Following Monday’s choppy action, financial markets stay relatively quiet early Tuesday as investors await S&P Global PMI surveys for the Eurozone, the UK and the US. Market participants will continue to keep a close eye on headlines surrounding the debt-limit talks and comments from central bank officials.

US President Joe Biden and House Speaker Kevin McCarthy failed to reach an agreement on raising the government’s $31.4 trillion debt ceiling ahead of the estimated June 1 deadline. In a statement released following the meeting, “we reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” Biden said. The sides are expected to continue talks over the phone throughout this week.

US stock index futures trade virtually unchanged on the day and the benchmark 10-year US Treasury bond yield holds steady above 3.7%. In the meantime, the US Dollar Index (DXY) fluctuates in a tight channel slightly below 130.50. In addition to S&P Global PMIs, the US economic docket will also feature April New Home Sales and Richmond Fed Manufacturing Index for May.

EUR/USD struggles to stage a recovery and continues to trade at around 1.0800 early Tuesday. The data from Germany showed in the European morning that the HCOB Manufacturing PMI dropped to 42.9 in May from 44.5 in April, revealing that the business activity in the manufacturing sector continued to contract at an accelerating pace.

GBP/USD stays under modest bearish pressure and edges lower toward 1.2400. Bank of England Governor (BoE) Andrew Bailey and other policymakers will be testifying before the UK Treasury Select Committee from 0915 GMT.

USD/JPY climbed toward 139.00 and touched its highest level since November during the Asian trading hours on Tuesday before staging a downward correction. As of writing, USD/JPY was trading flat on the day near 138.50. Earlier in the day, the data from Japan revealed that Jibun Bank Manufacturing PMI and Jibun Bank Services PMI improved to 50.8 and 56.3 in May, respectively.

Gold price turned south amid rising US Treasury bond yields and closed the day in negative territory. XAU/USD continues to stretch lower early Tuesday and was last seen losing nearly 1% on a daily basis below $1,960.

Following Monday’s indecisive action, Bitcoin gained traction early Tuesday and climbed toward $27,300. Ethereum broke out of its two-week old horizontal channel and was last seen rising 2% on the day at $1,850.

The US Dollar (USD) stays on the back foot to start the new week as market participants stay focused on headlines surrounding the debt limit negotiations in the US. In the European session, Germany’s Bundesbank will release its monthly report and Eurostat will publish the preliminary Consumer Confidence Index data for May. There won’t be any high-impact macroeconomic data releases featured in the US economic docket but several Fed officials will be delivering speeches.

While speaking on Friday, FOMC Chairman Jerome Powell reiterated that they are strongly committed to return inflation to the 2% target. Regarding the potential impact of the recent banking crisis on the policy, Powell said that rates may not need to rise as much as it would have otherwise. Although the US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, registered losses on Friday, it ended up closing the second straight week in positive territory.

Following his phone call with House Republican Speaker Kevin McCarthy on Sunday, US President Joe Biden said that the conversation went well and added that they will speak again on Monday. Meanwhile, US Treasury Secretary Janet Yellen said over the weekend that June 1 is the “hard deadline” to raise the debt ceiling.

EUR/USD touched its lowest level since late March at 1.0760 on Friday but managed to stage a technical correction ahead of the weekend. The pair trades in a narrow channel slightly above 1.0800 early Monday.

Despite the broad-based US Dollar strength, GBP/USD held its ground and closed virtually unchanged last week. Nevertheless, the pair is having a difficult time gaining traction at the beginning of the week and moving sideways below 1.2450.

USD/JPY gained more than 200 pips last week and registered its highest weekly close since November. The pair stays quiet in the European morning and fluctuates below 138.00.

Gold price stayed under heavy bearish pressure amid rising US Treasury bond yields last week and came within a touching distance of $1,950. Although XAU/USD recovered decisively on Friday, it is struggling to build on those gains early Monday while trading slightly below $1,980.

AUD/USD trades in the red below 0.6650 early Monday. In the Asian session on Tuesday, S&P Global will release Manufacturing and Services PMI reports for Australia.

