U.S. Dollar mostly untouched, tilted a bit positive

Another day that passes without a deal, which is making escalation risk a more persistent rather than temporary for traders. Meanwhile, equities continue their relentless enthusiasm, but some doubts remain over some artificial intelligence investments with a nine-day winning streak for the S&P 500 Index coming to an end. 10-year treasury bond yields jumped to 4.48% as energy costs keep worrying economists about inflationary pressures to remain for a while.

We shall see if headlines give us anything different than in the past two weeks where announcements regarding negotiations have been almost immediately countered. As far as data points, we have May’s S&P Global Purchasing Managers Index Composite out at 9:45am followed by Institute of Supply Management Services surveys, April Factory Orders and Durable Goods Orders at 10AM. Expect a lot of SpaceX talk throughout the remainder of the week. The Fed’s Beige Book, summary of Federal Reserve regional conditions, will be out at 2PM. At the time of publishing, the ADP Employment Change for May was a little better than expected coming in at 112K vs. 120K payrolls added.

EUR ⇓

The Euro has floundered a bit but remains in tight ranges as FX markets await something on the geopolitical front that can free it. Energy costs have gotten to a point where it is appropriate for the European Central Bank to exercise some “hawkishness,” which is why odds of a hike of 25 basis points happening at their June 11th meeting are basically guaranteed. It would be a major shock if voting members hesitate to increase borrowing costs. Meanwhile, there are concerns when it comes to Bulgaria’s financial health with Euro-area leadership sending a warning to the newest member that their deficit is a bit excessive.

JPY ⇓

The Japanese Yen is trading tightly and avoiding crossing a key level that would likely trigger more rounds of FX intervention. Bank of Japan Governor Kazuo Ueda made statements explaining there is a “good chance” that officials vote to hike interest rates later this month. The BOJ will meet on June 16th. Throughout May, the BOJ coordinated intervention that resulted in around 11.7 trillion Yen, roughly US73.00BN.