The US Dollar continued its impressive rally on Thursday, marking the fourth consecutive day of gains against a basket of currencies, as indicated by the DXY index. The DXY climbed from a low of 103.84 to reach a high of 104.312.
The strength of the US currency was supported by positive economic data, reflecting the resilience of the US economy. However, progress on talks regarding the US debt ceiling remained elusive, causing Treasury yields to rise and propelling the US Dollar to its highest level in over two months.
Traders remained cautious about the possibility of a default in early June, as negotiations between US President Joe Biden and top congressional Republican Kevin McCarthy were still ongoing. Market discussions suggested that the two parties were only $70 billion apart from reaching a deal.
Economic Data and Forex Market Trends
In terms of economic data, the number of Americans filing new claims for unemployment benefits increased slightly last week, although the previous week’s data was significantly revised downward, according to the Labor Department. The report also revealed that the US economy was growing at a faster pace than expected, with a real Gross Domestic Product (GDP) growth of 1.3% quarter-on-quarter in Q1.
In the forex market, the Euro (EUR) weakened by 0.31% against the US Dollar (USD), reaching 1.0715. The Japanese Yen (JPY) experienced a decline of 0.52% against the greenback, with the exchange rate at 140.16 JPY per USD. Investors awaited the Tokyo Consumer Price Index data, scheduled for release on Friday. The British Pound (GBP) dropped to a low of 1.2309 against the USD.
The US Dollar maintained its strength, recording significant gains against various currencies. Antipodean currencies, including the Australian and New Zealand Dollars, faced notable declines. The forex market remained attentive to economic data releases and ongoing developments in US debt ceiling discussions. The broader impact of these currency fluctuations extended to other sectors, including commodities like Gold and Oil, while Bitcoin displayed some recovery after a period of decline.
