Home Daily Commentaries USD Outlook Mixed as Debt Deal Passes but Jobs Surprise

USD Outlook Mixed as Debt Deal Passes but Jobs Surprise

Daily Currency Update

The USD Index (DXY) is down for a second day as the bill to suspend the Debt ceiling passed through the Senate late yesterday. Only President Biden’s signature is needed to finalize the agreement to suspend the ceiling until January 2025. The approval of the much-debated legislation has eased stress in the markets, so risk appetite is up, drawing money from US bonds into equities. The weakness in the USD may be short-lived as expectations of a June rate hike from the FOMC are starting to gain momentum after today’s jobs release. The US economy added 395K Jobs in May, far more than the 165K that economists were calling for. This could put pressure on the Fed to hike rates in an effort to control wage growth.

Key Movers

Both the Euro and GBP made overnight gains against the USD as European markets digested the now-approved US debt deal. However, they are now losing ground in early trading after the US Non-Farm payrolls surprised to the upside.

The Canadian dollar is gaining again at the start of the day, as oil continues its march upwards. Optimism is stirring around the OPEC+ meeting on Sunday possibly cutting their self-imposed production quotas. The benchmark WTI price is up over $71 a barrel today and is pulling risk-friendly currencies with it.

Expected Ranges

  • EUR/USD: 1.0704 - 1.0776 ▼
  • GBP/USD: 1.2428 - 1.2543 ▼
  • AUD/USD: 0.6523 - 0.6631 ▲
  • USD/CAD: 1.3409 - 1.3546 ▼