Home Daily Commentaries USD builds on 2-month high amid debt ceiling concerns

USD builds on 2-month high amid debt ceiling concerns

Daily Currency Update

The US dollar index (DXY) resumed strengthening today and built on yesterday’s 2-month high as the debt ceiling debate rages on. The dollar index broke above a descending trend line 2 weeks ago and has continued to strengthen. GDP growth rates released show the value of goods and services produced by the American economy grew 1.3% in the first quarter of this year which was slightly better than the anticipated 1.1% growth. While this came in higher than expectations, it still fell below the last quarter of 2022, showing a 2.6% increase. The release of preliminary GDP Price Index data shows the price of all goods and services has increased 4.2% quarter-over-quarter; this reading is slightly higher than the expected 4.0%. The most recent US Unemployment claims came in below the expected 249,000 mark at 229,000. This data point was above last week’s 225,000, which was revised downward from 242,000. This sustained increase in the last four-week averages could indicate layoffs are accelerating in the US.

Key Movers

The EUR/USD pair is decreasing as it appears Germany may be entering a recession. Germany’s GDP fell by 0.3% in the first quarter of this year compared to the fourth quarter of 2022. This was the second consecutive recorded negative quarter for the largest economy in the Eurozone. Markets are keeping a watchful eye on the EUR/USD pair and the German economy.

The Bank of Japan (BoJ) Governor Kazuo Ueda noted that the central bank’s response to cost-push inflation will depend on economic conditions. Ueda added that Japan will see this inflation subside as prices of imported raw materials have likely peaked. The BoJ has remained dovish during this time, focusing on supporting the economy, however, this dovishness indicates that if inflation strengthens the BoJ may decide to change its course.

The GBP/USD pair is also down today as sales volume data released out of Great Britain showed a dip this month. Retailers reported that May was the quickest sales volume decline since February 2009. However, sales volumes are expected to stabilize next month.

Expected Ranges

  • EUR/USD: 1.0759 - 1.1211 ▼
  • GBP/USD: 1.24 - 1.2651 ▼
  • AUD/USD: 0.6605 - 0.6789 ▼
  • USD/CAD: 1.3363 - 1.3656 ▲