EURUSD on Sovereign Debt

29 mai

Today's data releases include M3 currency production, mortgages, and private and corporate loans, as well as PPI, retail sales, consumer sentiment, and monthly and annual consumer price index data for several eurozone countries, mainly Germany. At the US open we have the MBA index of loans, purchasing power, and 30-year debt; and German inflation rates.

This afternoon the Dallas and Richmond FED will release their income, manufacturing, export and services indices closing the afternoon with William's speech and the famous Federal Reserve Beige Book, a report that aggregates the economic situation of the 12 Federal Reserve Districts, expressing economic conditions and projections mostly based on qualitative information obtained from each of the FED's district offices. This document is issued 8 times a year. This publication will be key to seeing how the U.S. economy drifts.

Cathie Woods and even Ray Dalio, as good market pessimists, were already saying that the market could enter a debt crisis. Dalio was already reporting last year that the U.S. government could drift to a debt level in excess of $52 trillion, with an amount of interest dedicated to paying off sovereign debt.
The debt in 2020 was 126.24% and corrected to 115.70% in 2022, in 2023 it fluctuated between 127.32% and 121.62%. The total U.S. debt in the last quarter of the year stood at 34 Trillion, so it has been reducing by 3Trillion since 2022 according to the St Louis Fed: fred.stlouisfed.org/series/GFDEGDQ188S

According to the US treasury office the current debt has expanded to around 34.59Trillion.
fiscaldata.treasury.gov/americas-finance-guide/national-debt/
Honestly this time, the public debt problem has been temporarily tackled, but it does not seem that the root of the problem is being solved.
Let's see if the Beige Book data goes along this time in relation to the state of the country's economy, despite allocating hundreds of millions in military and health care in its budget.


Looking at the 1-day chart, the price bell is very concentrated in a single price centered at the 1.08559 dollars per euro checkpoint. Currently a sideways translational move is being felt that has not broken out of the highs and lows due to the shift of US capital to Europe as a focus for investment using the Euro as a favorite currency to enter the market for the long term.
It will not be unusual to see an upward move if the beige book does not provide encouraging data to move us back to the highs at 1.09805.

Ion Jauregui - AT Analyst



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