CALM MARKETS EXPECTED AHEAD OF PMI RELEASES AS INVESTORS AWAIT DEBT-LIMIT RESOLUTION

The upcoming Purchasing Managers' Index (PMI) reports on Tuesday, insights into the performance of global economies in May. During the Asian session, Australia is set to release the S&P Global Composite PMI, followed by Japan later in the day. Subsequently, Europe and the United States will unveil their respective PMI data.

Here are the key highlights for Tuesday, May 23:

In a quiet trading day on Monday, the US dollar concluded with marginal changes, attentive to ongoing discussions surrounding the US debt ceiling. House Speaker McCarthy and US President Biden are scheduled to meet at 21:30 GMT to continue deliberations.

Banking concerns persist, with Treasury Secretary Yellen reportedly cautioning bank CEOs about potential merger in a recent CNN report. This suggests that a return to normalcy may still be some time away. The release of the S&P Global PMIs on Tuesday will shift focus back to economic indicators, while the Richmond Fed Manufacturing data and New Home Sales figures made public.

Anticipated increase in the US dollar due to a decline in the services the S&P Global PMIs Preview

The Japanese Yen struggled, primarily due to government bond yields hovering near monthly highs. The 10-year Treasury yield reached its highest closing level since March 9, standing at 3.72%. Although USD/JPY climbed above 138.50, approaching last week's highs, resistance in 138.80. Japanese data released on Monday revealed an unexpected 3.9% decline in core machinery orders for March. The Japan Jibun Bank PMI is scheduled for release on Tuesday.

The EUR/USD movement and briefly tested levels below 1.0800 after a recovery on Friday. Market participants are currently focused on Eurozone PMI data expected on Tuesday. Given the current economic climate and the data-driven forward guidance, the May preliminary readings are deemed critical. Several ECB members, including Guindos, Muller, Nagel, and Villeroy, will speak.

GBP/USD concluded the day unchanged, trading around 1.2430. The UK will report Public Sector Net Borrowing data and PMI figures. Inflation data is anticipated on Wednesday, which could significantly impact the pound.

Against the US dollar, commodity currencies traded in constrained ranges. USD/CAD increased little and closed above 1.3500. Around the 20-day Simple Moving Average (SMA), the pair is still moving in a sideways fashion. Canada is scheduled to publish its wholesale inflation figures on Tuesday.

AUD/USD increased to 0.6650 during the American session but still closed below the 20-day SMA. Australia is expected to publish its PMI statistics on Tuesday.

Despite remaining below the 0.6300 barrier, NZD/USD made small gains, reaching its best daily close in a week. The Reserve Bank of New Zealand (RBNZ) is expected to make its announcement about monetary policy on Wednesday. Rate increases are anticipated by market analysts, with some projecting increases of 25 basis points and others of 50 bps.

The South African rand had the best performance on Monday, with the USD/ZAR rate dropping to 19.20 from record highs. The Mexican Peso, on the other hand, underperformed, with the USD/MXN rate climbing for the fifth day in a row and close to 18.00. The National Bank of Hungary will meet to discuss monetary policy on Tuesday.

Gold's gains from Friday were partially reversed, with XAU/USD slipping toward $1,970/oz. Additionally falling, silver finished the day at $23.60. The performance of cryptocurrencies was uneven, with BTC/USD failing to recoup $27,000. Prices for crude oil increased somewhat; WTI got close to $72.00.