Bitcoin posted marginal losses on Sunday but stayed in its weekly range. Early Monday, BTC/USD trades flat on the day slightly below $27,000. Ethereum continues to fluctuate in a tight channel at around $1,800 following the previous week’s indecisive action.

Risk remains tepid at the start of the European session, as the Asian equities traded mixed, failing to benefit from the Wall Street rally. The US Dollar consolidates weekly gains near two-month highs, tracking the sluggish performance in the US Treasury yields across the curve.

The optimism around a potential US debt ceiling deal was faded by a Reuters report that cited, “the small but powerful Republican faction warned this week that they could try to block any agreement to raise the $31.4 trillion debt ceiling from passing the House of Representatives if the accord does not contain ‘robust’ federal spending cuts.”

Additionally, fresh US-Sino tensions over Taiwan are keeping traders cautious. US Trade Representative’s (USTR) office announced late Thursday, “the US and Taiwan reached agreement on the first part of their ‘21st Century’ trade initiative, covering customs and border procedures, regulatory practices, and small business.” The US-Taiwan agreement clouds the outlook for a visit to the US next week by a Chinese commerce official.

The US stock futures, however, are adding 0.15% on the day, as markets continue to remain hopeful over a debt ceiling deal by Sunday when Biden and McCarthy resume talks.

Despite a risk-on market profile, the US Dollar extended its three-day upsurge on Thursday, courtesy of the hawkish comments from US Federal Reserve (Fed) policymakers and rising bets of a 25 basis points (bps) rate hike in June. Markets are now pricing a 36% probability of a 25 bps June rate hike vs. a mere 10% chance seen at the start of this week.

Dallas Fed President Lorie Logan said that data at this time does not support skipping an interest rate hike in the June meeting. Fed Governor Philip Jefferson noted that inflation remains too high whereas St Louis Fed President James Bullard advocated higher rates once again, suggesting that they are insurance against inflation.

Looking ahead, markets stay focussed on headlines concerning the US debt ceiling and speeches by central banks’ officials, in the absence of top-tier economic data releases on both sides of the Atlantic. Fed Chair Jereme Powell’s speech will hog the limelight while the end-of-the-week flows will likely remain in play.

EUR/USD is picking up fresh bids to resume the rebound toward 1.0800 early Europe, as the US Dollar corrects in tandem with the US Treasury bond yields. Eurostoxx futures are up 0.05%, at the moment. Citing sources, Bloomberg reported that the European Central Bank (ECB) is said to step up scrutiny of bank liquidity and may raise requirements.

GBP/USD is recapturing 1.2400, having briefly dipped below the latter. Bank of England (BoE) policymaker Jonathan Haskel is due to give a speech on how to measure productivity at the Economic Statistics Centre of Excellence Conference on economic measurement 2023 ‘New directions in the measurement of productivity: Integrating concepts and data at 09:45 GMT.

USD/JPY is seeing a sharp correction toward 138.00, as the Yen is recovering ground after inflation in Japan accelerated again in April, with the core Consumer Price Index rising 3.4% from a year earlier. Core-core CPI, which strips away energy and fresh food prices, climbed 4.1%, reaching the highest since September 1981.

AUD/USD is holding its recovery gains near 0.6650, shrugging off resurfacing US-Sino tensions. The US and Taiwan reached an agreement on the first part of their ‘21st Century’ trade initiative, covering customs and border procedures, regulatory practices, and small business. The US-Taiwan agreement clouds the outlook for a visit to the US next week by a Chinese commerce official, somewhat weighing on investors’ sentiment.

USD/CAD is trading under pressure below 1.3500 amid a pullback in the US Dollar and higher WTI prices.

Gold price is attempting a dead cat bounce to test $1,970, looking to recapture the critical 50-Daily Moving Average (DMA) support-turned-resistance at $1,985.

Cryptocurrencies are trading listlessly, with Bitcoin sidelined below $27,000 while Ethereum is challenging the $1,800 mark.

