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JUNE 5, 2023

MAJOR CRYPTOS FELL

Bitcoin has dropped below $27,000, while Litecoin experienced the largest loss among the top 10 cryptocurrencies, dropping 3.83% to $92.53 in the last 24 hours, as of 8:00 am CST. Ethereum has also followed the falling trend as it experienced a decline of 2.10% to $1,864.93 in the same 24-hour frame. The cryptocurrency markets seem to be in a period of low activity, as investors are not taking any major steps to shape trends, leaving the market mostly range-bound.

OIL PRICES RISE

Oil prices have risen by more than $1 a barrel following Saudi Arabia’s decision to cut production by another 1 million barrels per day (bpd) starting next month to counter macroeconomic headwinds that have depressed markets. This comes after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) made no changes to their planned oil production cuts for the rest of the year. Consequently, crude oil prices have been on the rise with Brent crude futures trading at $77.50 a barrel, up by 1.8%, while U.S. West Texas Intermediate crude is at $73.13, up by 1.9%. Meanwhile, the United Arab Emirates was allowed to raise output targets by 200,000 bpd to 3.22 million bpd to reflect its larger production capacity.

BANKS’ CAPITAL REVIEW

In an effort to strengthen the financial industry, U.S. officials are reviewing capital requirements, potentially imposing tougher restrictions on larger banks. Regulators are proposing a potential 20% increase in capital requirements for large U.S. banks. The revised requirements, which are due to be announced in June, are dependent on each bank’s specific activities. Furthermore, banks with at least $100 billion in assets may need to comply with the new rules – lower threshold compared to the current requirement of $250 billion.

FED’S UNCERTAIN DECISION

The U.S. Federal Reserve is currently facing a challenging decision about whether or not to raise interest rates at the upcoming June meeting. Over the last 15 months, Fed’s Chairman Jerome Powell, has been slowly increasing interest rates but experts predict that he will take a break at the next meeting in order to assess the economic situation, including inflation rates and quarterly financial forecasts. Many see this pause as a risk management strategy due to the many uncertainties in the current economic climate, such as supply chain disruptions and potential recession. Most Fed officials think there is a need to continue to gradually increase interest rates without fracking the economy, however, some argue that indicators such as the Conference Board’s Leading Economic Index are flashing warning signs of a potential recession, and therefore central bankers should move cautiously.

KEY EVENTS HAPPENING THIS WEEK

Monday: Factory goods report for April, and U.S. ISM and S&P global service sector reports for May.

Tuesday: U.S. API weekly crude oil stock.

Wednesday:  U.S. trade deficit and Consumer credit reports for April.

Thursday: Initial jobless claims report, and Wholesale inventories report for April.

Friday:  Commodity Futures Trading Commission’s (CFTC) weekly reports.

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