US dollar hits a 10-week high amid choppy currency market; Japan's yen strengthens
The US dollar oscillated in trading after U.S. President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the U.S. debt ceiling and cap some federal spending in order to prevent a debt default.
Currency markets were choppy on Tuesday as the dollar hit a 10-week high against peers and a six-month top versus the yen before retreating after Japanese officials gave their currency a nudge.
Japan will closely watch currency market moves and respond "appropriately" as needed, the country's top currency diplomat said on Tuesday after financial authorities met in response to a weakening in the yen to its softest in six months versus the dollar.
The yen strengthened on news of the unscheduled meeting, and held onto those gains, with the currency last up 0.42% versus the dollar at 139.85 having earlier risen to 140.93, its highest since November 2022.
Meanwhile, the dollar oscillated in trading after U.S. President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the U.S. debt ceiling and cap some federal spending in order to prevent a debt default.
That helped the dollar index , which measures the U.S. currency against six major peers, hit 104.53 in European trading, its highest in 10 weeks. But it then retreated, falling as low as 103.870. It last fell 0.153% to 104.140, clawing back some of those earlier losses.
"A lot of that has to do with how oil has kind of fallen apart today," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
Oil prices fell more than 4% on Tuesday as mixed messages from major producers clouded the supply outlook ahead of the OPEC+ meeting this weekend.
"People are scratching their heads: what does this mean for demand?" said Bregar. "And so with that, I think we've seen a little bit of a safe haven bid come back into the dollar."
Adam Button, chief currency analyst at ForexLive, hypothesized that the dollar's dip despite a deal on the debt ceiling could be chalked up to end-of-the-month profit taking.
"It's been a one-way trade in the dollar all month long, and given the uncertainty around the (U.S. Federal Reserve) and the economic outlook later in the year, some market participants are taking a bit off the table as the month turns," he said.
Looking ahed, the market will be closely watching a readout of nonfarm payroll data due on Friday, which could provide key insight into the strength of the U.S. labor market.
"The jobs run has been nothing short of spectacular and we're way overdue for disappointing jobs," said Button.
The euro was last up 0.12% to $1.0718 , having earlier hit a two-month low, while the pound was last trading at $1.2391, up 0.26% on the day. .
In crytocurrencies, bitcoin last rose 0.15% to $27,792.00 while ethereum last rose 0.78% to $1,909.25.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
10:35 AM IST