The discussions over the debt ceiling came to an end yesterday without reaching an agreement, and this pattern has made traders very agitated. There was a glimmer of optimism that House Speaker Kevin McCarthy and Vice President Joe Biden would be able to reach an agreement and present it to Congress before the United States federal government will run out of money. However, it now seems like history will repeat itself, and this implies that there is a larger probability that we may see a short-term increase of the debt limit or a last-minute compromise similar to the one that occurred before.
At this point, all that we are receiving from politicians is simply their politics, in which they continue to toy with the future of the United States of America with the verbiage that they use. In spite of the fact that they continue to utilise a more political tone by claiming that more progressive work has been done, the needle does not move.
Traders are concerned that the current drama, if it continues in the same direction that it is going and we believe that it is going to be the case, will drag the issue very easily into June, when the United States government will have very little money left over to pay for its obligations. If this drama continues the way that it is going and we think that it is going to be the case, then we think it hurt the US status as safe haven further. Nevertheless, investors are aware that the debate over the debt limit is a spectacle that politicians like, and the likelihood that investors would lose faith in the ability of the United States government to pay its debts is quite low.
Forex Markets: Keep An Eye On Kiwi and Dollar
On the currency markets today, all attention will be focused on the New Zealand dollar because it is largely expected that the Reserve Bank of New Zealand (RBNZ) will raise interest rates once more. According to our most recent forecast, the central bank will most likely raise the interest rate by 25 basis points, and it is also quite probable that it will adopt a tone that may signal that interest rates will most likely continue to rise in the near future.
As for the US dollar index, the dovish comments given by the Fed Chairman on Friday lost their value yesterday as the yield on the 2-year US Treasury climbed to 4.3%. This simply means that traders aren’t ready to buy the narrative that the Fed isn’t going to increase the interest rate going into June. There is a good potential that there will be another increase in interest rates of 25 basis points heading into June; however, the dollar index does not yet reflect the possibility of this happening. This indicates that the dollar index may take up even more momentum in the near future, particularly if the yield on the 2-year Treasury continues to rise.
Bitcoin On Track To Record Monthly Losses
In the markets for crypto currencies, traders’ enthusiasm is continuing to wane as Bitcoin and Ether both lose further ground. Bitcoin is headed in the direction of having one of its worst monthly performances of this year, and Ethereum is following in Bitcoin’s footsteps by heading in the same direction. Bitcoin is now trading at a monthly loss of almost 8%, while Ethereum is currently trading at a monthly loss of around 5%. Bitcoin, on the other hand, is its own unique beast and has the ability to increase by more than 10% in a single day without experiencing any difficulties. However, such an event has not occurred with Bitcoin for quite some time, which is beneficial to the general investing narrative around Bitcoin since some investors have always been scared of the cryptocurrency’s volatility.
Gold Record More Losses
Gold Spot gold is continuing its downward trend, and the price is now trading much lower than its low from the previous day. The question of whether or not the United States will stop increasing its interest rate is the one that traders are concentrating on the most at the moment. As of the previous day, Neil Kashkari, president of the Minneapolis Federal Reserve, said that it would be a very tight call if the United States does not boost the interest rate any higher in the month of June. Traders should take this as a sign that few people are interested in pausing their interest, and the United States economy may see more slowdown as a result of this mindset.
