2023-05-25 20:53:23
TOKYO – The dollar rose to a two-month high against the euro and a six-month high against the yen yesterday, as the resilience of the US economy prompted dealers to reduce their bets on a rate cut this year.
The dollar has also benefited from demand for safe havens, while the US debt-ceiling crisis threatens the country with a catastrophic default by June 1 at the earliest, by which time the Treasury has warned it will not be able to pay all its bills.
The US currency touched the level of $1.07425 per euro early in the Asian session, for the first time since March 24, and remained high, recorded in the latest transactions of $1.0748. The dollar also recorded 139.66 yen, a level last seen on November 30.
“The dollar has seen a nice and strong rally, and there are good reasons for that,” said Tony Sycamore, an analyst at IG Markets, noting in particular the demand for safe havens amid the debt ceiling standoff, as well as growing signs of a slowdown in China and Europe.
The dollar index, which measures the performance of the US currency against six major currencies, including the euro and the yen, touched a two-month high of 104.01.
The latest sign of a slowdown in Europe came from a worse-than-expected deterioration in business confidence in Germany.
Meanwhile, the Chinese yuan again hit a six-month low, falling to 7.0827 per dollar in offshore markets, and China saw a series of disappointing economic indicators, all of which point to weak consumer demand and that the recovery from the pandemic has already been completed.
The Australian dollar was strongly affected by that weakness in China due to the close trade relations between the two countries, and it recorded a new low, the lowest in six and a half months, at $0.6527.
The New Zealand dollar fell to its lowest level since mid-November, recording $0.6085.
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