Financial markets today

The financial markets continue to exhibit turbulent activity in the middle of the week, despite renewed hope regarding a resolution on the US debt limit. The US Dollar Index remains comfortably above the 102.50 level, while the yield on the 10-year US Treasury bond fluctuates above 3.5%.

Eurostat is set to release revised inflation data for April, and the UE economic docket will feature April Housing Starts and Building Permits later in the day.

According to a late Tuesday report from Reuters, the meeting between US President Joe Biden, top congressional Republican Kevin McCarthy, and other congressional leaders regarding the debt ceiling concluded on a positive note.

McCarthy informed reporters after the meeting that a deal could potentially be reached by the end of the week. Early on Wednesday, US stock index futures show mixed trading, reflecting a cautious market sentiment.

In related news, the US Census Bureau revealed that Retail Sales in the United States increased by 0.4% in April, reaching $686.1 billion. This reading follows a revised decrease of 0.7% (previously reported as -0.6%) in March and falls short of the market’s expectation for a 0.7% rise.

The EUR/USD pair climbed above 1.0900 on Tuesday but struggled to gain further recovery momentum. Currently, the pair is trading within a narrow range slightly above 1.0850 in the early hours of Wednesday. Traders are closely monitoring statements from European Central Bank (ECB) officials, who have been expressing mixed views on the policy outlook since the beginning of the week.

On Tuesday, GBP/USD closed in negative territory below the 1.2500 level. The pair remains under pressure during the European morning, edging lower towards 1.2450. Bank of England (BoE) Governor Andrew Bailey is scheduled to deliver a speech at the British Chambers of Commerce Global Annual Conference at 0950 GMT.

Earlier today, data from Japan revealed that the Gross Domestic Product expanded at an annualized rate of 1.6% in the first quarter. This figure surpasses the 0.1% growth observed in the previous quarter and exceeds the market’s expectation of 0.7%.

USD/JPY gained bullish momentum during the Asian trading hours and is currently trading at its highest level in two weeks near 136.80.

USD/CAD declined towards 1.3400 after Statistics Canada reported on Tuesday that the annual Consumer Price Index rose by 4.4% in April, surpassing the market’s expectation of 4.1%. However, due to the impact of falling crude oil prices on the Canadian Dollar, which is sensitive to commodity movements, the pair regained strength and rose above 1.3500 early on Wednesday.

Gold prices broke below the $2,000 mark and touched their lowest level since early May at $1,985 on Tuesday, influenced by the upward movement of US Treasury bond yields. XAU/USD remains relatively stable, hovering around $1,990 on Wednesday.

Following a modest rebound on Monday, Bitcoin failed to make a decisive move in either direction on Tuesday. BTC/USD is fluctuating within a narrow range near $27,000 during the European morning.

On the other hand, Ethereum managed to achieve marginal gains for the third consecutive day on Tuesday. ETH/USD appears to have found stability slightly above $1,800 in the middle of the week.


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