US dollar rises on worries about US default risk, strong data

US dollar rises on worries about US default risk, strong data

NEW YORK, May 25 (Xinhua) — The U.S. dollar strengthened against a basket of other currencies on Thursday, amid lingering concerns over a possible U.S. debt default and upbeat macroeconomic and labor market data.

The dollar index, which measures the greenback against six major peers, rose 0.34 percent to 104.2424 in late trade.

US House lawmakers leave Washington for the long holiday weekend on Thursday without a deal on raising the debt ceiling, but the two sides differ by just US$70 billion on a total figure that would be well over US$1 trillion, according to a Reuters source .

“Failure to reach an agreement to raise or delay the debt limit by x-date would send a negative signal about the US’s broader governance and willingness to meet its obligations on time, which would likely not be consistent with an ‘AAA’ -grade,” Fitch said.

Standard Chartered’s head of North American macro strategy Steve Englander said that if the US were to go bankrupt, “it would be dollar positive very quickly.”

Moody’s Investor Service believes the US dollar’s dominance in international trade and finance will last for decades despite new challenges. “The biggest short-term danger to the dollar’s position stems from the risk of confidence-damaging policy mistakes by the US authorities themselves, such as a US default on their debt, for example,” Moody’s analysts wrote.

Additionally, the US labor market continues to show signs of improvement as initial jobless claims exceeded market expectations for the second week in a row.

The number of Americans filing jobless claims for the week ended May 20 rose to 229,000 from 225,000 the previous week but lower than the 248,000 consensus forecast, the US Labor Department reported on Thursday.

In addition, the US economic growth rate in the first quarter was revised to 1.3 percent, up from 1.1 percent in the original estimate.

In late New York trading, the euro was down at $1.0722 from $1.0750 in the previous session, and the British pound was down at $1.2318 from $1.2361 in the previous session.

The US dollar bought 139.9710 Japanese yen, higher than 139.1400 Japanese yen from the previous session. The US dollar rose to 0.9063 Swiss francs from 0.9051 Swiss francs and it rose to 1.3638 Canadian dollars from 1.3598 Canadian dollars. The US dollar increased to SEK 10.8328 from SEK 10.7255.






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