Dollar advances as US eco. resilience trumps fiscal uncertainty

August 03, 2023 / 12:26 PM
Sharjah 24 – Reuters: The dollar hit a four-week top against its major peers on Thursday, shrugging off a U.S. credit rating downgrade that cast doubt on the country's fiscal outlook, and instead got a leg up from strong private payrolls data.
Data out on Wednesday showed U.S. private payrolls rose more than expected in July, boosting the dollar as it pointed to continued labour market resilience.

That pushed the Aussie AUD=D3 to a two-month low in Asian trade and against the yen JPY=EBS, the greenback hit its highest since July 7.

The euro EUR=EBS fell 0.09% to $1.0928, while the U.S. dollar index =USD scaled a four-week peak of 102.82, extending the previous session's 0.5% gain.

Yields on U.S. Treasuries also stayed elevated on the prospect of higher for longer U.S. rates, with the benchmark 10-year Treasury yield hitting a near nine-month high of 4.1360%.

"Strong ADP numbers, insofar as it is taken to be a gauge of non-farm payrolls, ostensibly invoked a good deal of upside in U.S. Treasury yields and the U.S. dollar," said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

The closely-watched U.S. nonfarm payrolls report is due on Friday.

A fresh wave of risk aversion after rating agency Fitch downgraded the U.S. government's top credit rating could have resulted in some safe-haven buying, others said, which paradoxically also lent support to the dollar.

The move, which drew angry responses from the White House and left some investors dumbfounded, had sparked a selloff in Wall Street in the previous session.

August 03, 2023 / 12:26 PM

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