REUTERS/Dado Ruvic THE FED MAY NOT BE FINISHEDĪlvin Tan, head of Asia FX strategy at RBC Capital Markets, doubts the safe-haven argument. dollar banknotes are displayed in this illustration taken, February 14, 2022. debt default lingers, at a time when many banks look weak. But the threat of a potentially catastrophic U.S. The go-to explanation of currency strategists right now is the debt-ceiling debacle is boosting the dollar.ĭemocrats and Republicans are inching closer to reaching an agreement on raising the $31.4 trillion borrowing limit. currency against six others - has risen roughly 2% since the middle of April to around 103, although it's still down around 10% from last September's 20-year high of 114.78. The dollar index - which measures the U.S. Meanwhile, there are some signs that the Fed may have to raise rates again, and that more technical factors to do with investor positioning are involved. debt ceiling negotiations, the health of banks, and the global economy's outlook - are burnishing the dollar's safe-haven credentials. One is that a range of worries - about the U.S. So the dollar should be on the way down, right?Īnalysts say a number of factors are probably at play. inflation is cooling and the Federal Reserve may pause its interest rate hikes next month. That's made the greenback's 2% bounce over the last month particularly confusing. LONDON, May 18 (Reuters) - If investors agree on one thing this year, it's that the dollar is going to fall.
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