© Reuters
Investing.com – The US dollar held steady in early European trade Thursday near a two-month high as traders digested progress on the US debt ceiling bill, comments from a number of Fed speakers, and Chinese manufacturing activity data.
At 03:55 EST (07:55 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading largely flat at 104.240, just below a two-month high it hit in the session. previous.
Risk sentiment got a boost earlier on Thursday after a private survey showed that China grew more-than-expected in May, giving hope of a rebound in the country’s main growth engine after official data showed a sustained slowdown earlier this week.
This helped it fall 0.1% to 7.1072, with the yuan rebounding from a six-month low, although doubts remain about a recovery in the world’s second-largest economy given that today’s survey showed a marginal improvement in activity.
The safe-haven dollar also drifted off recent highs after the US House of Representatives voted in favor of a bill to suspend the debt ceiling late Wednesday.
The deal is now heading to the Senate for approval, but the chance of default in the world’s largest economy appears to be rapidly declining.
Attention now returns to officials’ monetary policy intentions as the next meeting approaches.
The pause in rate hikes in June was given a big boost on Wednesday after the head of the Philadelphia Federal Reserve indicated he was ready to pause rate hikes next month to assess incoming data.
“Skipping a rate hike at an upcoming meeting would allow the committee to see more data before making decisions about how firm the additional policy will be,” Harker said.
Elsewhere, it fell 0.1% to 1.0680 after growing 0.8% month-over-month in April, an improvement on the 2.4% decline in the previous month, but still 4.3%.
However, the focus will be on the May release later in the session. Figures from a number of individual countries have shown that inflation pressures are easing, so there is a potential downside to the expected 7.0% annual figure for May.
This supports the view of the dovish members of the Governing Council who are calling for an early end to interest rate increases.
It fell to 1.2439 after data from the Nationwide Building Association indicated it eased again in May, falling 3.4% year over year.
It rose 0.1% to 0.6506 supported by better-than-expected numbers, while it rose 0.3% to 139.75, although the yen traded well above its recent six-month lows against the dollar.