US dollar rises amid flight to safe havens

US dollar rises amid flight to safe havens

New York, May 24 (Xinhua) — The U.S. dollar index edged higher on Wednesday as concerns over the U.S. debt ceiling talks increased risk aversion among investors.

The dollar index, which measures the greenback against six major peers, rose 0.38 percent to 103.8847 in late trade.

The fall in major stock markets worldwide weighed on risk appetite on Wednesday and strengthened the US dollar.

Demand for the safe-haven U.S. dollar is increasing as traders continue to focus on debt ceiling talks, said Vladimir Zernov, an analyst at market intelligence provider FX Empire.

As US President Joe Biden and House Speaker Kevin McCarthy continue to negotiate to raise the federal debt ceiling, Treasury Secretary Janet Yellen confirmed on Wednesday that the Treasury is unlikely to meet all US payment obligations as early as June 1, without a congressional decision to raise the debt ceiling of 31.4 trillion US dollars.

“We are committed to not having missed payments and to raising the debt ceiling, but we are not involved in planning for what happens if there is a default,” Yellen said.

Meanwhile, Federal Reserve officials were split on interest rates, with some members seeing the need for more hikes while others expected a slowdown to remove the need for further tightening, according to minutes of the Federal Open Market Committee’s May meeting released Wednesday.

Participants generally expressed uncertainty about how much more policy tightening might be appropriate, with many participants focusing on the need to maintain freedom of choice after this meeting, the minutes said, which provided more insight into the central bank’s thinking on interest rates and inflation.

“I don’t support stopping rate hikes unless we get clear evidence that inflation is coming down towards our 2 percent target, but whether we hike or skip at the June meeting will depend on how the data comes in over the next three weeks.” said Federal Reserve Governor Christopher Waller.

In late New York trading, the euro fell to US$1.0750 from US$1.0775 in the previous session, and the British pound was down to US$1.2361 from US$1.2417 in the previous session.

The US dollar bought 139.1400 Japanese yen, higher than 138.5240 Japanese yen from the previous session. The US dollar rose to 0.9051 Swiss francs from 0.9013 Swiss francs and it rose to 1.3598 Canadian dollars from 1.3505 Canadian dollars. The US dollar increased to SEK 10.7255 from SEK 10.6239.






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