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Markets applaud Biden’s budget, dollar rises, focus on US PCE

This is what you need to know to trade today Friday May 28:

Market mood is good on reports of a large US budget and upbeat US figures The dollar is rising with yields ahead of another round of economic releases, which includes the underlying US PCE, while gold It is lagging and cryptocurrencies are far from the highs. End-of-the-month flows can cause nervousness.

Big budget: The President of the United States, Joe Biden, will present a budget of 6 trillion dollars for fiscal year 2022, in addition to large plans for spending on infrastructure. The prospects for robust spending and faster growth have boosted equity markets, while expectations for higher debt imply higher bond yields. The dollar is rising across the board.

On infrastructure, Republicans announced a nearly $ 1 trillion counter offer that still leaves them far behind the White House’s updated 1.7 trillion proposal.

The rush in Washington comes before a Long weekend for Memorial Day and by the end of the month. Money managers have been tightening their portfolios after a bullish May in equity markets and losses for the dollar. Oscillations are likely to be traded on Friday.

US data releases on Thursday were mostly upbeat, with Durable Goods Orders excluding defense and aviation increasing more than 2% in April, much better than expected. Jobless claims fell to 406,000 last week, also exceeding estimates. These numbers outweighed disappointments in the leading goods request readings and growth figures.

Friday’s highlights are personal income data, personal spending, and the basic personal consumption spending figure (Underlying PCE), the Federal Reserve’s preferred measure of inflation. It is expected to exceed 2% year-on-year, the bank’s target.

Gold, which fell below $ 1,900 amid rising Treasury yields, will react to any surprises on this gauge.

US PCE Inflation Preview: Gold Remains a Key Asset to Watch

The EUR/USD is trading below 1.22 amid renewed dollar strength, while the GBP/USD it is trading near 1.42. The pound 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 doubtful due to the spread of the first variant of COVID- 19 identified in India.

The cryptocurrencies They have been on the defensive, with Bitcoin falling below $ 37,000 and Ethereum below $ 2,600. Volatility remains high and may increase further over the weekend.

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