Russell Shor

President Joe Biden and House Speaker Kevin McCarthy will meet again on Monday to try to find a deal to avoid a U.S. default. Lawmakers are still far apart on an agreement to raise the federal borrowing limit, and time is running out. McCarthy said there's no agreement yet, despite a productive phone call with Biden. Biden called on Republicans to reconsider their extreme positions, as he finds their proposals unacceptable. The negotiations have faced many challenges since January when the U.S. reached its debt ceiling. Treasury Secretary Janet Yellen warned about the tough choices ahead if there's no agreement by the X-date deadline, which is estimated to be June 1. Some lawmakers are exploring alternative options like a discharge petition or invoking the 14th Amendment. Biden and McCarthy remain hopeful, and negotiations involve other key leaders as well.

During the last policy meeting, Fed officials reached a unanimous decision to raise interest rates, despite considerable deliberation on whether it would be wiser to pause the tightening efforts. The minutes of the FOMC’s meeting held on 2-3 May, will be released today, and will provide valuable insights into the extent of the officials' consideration of maintaining interest rates and whether any committee members advocated for a pause.

The German economy contracted over the last two quarters, which is defined as a technical recession. Q1 GDP, revised a second time, came in at -0.3%. This follows Q4 2022’s GDP of -0.5%. Germany has faced considerable challenges following Russia's invasion of Ukraine and the subsequent choice made by European leaders to sever relations with Moscow.

The core PCE was higher than the consensus of 4.6% y/y, printing at 4.7% y/y. The previous reading was 4.6% y/y. On a monthly basis, it came in at 0.4% (4.9% - annualised), higher than the 0.3% expected.

FXCM’s CHN50 and HKG33 CFDs have charted a lower peak followed by a lower trough. This puts the indexes into downtrend.

The weekly NAS100 has charted a series of higher troughs followed by higher peaks. This puts the index into an uptrend.

The US is predominantly a services-based economy. This makes the ISM non-manufacturing data particularly interesting. May’s figure was released today, printing at 50.3, down from 51.90 for April. This is a five-month low. When the numerical is above 50, companies are experiencing growth and expansion. The prices component of the survey came in at 56.2. This is down from 59.6 in April. The Fed is worried that services-based inflation is sticky, and this decline may suggest that this type of inflation is aligning more with target. The Fed is due to release its next rate statement on 14 June, which is likely to indicate a hold. The next CPI release is on Tuesday, 13 June.

In a legal action filed on Tuesday morning, the Securities and Exchange Commission (SEC) brought a lawsuit against Coinbase, a cryptocurrency exchange, in a federal court in New York. The SEC claims that Coinbase has been operating as an unregistered broker and exchange, and is seeking a permanent injunction to prohibit the company from engaging in such activities.

Netflix has moved passed its accumulation phase into a mark-up phase. It is trading above its black 200-day simple moving average, and, importantly, the SMA is pointing up. We have added On Balance Volume (OBV) as the indicator underneath the price chart. Volume is a measure of supply and demand. In this case both the price and OBV are coordinated and trending up. According to OBV theory, this connotes that the uptrend is likely to continue.

The hourly chart pulled back to the 38.2% Fibonacci and price support around the 1.0908 level. This served as a short-term platform for buyers to regroup.