Morning wrap (18.05.2023)

• Wall Street indices surged yesterday amid hopes that agreement on debt ceiling may be reached soon. Solid performance of regional banks also provided support, especially for Russell 2000

• US House Speaker McCarthy said yesterday that getting the debt ceiling deal done by Sunday is doable. US president Biden said he will have more news on debt ceiling on Sunday when he returns from a trip to G7 summit

• S&P 500 gained 1.19%, Dow Jones moved 1.24% higher, Nasdaq jumped 1.28% while Russell 2000 rallied 2.21%

• Indices from Asia-Pacific traded higher today, following lead from US equities. Nikkei gained 1.6%, S&P/ASX 200 moved 0.5% higher, Kospi added 0.7% and Nifty 50 gained 0.3%. Indices from China traded up to 1.1% higher

• DAX futures point to a higher opening of the European cash session today

• JPMorgan says that recession in the US looks almost certain and that the Fed may begin rate cuts in Q3 2023. Bank of America says that S&P 500 has not yet hit the bottom

• Nomura cuts its Chinese 2023 GDP forecast from 5.9 to 5.5%. Barclays lowered forecast for Chinese 2023 growth from 5.6 to 5.3%

• According to Chinese media, domestic air travel returned to pre-pandemic levels already but international air travel continues to lag

• Chinese ambassador to Australia confirmed that China will resume imports of Australian timber today

• AUD traded lower after a disappointing jobs report for April. Australian employment dropped 4.3k (exp. +24.5k) while the unemployment rate jumped from 3.5 to 3.7% (exp. 3.5%)

• Japanese exports increased 2.6% YoY in April (exp. 2.6% YoY) while imports were 2.3% YoY lower (exp. +11.4% YoY). Trade balance for April reached -432.4 billion JPY (exp. -1300 bln JPY)

• Major cryptocurrencies are trading lower today - Bitcoin drops 0.3%, Ethereum trades 0.1% lower and Dogecoin declines 1%

• Energy commodities trade a touch lower - oil drops 0.2% while US natural gas prices trade 0.1% lower

• Precious metals trade slightly lower today - gold drops 0.1%, silver trades 0.6% lower and platinum declines 0.3%

• NZD and JPY are the best performing major currencies while CAD and AUD lag the most

AUDUSD took a hit following the release of a disappointing jobs report from Australia (orange circle). However, an attempt to break below the 0.6640 support zone turned out to be a failed one and the pair recovered some ground later on. Source: xStation5