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Despite positive developments in the US debt ceiling negotiations, the risk sentiment remained cautious during the Asian trading session. President Biden and House Speaker McCarthy managed to strike a deal that involved reducing spending in exchange for temporarily suspending the debt ceiling until after the next Presidential election. This agreement is set to be voted on by Congress starting from Wednesday, and if approved, it will prevent a US debt default. However, despite the potential resolution to the debt ceiling issue, investors maintained a cautious outlook. This cautious investor sentiment caused a decline in short-term Treasury bills and most Treasury yields. Investors tended to gravitate towards safer investments, seeking stability amidst the prevailing market uncertainties.

The UK data docket for this week is relatively light on major releases. However, the overnight release of the BRC shop price index provided an early indication of May's inflation, showing a slight increase in the overall index to 9.0% from 8.8%. However, food price inflation slowed to 15.4% from 15.7%. Today, there are no significant releases scheduled. However, early on Wednesday, the Lloyds Business Barometer report for May will be released, providing further insights into business confidence, economic activity, and the impact of recent news on inflation and wage expectations.

The global focus is currently centered around inflation. This morning, the Spanish CPI data was released printing softer than expected, and tomorrow expect figures from France, Germany, and Italy, which will provide an early indication of the Eurozone's flash estimate, set to be released on Thursday. Market watchers anticipate another significant drop in headline inflation but the core rate is expected to remain relatively stable. These developments are unlikely to prompt any revisions to the market expectations that Eurozone interest rates will be raised by another 25bp in June, despite Germany's economy being confirmed to have entered a recession over the winter.

Stateside,  the Conference Board's Consumer Confidence gauge for May is anticipated to show a slight easing at the headline level. Investors will be closely watching the Dallas Fed Manufacturing Survey for May as a precursor to this week's ISM release, which provides valuable insights into the manufacturing sector. Later this afternoon, the Fed's Discount Rate Minutes will be released, shedding light on the central bank's views on monetary policy. Federal Reserve non-voter Barkin is scheduled to make remarks today, offering additional perspectives on the economic outlook. As we approach the end of this week, the Federal Reserve will enter a blackout period ahead of its policy meeting on June 14th. Current market expectations are divided between an unchanged outcome and a potential 25 basis points rate increase. The outcome of the policy meeting holds significant importance for investors, and market participants will closely monitor any developments leading up to the decision.
 

FX Options Expiries For 10 am New York Cut 

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

• EUR/USD: 1.0650-60 (1.06BLN), 1.0700 (272M)
• USD/JPY: 137.92-00 (511M), 139.00 (422M), 139.50 (409M)
• 141.00 (406M)
• EUR/GBP: 0.8700 (779M). AUD/USD: 0.6575 (364M)
• USD/CAD: 1.3435-45 (546M), 1.3590 (968M), 1.3615 (279M)
• AUD/JPY: 92.00 (836M)
   

Overnight News of Note

• US Futures Rise After Debt Ceiling Deal Tentatively Reached
• Biden, McCarthy Work Lawmakers To Pass Deal As Default Looms
• China Rebuffs Pentagon Chief, Blunting Push For Rapprochement
• BoJ’s Governor Ueda: Japan To Patiently Keep Ultra-Easy Policy
• Japan Jobless Rate Falls In Potential Future Boost For BoJ Goal
• Australia Building Approvals Slump To Lowest Level In 11 Years
• ECB’s De Cos: Tightening Cycle Closer To End, Still A Way To Go
• Sunak Looks To Cap Basic Food Prices In Fight Against Inflation
• Inflation In UK Shops Hits Record High With Little Sign Of Relief
• Insolvency Risk Rises For Larger UK Companies As Inflation Bites
• Spain’s Embattled Prime Minister Gambles Again On Snap Election
• Turkey's Erdogan Triumphs In Election Test, Extending 20-Year Rule

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4200

• Below 4200 opens 44170
• Primary support is 4100
• Primary objective is 4268
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

EURUSD Bias: Target Hit - New Pattern Emerging 

• Above 1.0860 opens 1.0950
• Primary resistance is 1.09
• Primary objective is 1.0660
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

GBPUSD Bias: Target Hit - Intraday Bullish Above Bearish Below 1.2440

• Below 1.2290 opens 1.2234
• Primary resistance  is 1.2540
• Primary objective 1.2234
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

USDJPY Bias: Target Hit - Intraday Bullish Above Bearish Below 139.60

• Below 139.50 opens 138.90
• Primary support  is 137.40
• Primary objective is 141.70
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

AUDUSD Bias: Target Hit - 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 Intraday Bias: 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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