The continuing impasse between the House of Representatives and the Presidency over the US debt ceiling knocked the Dollar yesterday, causing it to weaken in-trend.
- Treasury Secretary Yellen has written to the US Congressional leadership trying to find a solution to the impasse over the debt ceiling, which threatens a national default. These concerns probably helped the US Dollar to sell off yesterday, but the standoff will probably be resolved with some form of compromise.
- Stock markets are broadly higher, with the Japanese Nikkei 225 Index set to make its highest daily close in 16 months, while the NASDAQ 100 Index yesterday made its highest daily close since August 2022. Both will attract trend traders.
- In the Forex market, the US Dollar has dropped over the past day. Action has been dominated so far today by weakness in the Australian Dollar and strength in the Japanese Yen. The long-term bearish trend in the US Dollar remains valid although the strength of last week’s retracement suggests it is likely to persist for a while. Nevertheless, trend traders may still be looking for long trades in the EUR/USD and GBP/USD currency pairs, especially the latter.
- The slow bullish trend in Gold remains technically valid as it continues to trade above the very big round number at $2,000, despite its decline from its high near the all-time record price of $2,070 reached two weeks ago week.
- Some soft commodities have been breaking to new highs and trending strongly, notably the Sugar ETF Cane, and the Cocoa ETF NIB, which both reached multi-year high prices last week.
- Yesterday’s release of US Empire State Manufacturing Index data was worse than expected, showing a decline in manufacturing activity.
- There will be releases today of Canadian CPI (inflation) data, US Retail Sales data, and the UK Claimant Count (unemployment claims) change.