© Reuters. FILE: A bundle of five-dollar bills is examined at the Washington Bureau of Engraving and Printing, March 26, 2015. (REUTERS/Gary Cameron)
by Hannah Lang
WASHINGTON (Reuters) – The dollar was headed for a third straight weekly gain on Friday, as markets raised bets on higher interest rates for longer and amid closely watched recent talks about the U.S. debt ceiling.
Apparent progress in talks between President Joe Biden and ranking Republican congressman Kevin McCarthy has helped ease investor jitters, but doubts remain about when the two sides will reach a deal.
Ahead of the long weekend in the United States, a US official told Reuters that Biden and McCarthy are close to a deal that would raise the government’s debt ceiling of $31.4 trillion for two years while capping spending on most items. He warned that the “big issues” remain.
The euro, which measures the currency against six major currencies, was down 0.038% on the day at 104.170%.
“There have been some positive vibes or at least positive tones to the debt ceiling talks over the past 24 hours or so,” said Bipan Rai, head of North American forex strategy at CIBC Capital Markets.
“I certainly think when it comes to the FX market, this is echoed by a certain degree of defensive behavior in the dollar against some of the riskier currencies,” he said.
The dollar’s recent momentum has also been driven by growing expectations that the Federal Reserve will have to keep interest rates higher for longer to quell inflation.
The US Commerce Department said on Friday that US consumer spending increased more than expected in April, jumping 0.8% last month, boosting the economy’s growth prospects for the second quarter.
The personal consumption expenditures (PCE) price index rose 0.4% in April after rising 0.1% in March.
After the reading, the dollar recorded its highest level in six months against the yen and last settled at 140.60.
“The recent moves in currencies have been mainly driven by the sharp repricing of FOMC policy,” said Carol Kong, currency analyst at Commonwealth Bank of Australia (OTC:) (CBA).
Top European policymakers hit mixed tones on the future path of inflation in the eurozone on Friday, with European Central Bank chief economist Philip Lane taking issue with concerns about core inflation.
“There seems to be more uncertainty as to what the ECB is going to do when it comes to managing interest rates over the coming months,” Ray said.
The euro was last up 0.11 percent against the dollar, at $1.0731.
The pound last traded at $1.2352, up 0.26% on the day, after data showed British consumers opted to spend in April, though the currency was still heading for a weekly loss.
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Coin bid prices at 2:54 PM (1854 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 104.1700 104.2300 -0.04% 0.657% +104.4200 +103.8400
EUR/USD 1.0731 USD 1.0726 + 0.05% + 0.14% + 1.0759 USD + 1.0702 USD
USD/JPY 140.6000 140.0550 +0.39% +7.24% +140.7200 +139.5000
EUR/JPY 150.87 150.22 +0.43% +7.53% +150.9300 +149.8000
USD/CHF 0.9047 0.9057 -0.08% -2.13% +0.9074 +0.9019
GBP/USD 1.2353 USD 1.2321 + 0.26% + 2.14% + 1.2395 USD + 1.2317 USD
USD/CAD 1.3614 1.3645 -0.22% +0.48% +1.3654 +1.3602
AUD/USD 0.6520 USD 0.6506 +0.18% -4.39% + 0.6544 USD + 0.6490 USD
EUR/CHF 0.9709 0.9713 -0.04% -1.88% +0.9717 +0.9689
EUR/GBP 0.8685 0.8703 -0.21% -1.80% +0.8710 +0.8678
0.6045 USD 0.6062 -0.26% -4.78% + 0.6096 USD + 0.6034 NZD
dollars / dollars
Dollar / Norway 11.0800 11.0560 +0.27% +12.96% +11.0990 +10.9840
Euro / Norway 11.8878 11.8432 +0.38% +13.29% +11.9025 +11.8056
Dollar / Sweden 10.8119 10.8240 -0.02% +3.88% +10.8331 +10.7056
Euro / Sweden 11.6031 11.6054 -0.02% +4.07% +11.6184 +11.5124
