NEW YORK: 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 US debt ceiling deal to avert a potential default.
Top US 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 “structure” to the talks, he added.
“It’s pretty clear that some people were shorting the dollar as a hedge in anticipation of a crisis, but now with all the signals that we will find a resolution in the next few days, people are unwinding these positions so the dollar is strengthening,” said Thierry Wizman, global FX and rates strategist, at Macquarie in New York.
Apart from debt ceiling negotiations, investors also looked at economic data, which in recent weeks have depicted strength.
Thursday’s reports showed lower-than-expected US initial jobless claims of 242,000 in the latest week, compared with forecasts of 254,000.
Another piece of data indicated a milder-than-expected fall in the Philadelphia Federal Reserve’s manufacturing index to -10.4 in May from -31.3 in April. Markets were forecasting a contraction of -19.8. The index though has been in contraction since September and many of the real sector components remain in negative territory.
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