June 02, 2023

“EURUSD is steadily rising in the early morning, driven by positive risk sentiment following the US debt limit suspension approval and dovish Fed expectations, putting downward pressure on the US Dollar. Later today, the market will be awaiting the release of US Nonfarm Payrolls and Unemployment data for May.” 

Sam Cornford, Partner – Head of Trading 

Main Headlines 

the US Senate successfully passed a bipartisan legislation endorsed by President Joe Biden, effectively lifting the government’s debt ceiling of $31.4 trillion. This crucial move averts a potentially catastrophic default, which would have been unprecedented in US history. The bill, previously approved by the House of Representatives on Wednesday, received a 63-36 vote in the Senate. Lawmakers worked against the clock to reach this agreement after months of partisan disputes between Democrats and Republicans. The Treasury Department had issued warnings that it would be unable to meet its financial obligations by June 5 if Congress failed to act promptly. 

Prince Harry, the younger son of King Charles, is set to make royal history by becoming the first senior British royal to give evidence in court in over 130 years. He will appear in the witness box at London’s High Court next week as part of his lawsuit against Mirror Group Newspapers (MGN), the publisher of Daily Mirror, Sunday Mirror, and Sunday People. Alongside more than 100 other celebrities and prominent figures, Harry accuses the newspaper group of engaging in unlawful behavior. This testimony marks a significant moment, as the last senior royal to provide evidence in court was Edward VII in 1870 during a divorce case. 

GBP 

Sterling is stronger against the Dollar and weaker against Euro this morning. The US Transportation Department (USDOT) announced yesterday that it will impose a $1.1 million fine on British Airways for its failure to promptly refund passengers for flights to and from the United States during the COVID-19 pandemic. Since March 2020, the USDOT has received over 1,200 complaints alleging that British Airways did not provide refunds in a timely manner. The airline, which is owned by IAG (ICAG.L), has denied these allegations. British Airways maintains that it acted lawfully throughout the crisis and offered customers options to rebook their travel or claim refunds in case of flight cancellations. 

EUR 

Euro is well bid against most major currencies overnight. Europe’s largest farmers’ associations, represented by Copa-Cogeca, are currently staging protests against the proposed European nature restoration law. This legislation aims to safeguard a minimum of 20% of the European Union’s land and sea area by 2030. However, Copa-Cogeca is urging the European Commission to withdraw the act, arguing that it will diminish areas available for agriculture, forestry, and horticultural activities. In contrast, the European Commission asserts that the restoration law is crucial for addressing significant ecological threats. 

USD 

The Dollar is weaker than most major currencies in the early morning trade. The US dollar is on track for its most significant weekly decline since mid-January as investors increasingly believe that the Federal Reserve will refrain from raising interest rates this month. This expectation has diminished the appeal of the greenback to non-US buyers. Furthermore, the passage of a bill by the US Senate to suspend the debt ceiling and avoid a catastrophic default has removed a major support pillar for the dollar. Ironically, the dollar had previously benefited from its safe-haven status in the face of the looming default. 

Markets 

European stock markets opened higher this morning following the passage of a bill by US lawmakers to raise the debt ceiling and establish a two-year cap on government spending, just days before the default deadline. The Stoxx 600 index experienced a 0.4% increase during early trade, recovering further from the two-month low it reached on Wednesday. Mining stocks led the gains, rising by 1.7%, while the oil and gas sector climbed 1% in anticipation of the OPEC+ meeting scheduled for June 4. Futures tied to the Dow Jones Industrial Average 

Main Economic Data/Central Banks/Government (All Times CET) 

8:45 a.m.: France April Industrial Production
9:00 a.m.: Spain May Unemployment
9:30 a.m.: ECB’s Vasle Speaks
12:00 p.m.: Ireland 1Q GDP
12:00 p.m.: UK to sell bills
2:30 p.m.: US May Nonfarm Payrolls, Unemployment
UK Sovereign Rating to be reviewed by Fitch
France Sovereign Rating to be reviewed by S&P
Biden speaks on debt-limit deal 

Corporate Events 

Earnings include Catalent 

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