The US dollar’s price action has been very messy in recent days, reacting sharply to the data
TOKYO (Armfalcon.com) – The US dollar remained under pressure early in the Asian session on Tuesday morning, weighed down by risks of default or default The US as the stalemate between Democrats and Republicans over a debt ceiling increase shows little sign of resolution.
Dollar index – that measures greenbacks against a basket of six other major currencies – little changed at 102.39 after sliding 0.26 percent overnight, retreating from a five-month high.
greenback was supported last week by request safe haven amid China’s faltering COVID recovery and by surging US consumer inflation expectations, which led markets to put the risk of a June Federal Reserve rate hike back into play.
This week, however, looming lending limits — which Treasury Secretary Janet Yellen reiterated could trigger defaults as early as June 1.
President Joe Biden expressed confidence that a deal could be done in time ahead of an expected meeting with congressional leaders later Tuesday. However, House Republican Speaker Kevin McCarthy said the two sides were still far apart.
“The US dollar price action has been very messy in the last few days, reacting sharply to the data,” said Sean Callow, senior FX strategist at Westpac.
“There is also some debate about what the increased pressure on the debt ceiling means for the US dollar,” he added. “The Japanese yen and Swiss franc appear to be benefiting, but we have many historical examples of US-induced global market trauma actually making the dollar stronger.”
Westpac sees the potential for the dollar index to fall to around 101.05 in the near term.
The euro, which has the heaviest weight on the dollar index, was up 0.06 percent early Tuesday to $1.0879, after bouncing from a five-week low overnight.
Sterling was steady at $1.2529, following Monday’s 0.67 percent rally.
The yen, which has been hit by the wider gap between US and Japanese long-term yields, pulled away from a nearly two-week low.
The dollar lost 0.13 percent to 135.915 yen after rising to 136.32 yen on Monday (15/5/2023).
The yield on the 10-year US Treasury fell to around 3.49 percent in Tokyo from a high of 3.511 percent overnight.
The dollar fell 0.08 percent to 0.8949 Swiss franc.
The Australian and New Zealand dollars, which are not part of the dollar index, remained bid ahead of the Chinese retail sales data, despite recent macroeconomic readings from their major trading partners indicating weak domestic demand.
The Aussie was up 0.07 percent to $0.67045 while the New Zealand kiwi was up 0.16 percent to $0.62525.
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Translator: Apep Suhendar
Editor: Click Dewanto
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