HomeFinancial MarketsGlobal Market Relief Rally Expected Following Debt Ceiling Deal

Global Market Relief Rally Expected Following Debt Ceiling Deal

Global markets are expected to embark on a relief rally after U.S. President Joe Biden and House Republican Speaker Kevin McCarthy reached an agreement to raise the U.S. government’s debt ceiling in an effort to evade an unprecedented default.

McCarthy revealed to reporters that he and Biden are set to talk once again on Sunday before a bill for the legislation is put up for a vote in Congress on Wednesday.

In anticipation of the June 1 deadline, scores of investors decided to reduce their investment in riskier assets, instead gunning for safe havens. The dollar proved to be one such asset and is expected to be in focus in the coming days after a strong week.

“Markets should breathe a sigh of relief, with the dollar likely to soften a tad as the debt ceiling imbroglio is finally resolved,” Chang Wei Liang, a strategist at DBS Group Holdings in Singapore claimed. “The deal appears well-balanced between reducing spending while not jeopardizing growth, and is likely to be a small positive for US Treasuries.”

Outperforming its historical norms, the dollar advanced against all of its fellow Group-of-10 currencies, with the typically-safe haven yen declining to a six-month low against the dollar of under 140.

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