Risk assets start the day off on a positive note with a prospective deal on the debt ceiling. It has been reported that an agreement has been reached between President Joe Biden and House Speaker McCarthy, which was passed through the house.
Now that part one has been done, the next obstacle would be to get the deal through the Senate.
Positive data coming out of China has added fuel to investors' risk appetite. With the Caixin PMI data coming out, the manufacturing outlook was slightly more optimistic compared to PMI data that has been released just yesterday.
The S&P500 is creating a classic technical pattern (rising wedge) after breaking through highs. If we break support as highlighted on the chart below, we could see a move lower towards next support of 4055.
The risk sentiment is going to be data driven, with today's calendar releasing major news out of the US including:
- ADP Employment Change
- Unemployment Claims
- ISM numbers
Moreover, we will be finishing the week off with the main labour report NFP.
We can't take our eyes off any news out of the senate, with only a few days left until X day, June 5th.
This will most definitely continue to create some whipsaws in the markets, with uncertainty creeping in on any negative news outflows.
The Kiwi remains of the charts to watch after being sold off heavily in recent weeks. Any rejection or change in short term trend could provide a nice rally.
The USD and US10Y are looking slightly over cooked at the minute. Contrarian trades, you have to trade with caution, and manage aggressively.
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