The US dollar rose again on Wednesday and USDX posted a 0.28% daily gain, rising further in early European trade on Thursday as there is yet to be an agreement in Washington to end the debt ceiling impasse. An even stronger move was observed among EM pairs, with USD/ZAR increasing by 0.97%, USD/MXN increasing its value by 0.65%, and USD/CNH increasing by 0.21%.
Major US stock indexes also rose on Wednesday, supported by growing expectations that a potential $31.4 trillion federal debt ceiling deal is on the way. Furthermore, a jump in shares of regional banks gives some optimism to investors worried about a possible escalation of the sector’s problems. All three major stock indexes were up about 1% during the day. Japan’s stock markets continued to gain on Wednesday, outpacing Wall Street, with the Japan 225 index hitting a 20-month high, adding 2.11% to its share price.
Trading activity remains sideways on the cryptocurrency front. The two major cryptocurrencies have been trading in a tight range all week, waiting for a break in either direction. Bitcoin gained nearly 1% on Wednesday, while Ethereum traded almost unchanged, ending the session lower by 0.10%.
With major markets in France and Germany closed for a banking holiday, the highlights for Thursday are the unemployment claims report, the Philadelphia Fed manufacturing index and US current home sales data. During the day, speeches from some Fed members will also attract attention. ,
EUR/USD fell again on Wednesday ahead of European Central Bank President Christine Lagarde’s speech at the end of the session, although the US debt issue remains the main driver.
The pair hit a monthly low near 1.0800 and ended the session 0.25% lower at 1.083 as the euro lagged behind Eurozone April CPI after a slight negative revision at 0, 06% m/m.
Markets are now primarily focused on the US dollar as a safe-haven asset, while concerns about the European economy may have contributed to the pair’s recent decline.
All three major US stock indices closed with gains of more than 1% on Wednesday as hopes of a deal to raise the debt ceiling helped investors.
Debt ceiling talks, which have become a growing concern for market participants, are moving in the right direction, with promises from US President Joe Biden and House Speaker House Republican Kevin McCarthy that the United States will avoid a catastrophic default .
The US 500 rose 0.99% to 4,170, while the US 30 and US Tech 100 ended the session up 1.05 and 1.07%, respectively.
Positive quarterly results weather, stability in regional US stocks and hopes that the US Federal Reserve has ended its rate-hike cycle could further support market sentiment.