© Reuters
Investing.com – The US dollar rallied in Europe on Thursday, rising to a two-month high amid growing default concerns in the United States as Fitch Ratings threatens a rating downgrade.
At 02:55 ET (06:55 GMT), the dollar, which measures the greenback against a basket of six other currencies, rose 0.2% to 103.955, just below an overnight high of 104.05, the highest since mid-2010. March.
The dollar’s safe-haven status means it has benefited from a lack of progress in talks to raise the US government’s $31.4 trillion debt ceiling, with an early June deadline that Treasury Secretary Janet Yellen said is when it is “very likely” the department will run out of money approaching.
This uncertainty led ratings agency Fitch to place the US rating “AAA” on hold for a possible downgrade, adding to the jitters in global markets.
“Fitch still expects a solution to the debt limit before the tenth date,” the credit agency said in a report.
“However, we believe that the risks have risen because the debt limit has not been raised or suspended before the tenth date, and therefore the government could start defaulting on some of its obligations.”
The dollar has also been boosted by a more hawkish view on monetary policy measures by the Federal Reserve this year, as the US economy has proven resilient in the face of severe tightening so far.
From the Fed’s latest meeting, released on Wednesday, showed officials are divided on whether additional interest rate increases would be necessary to bring down inflation, but the labor market and price pressures all proved more resilient than expected after the May meeting.
Data due for release later Thursday includes US weekly estimates and a second estimate for the first quarter in the US.
Elsewhere, it fell 0.1% to 1.0739, near a two-month low, after data released early Thursday showed that the European Union, the largest in Europe, contracted slightly in the first quarter of 2023 compared to the previous three months. entering a recession.
State Department officials tend to point to further interest rate increases for tameness, and board member Bostjan Vasli was the latest to do so.
However, it is proving difficult to find growth in the area, and that tone may soon change.
Both the German central bank chief and the European Central Bank’s chief economist are scheduled to speak later in the session, and their comments will likely be carefully considered.
It fell to 1.2363, not far from its weakest level since April 3rd, while the risk sensitivity slipped slightly to 0.6541.
It fell to 139.45, off a six-month high, with the yen struggling after yields stretched to highs not seen since mid-March.
It rose 0.1% to 7.0685, with the pair close to a near six-month high as fears of a renewed COVID outbreak added to concerns about slowing economic growth in China.
It rose by 0.1% to the level of 19.9163 before the last monetary policy decision before. It is expected to keep interest rates unchanged for the third month in a row as it tries to keep the lira stable just days before the presidential run-off.