Major News
- With the Senate passing the bill to raise the US Debt Ceiling, equities have started to rally.
- DXY retracement is coming back to 103 support as US10Y yields hit the 3.6% support.
- NFP is set to either break or hold this level today
- BTC remains trapped in the $27k - $30k range
The tone across the board is Risk On.
Equities started rallying on the news out of the Senate, with a large majority victory. The outcome has always been positive, but uncertainty will always be roaming around as nothing can be fully guaranteed.
Now that this issue has been somewhat resolved and out of the way for the moment, attention will move on to the treasury, and what this will mean from a liquidity perspective.
The issuance could be in the region of $500bn up to $1trn, which could cause some resistance on the equity rally.
As US10Y yields decline, we are seeing a DXY correction with 103 support about to be tested. We can now expect the NFP data to be a key driver for a short term. However, we have passed the seasonal bull run for USD.
A move below 103 coupled with recent PA would suggest a further move lower.
As previously mentioned in IX Daily articles, we were highlighting that NZD was setting up for a potential reversal based on USD over-stretched. NZD has heavily been sold off in recent weeks.
The technical pattern setup, and has since played out perfectly as highlighted.
It would be important to remember that both NZD & AUD are positively affected when risk turns positive, which means that the recent debt ceiling issues have been adding extra pressure on those markets.
Now that an agreement has been reached and agreed on by all concerned parties, we have seen a short term surge on both NZD and AUD.
NFP Data
With the NFP data coming out today, we can expect to see the upside limited on positive data, and the downside magnified on negative data.
An initial move higher in USD could be an opportunity to short.
The key would be to wait for the data and watch prices closely before making any decision.
This is based on the most recent comments of Fed member Harker - a known Hawk - who said that he "would prefer rates to remain unchanged" at the upcoming Fed's June Meeting.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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