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The financial markets trade with caution early Thursday, as the haggling over the US debt ceiling continues to underscore default fears. The Asian stocks witnessed limited gains, despite a solid upsurge in Wall Street indices.

On Wednesday, risk sentiment improved and limited the US Dollar’s upbeat momentum after President Biden expressed confidence there’ll be no US default while a rally in regional banks stocks also lifted the overall mood. Regional banks rally was led by Western Alliance Bancorp a day after the lender said its deposits grew by more than $2 billion in the quarter ended May 12.

At the time of writing, the US S&P 500 futures are down 0.11% on the day, hinting at a sense of caution, as investors weigh the latest developments surrounding the US debt ceiling issue. Citing a draft letter written by senators to President Biden, CNBC News reported early Thursday, “we write to urgently request that you prepare to exercise your authority under the 14th Amendment of the Constitution, which clearly states: ‘the validity of the public debt of the United States…shall not be questioned.'”

“Using this authority would allow the United States to continue to pay its bills on-time, without delay, preventing a global economic catastrophe,” the letter appealed to Biden.

Meanwhile, the US Dollar Index struggles to extend its recovery momentum following the late pullback on Wednesday. The retreat in the US Treasury bond yields seems to be capping the upside in the US Dollar, for now.

Heading into a data-quiet European calendar, choppy trading is likely to extend within the G10 currencies, with the market sentiment set to the key driver. Later in American trading, attention will be on a bunch of mid-tier US economic data releases, including weekly Jobless Claims, Philly Fed Manufacturing Index and the Existing Home Sales data.

Speeches from the European Central Bank (ECB) and Federal Reserve (Fed) officials will also entertain traders in the sessions ahead.

EUR/USD is trading on the defensive below 1.0850, as the US Dollar holds the previous gains. Financial markets in Germany, Switzerland and France are closed in observance of Ascension Day, leaving the pair gyrating in a familiar range amid thin liquidity.

GBP/USD is holding losses after facing rejection just below 1.2500. The pair stays on the back foot in the European morning ahead of Bank of England (BoE) Governor Andrew Bailey’s testimony on Quantitative Tightening before the UK Parliament’s Treasury Select Committee (TSC) at 09:15 GMT. BoE policymakers Dave Ramsden and Ben Broadbent will also testify.

USD/JPY is consolidating losses near 137.50 after retreating from daily highs of 137.75 to 137.29, tracking the weakness in the US Treasury bond yields. The pair is in the red despite the mixed Japanese Trade data, which showed the country’s exports and imports data fell short of market expectations.

AUD/USD was a big mover in Asia, initially rebounding toward 0.6700 before reversing sharply to near 0.6630 on the back of disappointing Australian employment data. The latest data from the Australian Bureau of Statistics (ABS) showed on Thursday, net employment fell by 4,300 in April from March, when it rebounded by a revised 61,100. Meanwhile, the Unemployment Rate unexpectedly rose to 3.7% during the same period. Currently, the pair is trading at around 0.6650, digesting upbeat comments from China’s Ambassador to Australia.

NZD/USD is regaining ground above 0.6250 as New Zealand’s yields spiked after the NZ Treasury called for a no recession in its Budget release.

USD/CAD is paring back gains toward 1.3450 amid a steady US Dollar and a minor pullback in WTI prices after Wednesday’s nearly 4% rally.

Gold price remains vulnerable while below the 50-Daily Moving Average (DMA), looking to extend the previous declines toward the $1,970 round figure.

Risk-averse trading is also witnessed across the crypto board, with Bitcoin edging lower toward $27,000 while Ethereum defends the $1,800 mark so far.

Choppy action continues in the financial markets mid-week despite renewed optimism about a debt limit deal in the US. The US Dollar Index holds comfortably above 102.50 while the 10-year US Treasury bond yield fluctuates above 3.5%. Eurostat will release revisions to April inflation data. Later in the day, April Housing Starts and Building Permits will be featured in the UE economic docket.

