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16.05.202313:51 Forex Analysis & Reviews: US premarket on May 16, 2023: US market in equilibrium

Investors are maintaining a cautious approach and continue to accumulate safe-haven assets, including Treasury bonds, amid a deadlock situation in Washington over the US debt ceiling crisis. The yield on benchmark 10-year Treasury bonds has dropped by four basis points, while S&P 500 futures contracts are now trading around flat after a 0.2% dip. The NASDAQ has grown by 0.2%. The Stoxx Europe 600 was pushed down by Telecom Italia SpA, which declined by 5.4%.

Exchange Rates 16.05.2023 analysis

Many are awaiting Joe Biden's meeting with Congress representatives to learn if there is any progress in the US debt ceiling discussion. The clarity regarding Fed policy clearly cannot persuade investors to resume buying risky assets, even though the rate hike cycle is nearing its end.

Negotiations on the debt ceiling are scheduled for today between President Joe Biden and House Speaker Kevin McCarthy. Yesterday, Treasury Secretary Janet Yellen warned that the US is already paying for its inability to raise the federal debt limit and reiterated that her department could run out of money by early June. However, most investors expect politicians to strike a last-minute deal to avert a default.

At the same time, according to the latest survey by Bank of America Corp, traders are hedging against the worst scenarios, buying Treasury bonds mixed with tech company stocks. If the latest situation with the debt ceiling plays out like in 2011, Treasury bonds could rise significantly.

In Japan, the Topix index has risen to its highest level since 1990. Increased buyback volumes by Japanese corporations alongside their focus on profitability has helped boost investor sentiment. The Nikkei 225 Stock Average index is now one of Asia's leading benchmarks.

Chinese stocks fell in Shanghai and Shenzhen after official data showed that industrial production, retail sales, and capital investments fell short of economists' forecasts.

Oil prices fell slightly following disappointing data from China, while gold continued to trade around its weekly lows. Bitcoin also dropped a bit, but overall, the market is demonstrating stability.

Exchange Rates 16.05.2023 analysis

Technical analysis suggests demand for the S&P 500 remains, and bulls can extend the uptrend. They will need to remain above $4,116 and regain $4,150. From there, the index could surge to $4,184. Another key goal would be holding on to $4,208, which would help solidify a new bull market. If the index moves downward in the absence of demand and risk of persistent high inflation in the US, bulls will have to act around $4,116. A breakout below that level would quickly push the trading instrument to $4,091, opening the way towards $4,064.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Jakub Novak,
Analytical expert of InstaSpot
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