The dollar rose against the Japanese yen on Monday, holding just below a six-month high, as investors waited on fresh signals on whether the U.S. Federal Reserve is likely to continue hiking interest rates and watched for news that Congress will reach an agreement to raise the U.S. debt ceiling. The greenback has bounced for the past two weeks as stronger than expected economic reports and hawkish Fed officials keep the prospect of further interest rate increases alive. “The dollar had a nice two-week bounce, helped by rising U.S. interest ...

The most bullish expectations were probably for a debt ceiling deal to be on the table by today. This hasn’t been the case following a partial breakdown in negotiations on Friday, but a reconciliation and new staff-level talks over the weekend are keeping hopes alive that President Joe Biden and Speaker Kevin McCarthy will reach an agreement by the end of this week. We discussed late last week how the dollar was enjoying a rather ideal mix of factors. Progress on debt ceiling talks was prompting some re-rating of US ...

The dollar was steady against the euro and yen on Monday, as U.S. debt ceiling negotiations were set to resume and after Federal Reserve Chair Jerome Powell indicated he favours a meeting-by-meeting approach when it comes to future policy moves. The greenback was down 0.1% at 137.85 yen to start the week, having snapped a six-day winning streak on Friday, pulling back from a six-month peak. The euro was little changed $1.0805, having hit a seven-week low of $1.0760 on Friday. Investors are now waiting for a key meeting between ...

If investors agree on one thing this year, it’s that the dollar is going to fall. That’s made the greenback’s 2% bounce over the last month particularly confusing. U.S. inflation is cooling and the Federal Reserve may pause its interest rate hikes next month. So the dollar should be on the way down, right? Analysts say a number of factors are probably at play. One is that a range of worries – about the U.S. debt ceiling negotiations, the health of banks, and the global economy’s outlook – are burnishing ...

India’s foreign exchange reserves (INFXR=ECI) rose for a third consecutive week and stood at $599.53 billion for the week ended May 12, their highest level since early June, the Reserve Bank of India’s (RBI) statistical supplement showed on Friday. That is an increase of $3.55 billion from the previous week. Reserves had risen by a total of $11.7 billion in the prior two weeks. The central bank intervenes in the spot and forwards markets to prevent runaway moves in the rupee . Changes in forex reserves also stem from valuation ...

USD: Rates lifting the dollar The dollar has continued to build bullish momentum, drawing strength from the repricing in Federal Reserve rate expectations now that risk sentiment seems to stabilise as a bi-partisan deal on the debt ceiling looks more feasible. Republicans are demanding stricter work requirements for social safety net programmes, a point the most liberal branches of the Democratic parties have firmly opposed. It seems, however, that President Biden may ultimately budge on this point, and House Speaker McCarthy said yesterday that an “agreement in principle” may be ...

China’s heavily managed yuan has dropped to multi-month lows and breached the closely watched 7-per-dollar level, and analysts who are predicting more weakness point to the U.S. Federal Reserve’s policy as being the bigger driver than economic weakness at home. The yuan, also referred to as the renminbi, hit 7.0234 per dollar on Thursday, levels last seen in December before euphoria over China’s reopening after the COVID-19 pandemic lifted it for a few weeks. As doubts grow about the strength of its economic recovery, foreign money has left China’s markets ...

The dollar held at around six-month highs against the yen and seven-week highs against the euro on Friday, as optimism over a breakthrough in U.S. debt ceiling talks and robust economic data reduced the chances of a series of U.S. rate cuts this year. Negotiators for Joe Biden’s Democrats told the president on Friday that they are making “steady progress” in talks with Republicans aimed at avoiding a U.S. default, just days after Biden and top U.S. congressional Republican Kevin McCarthy underscored their determination to strike a deal to raise ...

Bearish bets were raised on most Asian currencies, as the possibility of an economically disastrous debt default in the United States and signs of a weak post-pandemic recovery in China triggered risk aversion, a Reuters poll found on Thursday. Short bets intensified on nearly all Asian currencies, with those on the Chinese yuan CNY=CFXS, Taiwanese dollar TDW=TP, Malaysian ringgit MYR=, and Philippines peso PHP= reaching their highest since November, the fortnightly survey of 12 analysts showed. The yuan weakened to its lowest level since December on Thursday, after crossing the ...

The dollar rose to fresh seven-week peaks on Thursday as another round of solid economic data further pared back bets on easing by the Federal Reserve and amid market optimism about a U.S. debt ceiling deal to avert a potential default. Top U.S. congressional Republican Kevin McCarthy said on Thursday that Speaker McCarthy sees a bill to raise the government’s $31.4 trillion debt ceiling on the House floor next week, according to news reports. He noted that negotiations are at a better place than last week and there is a ...

The narrative around US debt-limit negotiations has continued to gradually improve. President Biden has remained optimistic about reaching a deal, but markets are primarily following House Speaker Kevin McCarthy’s comments on the issue. He has changed his own rhetoric from stressing the two sides remained far apart to saying that achieving a deal is doable. Currently, staff-level talks are being held while President Biden is attending the G7 summit in Japan. We are seeing diverging reactions in asset classes: US equities rebounded, treasuries remained under pressure, but the dollar – ...

The U.S. dollar held near a seven-week peak on Thursday after President Joe Biden and top U.S. congressional Republican Kevin McCarthy worked towards avoiding a damaging debt default, while investors scaled back Federal Reserve easing expectations. Biden and McCarthy on Wednesday underscored their determination to strike a deal soon to raise the government’s $31.4 trillion debt ceiling, having agreed a day earlier to negotiate directly after a months-long standoff. “In the short-term, the debt ceiling is win-win for the dollar,” said Viraj Patel, global macro strategist at Vanda (NASDAQ:VNDA) Research. ...

The dollar rose to a seven-week high on Wednesday, boosted by safe-haven bets amid the risk of a U.S. debt default, with traders paring back bets on a Federal Reserve interest rate cut any time soon following solid U.S. consumer spending and housing data. The U.S. dollar index, a measure of the greenback’s value against six major currencies, climbed as high as 103.12 , its strongest level since late March. It was last up 0.3% at 102.91. The euro, meanwhile, dropped to a six-week low versus the dollar at $1.0811 ...

EUR/USD: The bumpy path to a higher EUR/USD • Based on our view that the Fed tightening cycle is over and that a credit crunch makes a US recession more likely, we believe the dollar is about to embark on a multi-quarter (if not multi-year) decline. The bulk of that dollar decline may come in 2H23 as the US disinflation story builds and the Fed front-loads easing with 100bp of cuts in 4Q23. That could see EUR/USD at 1.20 end year. • The road to a dollar decline will not ...

USD: Tentative debt-limit progress not enough to lift sentiment Some slightly encouraging news has emerged from yesterday’s high-level meeting between President Biden and Congress Speaker Kevin McCarthy. The two sides have agreed on a new basis for staff-level negotiations on the debt limit, and Biden has decided to shorten his Asia-Pacific trip to make sure he can secure a deal early enough to give both Houses time to approve it before the 1 June default deadline. Speaker McCarthy said it is possible to get a deal by the end of ...