Forex Top Team

U.S. Debt Ceiling Issue Reaches Resolution; U.K. and U.S. Markets Closed, Lack of Action

A compromise has been reached between the Biden administration and the Republican Party in Congress regarding the US debt ceiling issue over the weekend, providing some certainty about avoiding default. While there may still be some anticipated difficulties in persuading opposition members for congressional approval, the overall agreement has brought a sense of relief to the market.

In the Turkish presidential election, incumbent President Erdogan has secured a majority, smoothly overcoming this issue as well.

Market focus is now shifting to the June FOMC (Federal Open Market Committee) meeting in the United States to determine whether there will be an interest rate hike or if rates will be maintained. Following a series of strong US economic indicators last week, the market is currently pricing in around a 37% chance of rates being maintained and a 63% chance of a 25 basis points rate hike. Whether expectations for a rate hike will further increase or not will depend on the results of the US employment statistics to be released later this week.

In the subsequent foreign markets, the UK will be closed for the Spring Bank Holiday, Switzerland will be closed for Whit Monday, and the US will be closed for Memorial Day. With these immediate risk events out of the way, today’s market may experience a lack of significant catalysts. There may be a continuation of a further strengthening of the dollar scenario or an increase in adjustment pressure after these events. Given the anticipated thin trading volumes, there may be some nervous price movements.

Today is expected to be range-bound with no major economic indicators.

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