Reuters reported late Tuesday that the meeting between US President Joe Biden, top congressional Republican Kevin McCarthy and other congressional leaders on debt ceiling ended on an upbeat note. Coming out of the meeting, McCarthy told reporters that it was possible to get a deal by the end of the week. Early Wednesday, US stock index futures trade mixed, reflecting the cautious market stance. Meanwhile, the US Census Bureau reported that Retail Sales in the United States rose 0.4% in April to $686.1 billion. This reading followed the 0.7% (revised from -0.6%) decrease recorded in March and came in below the market expectation for an increase of 0.7%.

EUR/USD rose above 1.0900 on Tuesday but failed to gather further recovery momentum. The pair trades in a very narrow channel slightly above 1.0850 early Wednesday. Market participants will pay close attention to comments from European Central Bank (ECB) officials, who have been delivering mixed remarks regarding the policy outlook since the beginning of the week.

GBP/USD closed in negative territory below 1.2500 on Tuesday. The pair stays on the back foot in the European morning and continues to push lower toward 1.2450. Bank of England (BoE) Governor Andrew Bailey will deliver a speech at British Chambers of Commerce Global Annual Conference at 0950 GMT.

The data from Japan showed earlier in the day that the Gross Domestic Product expanded at an annualized rate of 1.6% in the first quarter. This reading followed the 0.1% growth recorded in the previous quarter and came in much higher than the market expectation of 0.7%. USD/JPY gathered bullish momentum during the Asian trading hours and was last seen trading at its highest level in two weeks near 136.80.

USD/CAD fell toward 1.3400 after Statistics Canada reported on Tuesday that the annual Consumer Price Index rose 4.4% in April, compared to the market expectation of 4.1%. With retreating crude oil prices weighing on the commodity-sensitive Canadian Dollar, however, the pair regained its traction and climbed above 1.3500 early Wednesday.

Gold price broke below $2,000 and touched its weakest level since early May at $1,985 late Tuesday, pressured by rising US Treasury bond yields. XAU/USD stays relatively quiet at around $1,990 on Wednesday.

Following Monday’s modest rebound, Bitcoin failed to make a decisive move in either direction on Tuesday. BTC/USD fluctuates in a tight channel near $27,000 in the European morning. Ethereum managed to register small gains for the third straight day on Tuesday. ETH/USD seems to have stabilized slightly above $1,800 mid-week.

The positive shift seen in risk mood made it difficult for the US Dollar to find demand on Monday and the US Dollar Index (DXY) snapped a two-day winning streak. Early Tuesday, the DXY holds its ground as markets await April Retail Sales data from the US. In the European session, Eurostat will release the Gross Domestic Product growth data for the first quarter and ZEW Survey – Economic Sentiment for the Euro area and Germany will also be looked upon for fresh impetus. Market participants will continue to pay close attention to comments from central bank officials.

US stock index futures trade modestly lower on the day and the benchmark 10-year US Treasury bond yield stays in negative territory below 3.5%. Following the 0.6% decline recorded in March, Retail Sales in the US are forecast to rise 0.7% in April. US President Joe Biden will meet with Republican House of Representatives Speaker Kevin McCarthy and three other top congressional leaders at 1900 GMT for the next round of debt limit negotiations.

US April Retail Sales forecast: US Dollar unlikely to find reprieve.

Early Tuesday, the data published by the UK’s Office for National Statistics (ONS) revealed that the ILO Unemployment Rate edged higher to 3.9% in the three months to March. This reading came in higher than the market expectation of 3.8%. In the same period, wage inflation, as measured by Average Earnings Including Bonus, held steady at 5.8% but surpassed analysts’ estimate of 5.1% by a wide margin. Pound Sterling came under heavy selling pressure after the mixed jobs report and GBP/USD dropped below 1.2500.

EUR/USD registered small gains on Monday but closed below 1.0900. The pair stays relatively quiet early Tuesday. Citing Eurosystem sources, MNI reported on Monday that the European Central Bank (ECB) was most likely to raise key rates once or twice more in this tightening cycle.

