The USD is the strongest and the GBP is the weakest as the NA session begins. It is a holiday in most European countries in observance of Ascension Day (banks are closed). US yields are higher. US stocks are modestly higher. Walmart reported better earnings this morning with EPS coming in at $1.47 versus $1.32 expected. Revenues were higher at $152.3 billion versus $148.76 billion expected. Sales ex-gasoline were up 7.3% versus 5.1%. Walmart shares are trading at $151.81 versus $149.53 at the close yesterday. Oil prices have slightly dropped, awaiting the outcome of the debt limit talks. A successful agreement could bolster the prices. Yesterday, the inventory data showed a sharp build of 5.0 million barrels vs an expected draw of -1.2M barrels expected. The price moved higher by 2.78% (go figure).

U.S. President Joe Biden is in Japan for the G7 meeting discussing key global issues, while the spotlight stays on the resolution of the debt ceiling talks back home. The President has expressed optimism, emphasizing that the U.S. „will not default“ and citing ongoing negotiations with top Congress members. He is expected to return to Washington on Sunday to aid in reaching an agreement, which Republican leader Kevin McCarthy believes is feasible by the weekend. Despite guarded optimism, no formal resolution has been reached, and a potential government default looms as early as June 1.

The day’s economic agenda commences at 8:30 am with the release of the Canadian New Housing Price Index (NHPI) data. The forecast suggests a slight dip of -0.1%, compared to the previously recorded 0.0%. In the US at the same time, Unemployment Claims are expected to decrease to 253K from the previous count of 264K (the 4-week average was the highest since November 2021). The Philadelphia Fed Manufacturing Index is also set to be unveiled with an anticipated improvement to -19.5 from a previous -31.3. Recall, the empire manufacturing index fell sharply on Tuesday (to -31.8 from 10.8 in the previous month). At 9:05 am, remarks from FOMC Member Jefferson are scheduled, followed by FOMC Member Barr at 9:30 am. Their commentary could provide valuable insights into the Federal Reserve’s perspective on the state of the economy and monetary policy.

At 10:00 am, the release of US Existing Home Sales data, is forecasted to decline to 4.30 million from the previous figure of 4.44 million. Additionally, the Conference Board Leading Index on a month-on-month basis is expected to report a smaller decrease of -0.6%, an improvement from the previous -1.2%. FOMC Member Logan is also slated to speak during this hour. The sharp decline is forecasting a recession in the US going forward (nothing new).

A tentative release of the Bank of Canada’s (BOC) Financial System Review is on the docket, with no specific time provided. At 11:00 am, remarks from the Bank of Canada’s Governor Macklem are scheduled, potentially shedding light on Canada’s monetary policy direction.

Overnight, in the Asian Pacific session disappointing labor market data for April was released. Jobs in the economy shrunk while the unemployment rate jumped higher (however, the unemployment remains near record lows so it is not all bad). Nevertheless, the data today in addition to the subdued wages data published yesterday, along with other indications showing some steam coming out from the Australian economy should give the Reserve Bank of Australia reason enough to pause at its upcoming June 6 meeting. New Zealand PPI was lower than expectations.

Montana is the first US state to ban TicTok. The decision is expected to be challenged in the courts. If the ban is maintained it will go into effect in January and will raise tensions between the US and China.

A look around the markets is showing.

• WTI crude oil is down $0.05 or -0.07% at $72.78
• Gold is down $5.70 or -0.29% at $1975.77
• Silver is down $0.18 or -0.84% at $23.54
• Bitcoin is back about the $27,000 level at $27,377. The price low reached $26,550.

In the premarket for US stocks, the major indices are marginally higher after yesterday’s gains:

• Dow industrial average is up 14.23 points after yesterday’s sharp 408.63-point rebound
• NASDAQ index is up 37 points after yesterday’s 157.51-point rise
• S&P index is up 8.25 points after yesterday’s 48.89-point rise

Although it is a banking holiday in Europe, stocks continue to trade:

• German DAX +1.64%
• Frances +0.92%
• UK’s FTSE 100 +0.49%
• Spain Ibex +0.64%

in the US debt market, yields are higher:

• 2-year yield 4.186% +3.0 basis points
• 5-year yield 3.617% +2.6 basis points
• 10-year yield 3.602% +2.1 basis points
• 30-year yield 3.89% +1.1 basis points

This article was written by Greg Michalowski at www.forexlive.com.

