US debt ceiling talk dominated markets this week as uncertainty kept investors cautious with so much debt fault risk around. Although most analysts see the actual chances of a US default as an unlikely outcome, it is still a tail risk markets have had to deal with all week. CAD inflation came in hot on Tuesday and this will be a concern for the Bank of Canada at its next meeting in early June. Oil prices are trying to find a base helped by the IEA’s forecast this week focusing on the tighter oil market that is still expected in the second half of 2023.

Other key events from the past week

• USD: Debt ceiling talks, May 15: Debt ceiling talks went on again this week without a clear resolution at the time of writing. The current US debt limit stands at $31.4 trillion and both US parties agree the limit needs to be raised, so it should be resolved in due course despite the political posturing.
• CAD inflation data: Hot inflation, May 16: Going into this inflation print it was going to be an important one for BoC policy. The headline came in at 4.4%, well above the 4.1% expected. Will this send EURCAD even lower next week?
• Oil: IEA forecast, May 16: The IEA said that current market pessimism surrounding oil’s outlook stands in sharp contrast to the tighter market balance expected in the second half of this year. Will oil prices finally lift on China demand in the second half of this year?

Key events for the coming week

• NZD: RBNZ rate meeting, May 24: The RBNZ is widely expected to hike interest rates by 25bps to 5.50% next week. However, will this be the last rate hike from the RBNZ before going on hold? Watch the AUDNZD pair next week.
• Seasonal Insights: Is Visa set for end-of-year seasonal gains?
• GBP: UK inflation data, May 24: Inflation data is now a major focus for the BoE after the last rate meeting. If inflation comes in higher than market expectations again next week then the GBP will likely gain as traders price in yet more hikes to come from the BoE on June 22.

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