Super dollar jumps to 6-week highs on US default risk

Super dollar jumps to 6-week highs on US default risk

The dollar rose this Wednesday, benefiting from its safe haven status against the risk of default on the United States debtand because the operators reduced bets on a Federal Reserve interest rate cut in the near term after strong US consumer spending data.

The American president, Joe Bidenand the speaker of the House of Representatives, the Republican Kevin McCarthy, have come close to an agreement to raise the country’s debt ceiling, but nothing is closed yet.

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Biden said that any default would send the economy into a recession, but lInvestors also fear that the global impact will be negative.

Against a basket of currency pairs, such as the euro, yen, and sterling, The dollar index rose 0.25% to 102.86, after touching its highest level since early April.

Against him The yen rose 0.5% to a two-week high of 137.17 per dollar, and against the pound sterling it gained 0.15% to $1.2469.after reaching its highest against the British currency since April 26.

“A resounding blow to the world’s leading economy can only have negative repercussions on the global economy and reduce risk appetite, thus becoming a refugee event”said Jane Foley, a strategist at Rabobank.

Expectations of short-term interest rate cuts in the United States were dampened by the robust increase in consumer spending in April and by comments from Federal Reserve officials.

Chicago Fed President Austan Goolsbee said it was “too premature to talk about rate cuts,” and Cleveland Fed chief Loretta Mester said rates were not yet at a point where the central bank could keep them stable, given persistent inflation.

The euro was down 0.3% at $1.0831, a six-week low against the dollar.

Euro zone inflation accelerated last month, Eurostat reported on Wednesday, confirming preliminary data pointing to increasingly stubborn price growth among the 20 countries that share the euro.

Source: Ambito

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