Supported by rising US Treasury bond yields, USD/JPY climbed to its highest level in over 10 days above 136.00 on Monday. The pair seems to have gone into a consolidation phase early Tuesday and was last seen trading a few pips below 136.00.

USD/CAD fell sharply on Monday and closed below 1.3500 as rising crude oil prices helped the commodity-sensitive Canadian Dollar gather strength. Later in the day, Statistics Canada will publish the Consumer Price Index data for April, which is forecast to rise 4.1%, compared to 4.3% in March.

During the Asian trading hours, the data from Australia revealed that the Westpac Consumer Confidence Index worsened to -7.9% in May from 9.4% in March. AUD/USD stays under modest bearish pressure on Tuesday and trades in negative territory below 0.6700 after having failed to stabilize above that level on Monday.

Following a quiet Asian session, Gold price turned south in the European morning and dropped toward $2,000.

Bitcoin rose toward $28,000 on Monday but lost its bullish momentum before testing that level. BTC/USD stays on the back foot early Tuesday and trades in negative territory near $27,000. Ethereum posted small gains on Monday. In the European morning, ETH/USD fluctuates in a tight channel slightly above $1,800.

The action in financial markets remain subdued at the beginning of the week and the US Dollar Index (DXY) consolidates last week’s gains, whilc holding above 102.50. May Industrial Production data from the Eurozone will be featured in the European economic docket. Later in the day, the Federal Reserve Bank of New York will release the Empire State Manufacturing Index. In the early trading hours of the Asian session on Tuesday, Industrial Production and Retail Sales data from China will be looked upon for fresh impetus.

Late Friday, the University of Michigan reported that the Consumer Confidence Index dropped to 57.7 (preliminary) in May from 63.5 in April. Furthermore, the one-year inflation expectation component edged lower to 4.5% from 4.6% but the 5-year inflation expectation rose from 3.0% to 3.2%, the highest reading since 2011. Supported by the risk-averse market environment, the DXY gained nearly 1.5% last week and registered its highest weekly close since late March. Early Monday, US stock index futures are up around 0.3% and the benchmark 10-year US Treasury bond yield hold steady slightly below 3.5%.

Earlier in the day, US President Joe Biden reportedly said that he expects to meet with Congressional leaders for the next round of debt limit negotiations on Tuesday.

EUR/USD broke below 1.0900 on Friday and lost nearly 100 pips on the day. The pair stages a technical correction and clings to small gains above 1.0850 early Monday.

GBP/USD lost nearly 200 pips last week and snapped a three-week winning streak. Although the pair edges higher in the European morning, it continues to trade below 1.2500.

USD/JPY gathered bullish momentum in the Asian session and touched its highest level in over 10 days at 136.26 before retreating toward 136.00 into the European session.

Gold price closed the previous week virtually unchanged as buyers managed to defend the key level on Friday. XAU/USD holds its ground early Monday and trades in positive territory near $2,020.

Ahead of Tuesday’s key data releases from China, AUD/USD stays bullish early Monday and continues to stretch higher toward 0.6700. Similarly, NZD/USD was last seen rising 0.5% on the day above 0.6200.

Following a quiet weekend, Bitcoin has gathered recovery momentum and advanced to the $24,500 area early Monday. Ethereum is up nearly 2% in the European morning, trading above $1,800.

Following the slide seen with the initial reaction to April inflation data on Wednesday, the US Dollar Index stages a rebound early Thursday. The Bank of England (BoE) will announce monetary policy decisions later in the day and Governor Andrew Bailey will comment on the policy outlook and respond to questions from the press. April Producer Price Index (PPI) and weekly Initial Jobless Claims will be featured in the US economic docket.

Bank of England Preview: Bailey to break Pound’s rally with reluctance to raise rates further.

