Optimism Sparks Dollar Surge: Debt Ceiling Deal and Economic Data Suggest Delayed Rate Cuts

Dollar jumped to a seven-week high yesterday sparked by optimism regarding a resolution to raise the debt ceiling and prevent a default by the United States. Adding to this, a round of solid economic data that suggests rate cuts from the Federal Reserve could come later rather than soon also weighed on sentiment.

Dollar index settled at 102.859, down 0.25%, while USDINR settled at 82.4250, up 0.22%.

Bullions remained somewhat negative, however, prices recovered from the day’s lows before giving a closing. Gold prices made a low 59960 and settled at 60145. Silver made a low 72148 and settled at 0.10%.

Copper witnessed a smart recovery from a five-month low of 710.30 and settled at 723.20, up by 1.08%., Zinc gained by 0.75%, and settled at 227.05. Aluminium prices rose by 0.80% at 208.30.

Crude Oil prices witnessed a speculative jump yesterday on optimism over oil demand and U.S. debt ceiling negotiations.

U.S. oil stocks unexpectedly increased last week as a result of another release from the Strategic Petroleum Reserve, which put pressure on prices. Crude inventories rose by 5 million barrels in the week to May 12 to 467.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 900,000-barrel drop. [EIA/S]

Brent crude futures were up by 2.75% to $76.71 a barrel. U.S. West Texas Intermediate crude was at $72.61 a barrel, up 2.98%. MCX crude oil was up by 3.09% and settled at 6014.00

Economic data and events to watch


At 1.15 pm -MPC Member Pill Speaks will have to closely watch.

At 2.45 pm – Monetary Policy Report Hearings.


At 6.00 pm- NHPI m/m is to be released. Data is foreseen at -0.1% from 0.0%.

 At 8.30 pm – BOC Gov Macklem Speaks.

The above data is expected to have a volatile impact on the dollar.


At 6.00 pm – Unemployment Claims are due to release.  Data is foreseen at 253k lower than the previous week of 264k.

Philly Fed Manufacturing Index expects to recover by -19.5, from the previous -31.3.

At 6.35 pm- FOMC Member Jefferson.

And At 7.00 pm – FOMC Member Barr Speaks.

At 7.30 pm – Existing Home Sales are due to be released. The forecast is seen at 4.30M lower than 4.44 M.

CB Leading Index m/m data foreseen at -0.6% from -1.2%. The above data could have a mixed impact on the dollar