It is certainly shaping up to be another wild week for financial markets thanks to the US debt limit saga. The risk pendulum continues to swing back and forth on this major development with volatility expected to intensify as the so-called default X-date looms.

Asian markets gave up earlier gains on Tuesday as investors adopted a cautious stance after US debt ceiling negotiations ended "productive talks" without a deal. However, President Joe Biden and House Speaker Kevin McCarthy both expressed optimism about reaching a breakthrough to avoid a default. European futures are pointing to a positive open ahead of the preliminary PMI figures for the eurozone in May. Wall Street closed mixed and remains influenced by the US debt ceiling developments.

This could be a wild week for the New Zealand Dollar thanks to fundamental and technical forces.

The New Zealand dollar is the best-performing G10 currency month-to-date, gaining roughly 1.7% against the dollar.

Gold prices could see some heightened volatility over the coming week due to US debt limit negotiations, Fed minutes and key US economic data.

The past few days have certainly been rough for the precious metal with prices heading for their biggest weekly drop since February.

Over the past few weeks, news around the US debt ceiling has hijacked global market headlines.

As the deadline for the US to raise its borrowing limit looms, you may be wondering what exactly is going on?

Here, we’ll explain what the US debt ceiling crisis is, why it’s a big deal, and how it could impact your trading.

What is the US debt ceiling?

A sense of caution gripped financial markets on Wednesday as anxious investors kept a close eye on the US debt ceiling negotiations. Any fresh newsflow on the debt ceiling development is likely to influence sentiment which already remains shaky amid the uncertainty. In the meantime, there have been some interesting movements across the currency and commodity space.

Here are some technical setups to keep an eye on this week.

Most Asian equities were mixed on Tuesday as investors digested weaker-than-expected Chinese economic data. Industrial production and retail sales data from the world’s second-largest economy missed expectations in April, pointing to further signs of an uneven recovery. European futures are pointing to a flat open as political and economic uncertainty rocked sentiment in the region.

The dollar caught our attention this morning after touching its highest level in five weeks against other major currencies.

The Japanese Yen has appreciated against every single G10 currency since the start of May, with the USDJPY dropping over 1% month-to-date.

Our focus falls on the pound ahead of the Bank of England (BoE) rate decision this afternoon.

The BoE is widely expected to raise interest rates for the 12th consecutive meeting thanks to stubborn double-digit inflation. While a 25-basis point hike is pretty much a certainty, the key question is whether the BoE will signal more hikes like the European Central Bank (ECB) or hint at a pause like the Federal Reserve (Fed).