Dollar edges up as markets await debt-ceiling talks, inflation data

U.S. Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration

By Laura Matthews

NEW YORK (Reuters) – The dollar edged up against most major peers on Tuesday as traders, seeing no immediate breakthroughs on the U.S. debt-ceiling talks, look to new inflation data for a clearer picture of the economic outlook and the Federal Reserve’s likely rate-hiking path.

The dollar index, which measures the currency against six rivals, pared gains that took it to a nearly one-week high earlier in the session, and was last seen at 101.63 or up 0.2% in afternoon trading.

“I believe we’re going to see maybe a little bit of grandstanding (on the debt ceiling), just making sure that each side is pandering a bit to their base,” said John Doyle, vice president of trading and dealing at Monex USA. “So I don’t think that we’re going to have a breakthrough today. And that might be why the dollar is a bit stronger.”

Read More: Stocks slide on Chinese data, US debt ceiling worries hit T-bills

“Overall, longer-term, we do see a deal getting done,” he said. “We’ve kind of seen this movie before. But we shouldn’t downplay the threat that the wheels might come off. The threat is always there. Once you play with fire enough, eventually you could get burned. So while we don’t think that that’s the most likely scenario, we can’t completely dismiss it.”

The release of closely watched U.S. inflation data on Wednesday is likely to set the tone for markets, after stronger-than-expected jobs data last week.

Any Federal Reserve policy tweaks will have to be weighed against a backdrop of the recent turmoil in the U.S. banking sector and a political impasse in Washington over lifting the country’s debt ceiling and avoiding a default, analysts said.

The Fed’s quarterly survey of bank loan officers released on Monday showed that credit conditions for U.S. businesses and households continued to tighten at the start of the year, most likely due to interest rate hikes.

The survey was among the first measures of sentiment in the banking sector since the recent run of bank failures, sparked by Silicon Valley Bank’s collapse in March.

Read More: US dollar edges higher as GDP, jobless claims affirm rate hike bets

The euro fell 0.39% to $1.0962.

Sterling remained flat at $1.2620, ahead of Thursday’s central bank policy meeting.

“It’s widely expected that we’re going to get that quarter-basis-point hike, and then we’ll see where they go from there,” Doyle said.


Currency bid prices at 4:03PM (2003 GMT)

       Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid          

                                                   Previous                   Change                              


       Dollar index                 101.6100       101.4400    +0.19%         -1.817%       +101.8400   +101.3500          

       Euro/Dollar                  $1.0963        $1.1005     -0.37%         +2.32%        +$1.1003    +$1.0941          

       Dollar/Yen                   135.2100       135.1450    +0.07%         +3.15%        +135.3450   +134.7250          

       Euro/Yen                     148.24         148.69      -0.30%         +5.66%        +148.6900   +147.9000          

       Dollar/Swiss                 0.8903         0.8897      +0.09%         -3.69%        +0.8943     +0.8890          

       Sterling/Dollar              $1.2621        $1.2618     +0.02%         +4.36%        +$1.2639    +$1.2580          

       Dollar/Canadian              1.3381         1.3373      +0.07%         -1.23%        +1.3406     +1.3367          

       Aussie/Dollar                $0.6762        $0.6781     -0.30%         -0.82%        +$0.6787    +$0.6747          

       Euro/Swiss                   0.9761         0.9787      -0.27%         -1.35%        +0.9800     +0.9759          

       Euro/Sterling                0.8686         0.8719      -0.38%         -1.79%        +0.8725     +0.8680          

       NZ                           $0.6334        $0.6345     -0.19%         -0.26%        +$0.6349    +$0.6319          


       Dollar/Norway                10.5720        10.5050     +0.53%         +7.61%        +10.5890    +10.5200          

       Euro/Norway                  11.5929        11.5493     +0.38%         +10.47%       +11.6028    +11.5483          

       Dollar/Sweden                10.1966        10.1571     -0.07%         -2.03%        +10.2147    +10.1520          

       Euro/Sweden                  11.1749        11.1828     -0.07%         +0.23%        +11.1961    +11.1622          

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