The US Bureau of Labor Statistics announced on Wednesday that annual inflation in the US, as measured by the change in the Consumer Price Index (CPI), edged lower to 4.9% in April from 5% in March, compared to the market expectation of 5%. US Treasury bond yields turned south after inflation data and the benchmark 10-year yield snapped a four-day winning streak and lost more than 2% on the day. In turn, the US Dollar Index closed in negative territory. Mixed market mood, however, helped the USD stay resilient against its rivals in the late American session.

During the Asian trading hours on Thursday, monthly CPI in China decreased 0.1% in April, brining the rate of annual change down to 0.1% from 0.7% in March. Meanwhile, the data from Australia revealed that the Consumer Inflation Expectations climbed to 5% in May from 4.6% in April, matching the market expectation. AUD/USD stays on the back foot early Thursday and trades near 0.6750.

The BoE is widely expected to raise its policy rate by 25 basis points to 4.5% following the May policy meeting. The BoE will also release its revised projections for growth and inflation. Market participants will pay close attention to the vote split and comments from Bailey regarding additional rate increase in the near future. GBP/USD closed virtually unchanged for the second straight day on Wednesday and trades in a tight channel at around 1.2600 ahead of the event.

Bank of England Preview: A risk event for the GBP/USD rally.

EUR/USD registered small daily gains on Wednesday but failed to reclaim 1.1000. As market participants assess the latest remarks from European Central Bank (ECB) officials, the pair stays in negative territory at around 1.0950.

Gold price spiked to the $2,050 area after US inflation data but failed to preserve its bullish momentum. XAU/USD stays indecisive near $2,030 early Thursday.

Pressured by falling US yields, USD/JPY lost nearly 100 pips on Wednesday before going into a consolidation phase slightly above 134.00 early Thursday. The Bank of Japan’s Summary of Opinions for April meeting reiterated that they must continue the current easy policy given uncertainty over global outlook.

Bitcoin fluctuated in a wide range on Wednesday but ended up closing the day flat below $28,000. BTC/USD edges lower toward $27,500 early Thursday. Ethereum gained traction in the early American session but failed to cling to its recovery gains on Wednesday. In the European morning, ETH/USD continues to stretch lower toward $1,800.

The US Dollar Index, which tracks the US Dollar’s (USD) performance against a basket of six major currencies, seems to have gone into a consolidation phase after having closed the first two days of the week in positive territory. Although markets stay relatively quiet early Wednesday, April Consumer Price Index (CPI) data from the US should ramp up volatility in the second half of the day.

Wall Street’s main indexes closed in negative territory on Tuesday amid a lack of progress in debt ceiling negotiations. US stock index futures trade modestly higher in the European morning on Wednesday and the benchmark 10-year US Treasury bond yield fluctuates slightly above 3.5%.

EUR/USD extended its downward correction on Tuesday and closed well below 1.1000. With hawkish comments from European Central Bank (ECB) governors helping the Euro hold its ground, the pair edges higher early Wednesday but remains below 1.1000. The data from Germany showed earlier in the day that the annual CPI rose 7.2% in April, matching the flash estimate and the market expectation.

GBP/USD’s losses remained limited despite risk aversion on Tuesday as markets refrain from betting Pound Sterling weakness ahead of the Bank of England’s policy announcements on Thursday. The pair continues to fluctuate above 1.2600 early Wednesday.

USD/JPY registered small gains on Tuesday and trades above 135.00 in the European morning. The data from Japan revealed that the Leading Economic Index declined to 97.5 in March from 98 in February. Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda said on Wednesday that the BoJ’s ETF buying was helping underpin consumption and capex by preventing volatile market moves from hurting public confidence.

Following a quiet European session, Gold price edged higher in the second half of the day on Tuesday and closed in positive territory, supported by safe-haven flows. XAU/USD stays relatively calm on Wednesday and moves up and down in a tight channel at around $2,030.

Bitcoin struggled to find direction on Tuesday and closed the day virtually unchanged above $27,500. BTC/USD stays under modest bearish pressure in the European morning. Ethereum registered small losses on Tuesday and continues to trade within a touching distance of $1,800 early Wednesday.