House Republican leader McCarthy has said his deadline is June 1 but you can never trust a politician.
In any case, a deal will get done and the US won’t default, the same as always. I think the market has already moved on.
This article was written by Adam Button at www.forexlive.com.
On the week:
Broadcom was a big winner on Friday, gaining 11% with Qualcom and Intel making some headway as the chip rally broadens out.
This is the fifth week in a row of gains for the Nasdaq and it’s very much looking like the double bottom in Oct/Dec was the low.
This article was written by Adam Button at www.forexlive.com.
the EUR’s net speculative long positioning witnessed a significant decrease, dropping to 173,736 contracts compared to 187,089 in the previous week. As investors appeared to cut their bullish bets, the shift suggests some caution may be seeping into the market sentiment regarding the euro’s performance.
The Japanese yen experienced a considerable surge in short positions, hitting 80,660, marking a notable increase from the previous 64,791. This indicates a growing bearish outlook among traders on the yen. Similarly, AUD saw a decrease in its short positioning to 49,081, a slight relief from the preceding week’s 54,594.
In contrast, the British pound’s long position fell marginally from 12,593 to 11,589.
The Swiss Franc saw its small short position cut in half to 903 from the previous week’s 1,859, signalling a potential shift in traders‘ sentiment towards a less bearish outlook.
In net week’s data, I would expect to see more signs of US dollar buying as the dollar surged, inflation rose and the debt ceiling fiasco neared a conclusion. Given the size of the euro net position, it’s particularly vulnerable.
This article was written by Adam Button at www.forexlive.com.
Bank of America has reaffirmed its base case expectation that the Federal Reserve will not implement a rate hike in June, though the bank maintains an inclination towards a hike in the future, noting that it’s a „close call“.
According to BofA, three conditions need to be met for a Fed rate hike: 1) strong economic data, 2) an increase in the debt ceiling, and 3) subdued regional bank stress.
The bank also believes that inflation remains too persistent for the Fed to commit to a prolonged pause in rate increases. Even if the Fed decides to forego a rate increase in June, BofA suggests that it will keep the possibility of a July hike on the table.
Separately, Goldman Sachs economists continue to chase their tails. After calling for a pause after the March bank stress and then seeing a hike anyway, they’re now teetering with their June call.
„While we continue to expect the Fed to pause deletion in June, this morning’s stronger-than-expected consumer spending and inflation data and the wide range of views by FOMC participants on the appropriate policy path make this a close call,“ Goldman Sachs economists wrote today.
The market is pricing in a 70% chance of a hike in June and a 100% chance of a hike in either June or July.
This article was written by Adam Button at www.forexlive.com.
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