Singapore — The dollar rose to fresh seven-week peaks on Thursday after another round of solid economic data further pared back bets on easing by the Federal Reserve and amid market optimism about U.S. debt ceiling deal to avert a potential default.
Thursday’s reports showed lower-than-expected U.S. initial jobless claims of 242,000 in the latest week, compared with forecasts of 254,000.
Another piece of data indicated a milder-than-expected fall in a business index to -10.4 from the Philadelphia Federal Reserve. Markets were forecasting contraction of -19.8.
The dollar index touched a new seven-week high of 103.38 and was last up 0.5% at 103.34 after the economic numbers.
Against the yen, the dollar rose to a fresh five-month peak of 138.39 after the data and was last up 0.5% at 138.35.
Traders are pricing in around a 20% chance that the Federal Reserve raises its interest rate at its June meeting. Around a month ago, markets were pricing in around a 20% chance of a cut.
The rate traders have priced for the Fed’s December meeting stands at 4.525%, implying around 55 basis points of easing by year-end, down around 5 basis points from the day before.
The focus was also on debt ceiling talks.
President Joe Biden and top U.S. congressional Republican Kevin McCarthy on Wednesday underscored their determination to strike a deal soon to raise the government’s $31.4 trillion debt ceiling, having agreed a day earlier to negotiate directly after a months-long standoff.
*Rae Wee, Editing: Shri Navaratnam – Reuters
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