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Most Asian equity markets experienced positive trading overnight following the passage of the debt ceiling bill by the US House of Representatives, which helped avert a potential default. The bill has now moved to the Senate for consideration. Additionally, market sentiment was boosted by the unexpected expansion in Chinese Caixin Manufacturing PMI data. The Nikkei 225 index also saw support from various data releases, including business capital expenditure, which grew at its fastest pace since Q3 2016. Japanese firms also reported their largest recurring profits for Q1. The Hang Seng index and Shanghai Composite index initially displayed some indecision but later gained momentum. They were bolstered by the positive Chinese Caixin Manufacturing PMI data, which compensated for the weaker official PMI readings seen the previous day. Overall, the region saw predominantly positive market movements as investors reacted to data.

In the UK, today’s UK money supply and bank lending figures, along with the results of the Bank of England Decision Makers Panel, will offer valuable insights into the future trajectory of UK interest rates. Of particular interest will be any indications regarding the potential slowdown in mortgages and other types of lending. While markets anticipate a decrease in mortgage approvals compared to the previous month, they are expected to remain above the levels observed earlier this year. The Decision Makers Panel will be closely monitored for any signs of easing wage and/or price expectations. In addition, the second readings of May's PMI manufacturing data for the UK and the Eurozone are expected to confirm the initial estimates. These readings are unlikely to be revised and are anticipated to reveal that manufacturing activity continues to lag behind the service sector. These data points will contribute to a better understanding of the current economic landscape in the UK and Eurozone, providing valuable insights for policymakers and market participants alike.

As the next European Central Bank monetary policy announcement approaches in two weeks, the release of Eurozone CPI inflation data for May holds significant relevance. Initial figures from the largest economies in the region already indicate a larger-than-expected decline in inflation. Consequently, we have revised our forecast for headline inflation to 6.1% from the previous 7.0% in April. This adjustment is primarily driven by annual energy price base effects, while the "core" inflation rate is anticipated to show more resilience, with a modest decrease to 5.5% from 5.6% in April. The ECB appears poised to proceed with another rate hike in June, but uncertainties loom regarding the path forward. Market expectations suggest a high probability of another hike in July. However, comments from ECB policy makers reveal divergent views on the extent to which rates need to rise. Therefore, the release of the minutes from the previous policy meeting, scheduled for today, could provide valuable insights into the potential peak interest rate and shed light on the future direction of monetary policy.

Stateside, ISM manufacturing for May is eyed as it provides fresh insights into the sector's performance. The prevailing expectation is that the reading will once again indicate pressure on the manufacturing industry, with a figure below the 50-expansion level. However, any unexpected upward surprise in the data could amplify concerns regarding the potential for a rapid repricing of the expected pause in Fed policy at the June meeting.
 

FX Options Expiries For 10am New York Cut 

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

• EUR/USD: 1.0595-10 (529M), 1.0650-66 (458M)
• 1.0675-85 (762M), 1.0700 (2.5BLN), 1.0715-20 (802M)
• 1.0725-35 (2.61BLN), 1.0740-50 (634M, 1.0770 (1.1BLN)
• 1.0800-10 (1.3BLN)
• USD/JPY: 139.00 (601M), 140.00 (590M)
• GBP/JPY: 170.00 (276M)
• USD/CHF: 0.8850 (250M), 0.8820-25 (500M)
• GBP/USD: 1.2390-00 (650M)
• EUR/GBP: 0.8645 (270M), 0.8665-75 (420M), 0.8800-10 (734M)
• AUD/USD: 0.6670-75 (366M), 0.6685-95 (436M)
• AUD/NZD: 1.0800 (404M). AUD/JPY: 90.00 (550M), 91.00 (380M)
• USD/CAD: 1.3345 (770M), 1.3590-000 (684M)
   

Overnight News of Note

• Asia Gains As Fed Hike Bets Recede, Debt Vote Eases Nerves
• US Futures Inch Lower After House Passes Debt Ceiling Bill
• Federal Reserve Prepares To Skip June Rate Rise But Hike Later
• Fed’s Beige Book Shows Hiring, Inflation Cooling Throughout US
• Debt-Limit Deal Wins House Passage, Eases US Default Worries
• US Treasury Cash Pile Hits New Low As Debt Wrangling Persists
• US-China Tensions Expected To Dominate Asia Security Meeting
• China’s Caixin Manufacturing PMI Returns To Expansion In May
• IMF Urge BoJ To Keep Ultra-Low Rates, But Ready To Shift Path
• Japan Factory Activity PMI Expands First Time In Seven Months
• UK Executives Not Yet Convinced Worst Is Over, Survey Reveals
• Italy Start EUR1Bln Sovereign Fund For Strategic Supply Chains
• Google Invests In AI Startup To Take Cloud Business From AWS
• Apple Tests New High-End Macs Seen As Key To Reviving Sales

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
 

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4168

• Below 4165 opens 4140
• Primary support is 4126
• Primary objective is 4268
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearsih Below 1.0750

• Above 1.0765 opens 1.0830
• Primary resistance is 1.0830
• Primary objective is 1.06
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish Below 1.2440

• Below 1.2340 opens 1.2234
• Primary resistance  is 1.2540
• Primary objective 1.2234
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

USDJPY Bias: Bullish Above Bearish Below 139.60

• Below 139.50 opens 138.90
• Primary support  is 137.40
• Primary objective is 141
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

AUDUSD Bias:Intraday Bullish Above Bearish Below .6580

• Below .6490 opens .6450
• Primary resistance  is .6680
• Primary objective is .6450
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

BTCUSD Bias: Intraday Bullish Above Bearish below 26000

• Below 26000 opens 25800
• Primary support 26000
• Primary objective is 34600
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

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