HomeFinancial MarketsDollar Stabilizes as Debt Ceiling Negotiations Set to Recommence

Dollar Stabilizes as Debt Ceiling Negotiations Set to Recommence

The U.S. dollar remained steady on Monday with the U.S. debt ceiling talks set to recommence later in the day. Conditions also appeared stable on the interest rate front, with Federal Reserve Chair Jerome Powell clarifying that he favors a meeting-by-meeting approach when it comes to determining future policy moves.

The dollar remained little changed against the euro, standing at $1.0805. This comes after the euro slumped to a seven-week low of $1.0760 on Friday. The greenback slipped 0.1% against the yen to 137.85, ending a six-day winning streak against the Japanese currency.

In contrast, the dollar was up 0.2% against the sterling, which stood at $1.2425. The British currency previously slumped to a three-week low of $1.2392 last Thursday.

Optimism surrounding the debt talks rose after the phone call between U.S. President Joe Biden and House Republican Speaker Kevin McCarthy was described as positive by both sides.

Francesco Pesole, FX strategist at ING, believes that this phone call has worked in the dollar’s favor, explaining, “Friday there was a bit of a setback but there’s a bit more optimism after the weekend. Markets are seeing a deal on the debt limit and at the same time the Fed pushing back on rate cuts which is ultimately proving positive for the dollar.”

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