US dollar surges to seven-week high after data boosts debt ceiling hopes

SINGAPORE, May 18 (Reuters) – The dollar rose to fresh seven-week highs on Thursday as another round of solid economic data further pushed back challenges to easing by the Federal Reserve and averting a potential default amid hopes a U.S. debt ceiling deal will be in place. .

Thursday’s reports showed a lower-than-expected 242,000 U.S. initial jobless claims in the latest week, compared with forecasts of 254,000.

Another data from the Philadelphia Federal Reserve pointed to a milder-than-expected decline in the business index to -10.4. Markets were predicting a -19.8 contraction.

The dollar index hit a new seven-week high of 103.38, and rose 0.5% to 103.34 after the economic numbers.

Against the yen, the dollar hit a new five-month high of 138.39 after the data and was last up 0.5% at 138.35.

Traders are pricing in a 20% chance that the Federal Reserve will raise interest rates at its June meeting. About a month ago, markets were pricing in a 20% chance of a cut.

Traders are pricing in the central bank’s December meeting at 4.525%, implying about 55 basis points of easing by the end of the year, down about 5 basis points from the previous day.

Debt ceiling negotiations were also focused on.

President Joe Biden and top US Congressman Kevin McCarthy on Wednesday underlined their commitment to a deal to raise the government’s $31.4 trillion debt ceiling.

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Coin auction price at 9:00 am (1300 GMT)

Reporting by Sri Navaratnam Ray Wee Editing

Our Standards: Thomson Reuters Trust Principles.

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