Here is what you need to know on Friday, May 28:
The market mood is cheerful amid reports of a large US budget and upbeat US figures. The dollar is edging higher with yields ahead of another round of economic releases, which includes Core PCE, while gold is on the back foot and cryptocurrencies are off the highs. End-of-month flows may cause jitters.
Big budget: US President Joe Biden is set to unveil a $6 trillion budget for fiscal 2022, on top of large infrastructure spending plans. The prospects of robust spending and faster growth have boosted stock markets while expectations of higher debt mean higher bond yields. The dollar is rising across the board.
On infrastructure, Republicans announced a near $1 trillion counter offer which still leaves them far from the White House's updated $1.7 trillion proposal.
The rush in Washington comes ahead of a long Memorial Day weekend, and the end of the month. Money managers have been adjusting their portfolios after a bullish May in equity markets and losses for the dollar. Choppy trading is likely on Friday.
Thursday's US data releases were mostly upbeat, with Durable Goods Orders non-defense ex-air – the core of the core – jumping by over 2% in April, far better than expected. Jobless claims dropped to 406,000 last week, also exceeding estimates. These figures outweighed misses on headline orders and no change to growth figures.
US Durable Goods Orders in April show strong underlying expansion
The highlights on Friday are Personal Income, Personal Spending and Core Personal Consumption Expenditure (Core PCE) figure – the Federal Reserve's preferred measure of inflation. It is set to top 2% YoY, the bank's target.
Gold, which dropped below $1,900 amid the increase in Treasury yields, is set to react to any surprise in this indicator.
US PCE inflation preview: Gold remains key asset to watch
EUR/USD is trading below 1.22 amid renewed dollar strength while GBP/USD is trading close to 1.42. Sterling received a boost from Gertjan Vlieghe, a member of the Bank of England who hinted at a rate hike in early 2022. On the other hand, the next stage of the reopening remains in doubt due to the spread of the COVID-19 variant first identified in India.
Cryptocurrencies have been on the back foot, with Bitcoin falling below $37,000 and Ethereum under $2,600. Volatility remains elevated and may further increase over the weekend.
The wild and wooly world of cryptos is here to stay
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.