Forex Today: With US debt ceiling deal reached, focus turns to economic data

Share:

After a quiet Monday, Tuesday will likely bring greater market movements. During the Asian session, Japan will report April’s unemployment rate, while New Zealand and Australia will release April’s building permits data. In Europe, Spain will release preliminary inflation figures. In the US, attention turns to Congress after the debt-limit deal. On Tuesday, US data will include consumer confidence and housing numbers. Friday will see the release of the NFP report.

Here is what you need to know on Tuesday, May 30:

There was more action over the weekend than on Monday following an agreement in principle between US President Biden and Speaker Kevin McCarthy to lift the debt limit for two years. Now, the House and the Senate must pass the deal, with the June 5 deadline looming. That day, according to Treasury Secretary Janet Yellen, the US could run out of cash. The vote in Congress is expected to be on Wednesday.

The agreement in the US helped market sentiment on Monday, although price action was subdued with many European markets and Wall Street closed. The US dollar weakened modestly, and the DXY managed to close with modest gains, favored by the decline in EUR/USD.

The euro lagged on Monday, with EUR/USD retracing from 1.0740 toward 1.0700 while EUR/GBP posted the lowest daily close since November below 0.8670. GBP/USD ended flat, hovering around 1.2350. On Tuesday, Spain will release the preliminary reading of April’s Consumer Price Index (CPI).

USD/CHF dropped to the 0.9030 area and then bounced back toward 0.9050. EUR/CHF closed at 0.9685, the weakest since October 2022. Switzerland will release Q1 GDP data on Tuesday.

USD/JPY hit fresh monthly highs at 140.90 and lost momentum, approaching 140.00. The April Unemployment Rate is due in Japan on Tuesday.

AUD/USD rose for the second day in a row, favored by the improvement in market sentiment. The recovery found resistance at 0.6550. April Building Permits will be released on Tuesday.

NZD/USD remained under pressure, and was seen hovering around 0.6050. The pair is consolidating recent losses and is trading 225 pips below the level it had a week ago. Building permits data is also due in New Zealand.

USD/CAD dropped below 1.3600, with the Loonie favored by the better mood across the markets and also by stronger crude oil prices.

Gold moved sideways around $1,940, while Silver gave up a small fraction of Friday’s gains, falling to $23.15. Cryptocurrencies rose, with BTC/USD advancing to $27,650 and Ethereum climbing 2.10% to $1,893.

The Turkish lira posted a record low close. USD/TRY rose above 20.00 for the first time, following Recep Tayyip Erdogan’s victory in Sunday’s presidential runoff in Turkey.