Dollar stands tall as US economic resilience trumps fiscal uncertainty
dollar was perched near a four-week high on Thursday, shrugging off a U.S. credit rating downgrade that cast doubt on the country's fiscal outlook, and instead got a leg up from strong private payrolls data. Data out on Wednesday showing U.S.
private payrolls rose more than expected in July boosted the greenback, as the figures pointed to continued labour market resilience which is likely to keep U.S. rates higher for longer. That sent the dollar index to its highest since July 7 in the previous session.
It was last at 102.56, not far form Wednesday's peak of 102.78. Yields on U.S. Treasuries also remained elevated in early Asia trade, with the benchmark 10-year Treasury yield last at 4.0977%, after jumping to its highest since November at 4.1260% on Wednesday.
The euro gained 0.06% to $1.0944, recouping some of its losses from the previous session. «Strong ADP numbers, insofar as it is taken to be a gauge of non-farm payrolls, ostensibly invoked a good deal of upside in U.S. Treasury yields and the U.S.
dollar,» said Vishnu Varathan, head of economics and strategy at Mizuho Bank. The closely-watched U.S. nonfarm payrolls report is due on Friday.
Other traders say that a fresh wave of risk aversion after rating agency Fitch downgraded the U.S. government's top credit rating also sparked some safe-haven buying, lending support to the dollar. The move, which drew angry responses from the White House and left some investors dumbfounded, had sparked a selloff in Wall Street in the previous session.
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