Daily Market Commentary 30th May 2023

Markets in the US were closed for the long Memorial Day weekend, so trading was very quiet. As expected, the US debt ceiling negotiations were concluded and is expected to pass congress in the coming week. This was no surprise but the outcome did little to arrest the runaway deficit and debt spending of the Government. Markets will be focused on European inflation numbers being released this coming week, from across Europe. Markets are expecting to receive some good news and see significant declines, following ‘peak inflation’. The US PCE number did not support this narrative with core inflation back on the rise. Central banks are looking for an excuse to ‘pause’ rate hikes, but will need solid progress on the inflation front. The EUR looks to stabilise above 1.0700, while the GBP trades around 1.2500.

The long weekend saw little action on the foreign exchange front, with the AUD stabilsing above 0.6500, while the NZD looks to bounce off ‘Big Figure’ 0.6000. The Yen continues to flounder, trading above 140.00, suffering wide interest differential margins and softer demand. Markets will look ahead to European inflation data numbers and US employment data later in the week.