Dollar shrugs off Fitch's US downgrade, advances on strong jobs data

economictimes.indiatimes.com:

dollar rose on Wednesday as investors shrugged off Fitch's U.S. credit rating downgrade while data showing a larger-than-expected increase in private payrolls in July bolstered the greenback as it suggested further labor market resilience. Private payrolls rose by 324,000 jobs last month, the ADP National Employment report showed, more than an increase of 189,000 that economists polled by Reuters had forecast.

The U.S. labor market is slowing gradually despite the Federal Reserve having raised interest rates by 525 basis points since March 2022. The dollar index, a measure of the U.S.

currency against six peers, rose 0.745% to a fresh three-week high. The dollar index has gained 3.0% from a 15-month low on July 18. Fitch on Tuesday downgraded the United States to AA+ from AAA in a move that drew an angry response from the White House and surprised investors, coming despite the resolution two months ago of a debt ceiling crisis.

It cited likely fiscal deterioration over the next three years and repeated down-to-the-wire debt ceiling negotiations that threaten the government's ability to pay its bills. The downgrade contains no new fiscal information, Goldman Sachs said in a note, adding that it did not believe there are any meaningful holders of Treasuries who will be forced to sell because of the downgrade. There was also little negative reaction in the world's most-traded currency pair, with the euro down 0.56% to $1.092 as analysts said the dollar was likely benefiting from its status as a safe haven.