Currencies News

Dollar Reaches Five-Week High On Debt, Budget Deal

The greenback surged on Tuesday to close to a five-week high against a case of currencies after President Trump, and U.S. legislators reached a two-year deal lifting government borrowing limits to cover spending.

The U.S. Treasury now can improve short-term borrowing to rebuild a cash pile that has declined to around $195 billion from $423 billion in late April, Morgan Stanley analysts stated.

A rise in U.S. borrowing would scalp money within the banking system, which is seen as supportive for the dollar.

The greenback’s appeal got a lift after the International Monetary Fund raised its estimate on U.S. growth in 2019 while reducing its global growth forecast. Support also came from a report stating that U.S. negotiators will head to China on Monday for in-person trade negotiations.

In late U.S. trading, an index that follows the dollar versus the euro, yen, sterling and three other currencies. DXY was up 0.47% at 97.716. It reached 97.718, its highest level in five weeks.

The euro worsened broadly as traders geared up for news of new incentive from the European Central Bank. Cash markets have trimmed bets on a 10-basis-factor deposit rate cut; however, analysts expect dovish steerage and more generous terms for planned multi-year loans.

The single currency dropped to $1.1148, its worst since May 31. It stopped at $1.1150, down 0.52% on the day.

The euro sank 0.16% to 120.72 yen after reaching 120.49, its weakest since Jan. 3.

Britain’s pound dipped on news Boris Johnson, who promised to exit the European Union with or without a deal by the end of October, will oust Theresa May as prime minister.

Nina Sanders

By Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.

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