Stocks recovered some of their recent losses but the US dollar slid as the US debt ceiling bill was passed by the House of Representatives and is on its way to the Senate before President Joe Biden can sign it into law, says Axel Rudolph, Senior Market Analyst at online trading platform IG.
US Dollar advance stalls as Fed signals "skip"...
“Now that Democrats and Republicans have basically agreed to raise the US debt ceiling and a new bill is expected to become law before the 5 June cut-off date at which the US would default, the US dollar advance stalls. Comments by permanent voters Fed Governors Philip Jefferson and Patrick Harker in which they expressed a preference to skip a potential interest rate hike this month, led to a repricing of risk ahead of Friday's all-important Non-Farm Payrolls and average hourly earnings.”
...but US ADP data points towards Fed rate hike in June
“A much stronger ADP private payrolls report of 278,000 jobs created in May (versus 173,000 expected) and annual pay up 6.5% year-on-year, led to a sharp rise in the probability of another rate hike being seen in June. According to the CME FedWatch tool, whereas around 45% of investors expected the fed funds rate to rise to between 5.00% to 5.25% in June ahead of the ADP employment report, around 74% did so after the report with 26% vying for a rate hike to 5.25% to 5.50%. The immediate effect of this swift repricing initially pushed stock and oil prices lower before they rallied on much stronger-than-expected US month-on-month construction spending while the greenback continued to slide and the gold price remained bid.”
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