News Digest: US dollar gains as US economy shows signs of resilience
May 28, 2023
The US dollar hit a two-month high against a basket of its peers earlier this week as economic data originating from the United States continued to indicate resilience, somewhat discounting the discomfiture over the debt ceiling talks that has kept investors on tenterhooks.
The continued discussions in Washington over the debt ceiling negotiations between President Biden and Speaker McCarthy seems to be lifting the dollar, in spite of fears that the country could end up defaulting on its debt payments and send the US economy into recession. In fact, investors believe that not finding a solution to the debt impasse could result in a worse spell of trouble for the economy compared to the global economic outlook, a report said.
Central bank policy divergence has been a major issue for forex investors in 2023 with a recent outlook indicating that the Fed could start cutting rates soon. Federal funds futures show a 28.6% probability the Fed raises rates when a two-day policy meeting ends on June 14, according to CME Group’s FedWatch tool.