24th May 2023 – (New York) The U.S. dollar remained strong on Tuesday as concerns over the unresolved U.S. debt ceiling talks weighed down on investors’ appetite for risk. The dollar index, which measures the greenback against six major peers, rose by 0.28% to 103.4864 in late trading.
The ongoing debt ceiling negotiations continue to be a primary support for the U.S. dollar. U.S. House Speaker Kevin McCarthy told House Republicans on Tuesday that “I need you all to hang with me on the debt limit, we are nowhere near a deal yet”. Republican debt ceiling negotiator Garret Graves also reportedly said that things were not going well over the talks.
Investors remained worried about the U.S. debt ceiling standoff, resulting in the U.S. dollar being higher against most of the majors on Tuesday, according to Kenny Fisher, market analyst with online forex trading platform and broker OANDA.
Despite numerous headwinds, including the banking sector turmoil that erupted in March, the U.S. business activity and labor market have held up remarkably well over the past few months, noted DailyFX Strategist Diego Colman. He added that “there is reason to believe that the U.S. dollar could retain the upper hand for a little bit longer”.
Founder of Sevens Report Research, Tom Essaye, also said that “from a technical perspective, there are signs that a potential bottom for the dollar has been formed”.
In late New York trading, the euro fell to $1.0775 from $1.0819 in the previous session, while the British pound decreased to $1.2417 from $1.2442 in the previous session.
The U.S. dollar bought 138.5240 Japanese yen, a slight decrease from the 138.5500 Japanese yen of the previous session. The U.S. dollar increased to 0.9013 Swiss francs from 0.8970 Swiss francs, and it decreased to 1.3505 Canadian dollars from 1.3507 Canadian dollars. The U.S. dollar also increased to 10.6239 Swedish Krona from 10.5523 Swedish Krona.
The unresolved U.S. debt ceiling negotiations have caused uncertainty in the markets, leading to the strengthening of the U.S. dollar. The debt ceiling is the maximum amount of money that the U.S. government can borrow to pay for its expenses. If the debt ceiling is not raised, the government will not be able to pay its bills, which could lead to a government shutdown or default.
The U.S. Congress is currently debating whether to raise the debt ceiling, which is currently set at $28.4 trillion. Failure to raise the debt ceiling could have severe consequences for the U.S. economy and the global financial markets.