefly by concerns over slowing economic growth and weaker-than-expected Chinese demand.

WTI Oil

US 500

Wall Street finished mixed on Monday, with the US Tech 100 helped by gains in Alphabet and Meta Platforms, while the US 500 ended near flat as investors refrained from big bets ahead of a fresh round of talks about raising the U.S. debt ceiling.

US 30 posted a minor decline of 0.07% while US 500 and US Tech 100 ended the session with gains of 0.39% and 0.65% respectively.

Investors will look for clues on monetary policy from a slew of Fed speakers and key data points this week such as the April personal consumption expenditure (PCE) index and durable goods.

US 500

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