Headlines:

• The dollar’s resilience should not be understated
• EUR/USD hovers near key support with large expiries in play today
• USD/JPY flirts with key resistance region, 140 being eyed next?
• AUD/USD looks resigned to test the March and April lows again
• DAX closes in on record highs again as equities maintain the optimism
• ECB’s de Guindos: There is still scope to keep raising rates
• BOE’s Bailey: I do not envisage balance sheet returning to pre-financial crisis level

Markets:

• USD leads, GBP lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.9 bps to 3.600%
• Gold down 0.3% to $1,975.66
• WTI crude down 0.2% to $72.67
• Bitcoin up 0.1% to $27,365

It was a quiet session with not many headlines, as some parts of Europe are on holiday and with there being no major economic releases whatsoever.

That did not stop the dollar though, as it continues its grind higher and to test key levels in EUR/USD and USD/JPY.

The former is closing in on key support near 1.0800, although there are large option expiries limiting the downside push for now. Meanwhile, the latter is also running up against recent highs around 137.77-91 at the moment as buyers look for a breakout towards 140.00.

This comes despite equities continuing to show much optimism, with European indices rallying hard after the Wall Street gains yesterday. US futures are also slightly higher, so that is helping with the mood. Of note, the DAX is just inches away from fresh record highs set last year at 16,285-90.

As the dollar holds more resilient again, GBP/USD is seen down 0.4% to 1.2440 as the retreat this week continues while AUD/USD is down 0.3% to 0.6640 as the aussie is dragged down by softer jobs data earlier.

It’s a rare sight to see the dollar move higher in a time where stocks are also performing well, but it is what it is at the moment in markets.

Traders have been quick to price in relatively dovish Fed expectations since the regional banking crisis but perhaps that is now backfiring as high inflation is keeping the Fed on course to hold rates higher for longer, alongside economic conditions that are holding up in the US.

This article was written by Justin Low at www.forexlive.com.

Market picture

The crypto
market capitalisation rose 0.55% over the past 24 hours to 1.134 trillion. Late
Wednesday afternoon, another attempt was made to break above 1.14 trillion,
following the US stock market rally on the government debt ceiling news.
However, it has so far failed to stay in this territory.

Bitcoin is
up 0.7% at $27.2K, staying within the recovery trend that has been in place
since the 12th. However, this recovery is painfully slow, and local resistance
at $27.5K, which has been supporting since late March, remains in place.

According to
Santiment, large Bitcoin holders continue accumulating BTC – over the past five
weeks, cryptocurrency holdings have increased by nearly 85,000 BTC ($2.3
billion). Santiment believes Bitcoin is now in a consolidation phase before a
new surge.

News background

The stock
and cryptocurrency markets will collapse if the US defaults, says Mike McGlone,
senior strategist at Bloomberg Intelligence. He is bearish on cryptocurrencies
but bullish on gold.

Lightning
Labs, the developer of the Lightning Network, announced the release of Taproot
Assets Protocol v 0.2, which avoids potential delays in transaction processing
due to congestion on the Bitcoin network.

The UK
Parliament has proposed regulating cryptocurrencies as gambling. Crypto assets
can potentially be used for fraud and money laundering, posing a high risk to
consumers and the economy.

Tether’s
issuance team has decided to invest up to 15% of its net profits in Bitcoin
monthly to diversify its reserves. It has already invested $1.5 billion in BTC.
The bulk of USDT’s collateral is still in short-term US Treasuries.

According to
a Bloomberg survey, only 31 of the top 60 cryptocurrency companies have
successfully undergone external financial audits or confirmed reserves. Many
auditors are reluctant to work with cryptocurrency companies or need more
expertise.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

On the daily chart below for the S&P
500, we can see that the price action remains rangebound just beneath the 4175
level. This has been a really strong resistance and we can expect some quick
rally once the price breaks out decisively with buyers jumping in aggressively
and sellers folding fast.

Overall, the market hasn’t done
much since April as we’ve just been bouncing up and down between the 4175
resistance and the 4061 support. This is the type of market that
chops out many traders that suffer from impatience. At the moment, it’s a
waiting game until we get a clear breakout supported by a fundamental catalyst.

In the 4
hour chart below, we can see that we have an even tighter range between the
4175 resistance and the 4120 support. Such compressions generally lead to big
moves once the market breaks out. The big spike yesterday was due to positive
news on the debt ceiling front, but it’s more likely that in case of a deal
we get a “sell the fact” reaction rather than a rally. The risk events to watch next are the US Jobless Claims
today and Fed Chair Powell speech tomorrow.

In the 1
hour chart below, we can see more closely the tight range we’ve been stuck into
since the start of May. A break above the 4175 level should lead to a quick
rally into the 4206 high. That will be the last line of defence for the sellers
as a break beyond that will lead to further upside into the 4300 area. On the
downside, the sellers may lean again on the 4175 resistance and target the 4120
support first, and 4061 support next. Keep close eye on these levels.

This article was written by ForexLive at www.forexlive.com.