Forex – Dollar Index Remains Supported at 2-Week Peak

Dollar holds onto gains vs. rivals as U.S. government averts shutdown – The U.S. dollar remained at two-week highs against other major currencies on Thursday, boosted by news U.S. Senate leaders agreed on a two-year budget deal.

The greenback strengthened after U.S. congressional leaders on Wednesday to raise government spending by almost $300 billion. The budget agreement averted the risk of a government shutdown or a debt default.

The greenback was also underpinned by higher U.S. bond yields, with the yield on benchmark close to recent four-year highs on Thursday,

However concerns over recent volatility on global stock markets persisted. Equities wordlwide after a strong U.S. jobs report sparked concerns over rising inflation.

Markets began to stabilize on Wednesday but traders were still cautious as high bond yields could cause them to plunge again.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.28% at 90.41 by 05:15 a.m. ET (09:15 GMT), the highest since January 22.

The euro and the pound were lower, with down 0.24% at 1.2232 and with slipping 0.12% to 1.3858.

Later Thursday, the Bank of England was expected to leave its monetary policy on hold. Investors will especially be focusing on the central bank’s statement for potential indications on future policy moves.

The yen and the Swiss franc were also weaker, with up 0.28% at 109.69 and with adding 0.17% to 0.9458.

Elsewhere, shed 0.24% to 0.7805, while retreated 0.58% to trade at 0.7198.

Earlier Thursday, the Reserve Bank of New Zealand left its benchmark interest rate unchanged at , in a widely expected decision.

Commenting on the decision, RBNZ Assistant Governor John McDermott : “If we saw big moves in inflation expectations, the market should expect the bank to act,” he added.

Meanwhile, gained 0.21% to 1.2592.

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