# Dollar rises as U.S. debt bill passes House, euro slides ahead of inflation Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-01 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Dollar rises as U.S. debt bill passes House, euro slides ahead of inflation Meta Description: Latest update on the rise of the dollar and fall of the euro in response to U.S. debt bill approval and euro zone inflation data. Stay informed with Reuters URL: https://financedigest.com/dollar-rises-as-u-s-debt-bill-passes-house-euro-slides-ahead-of-inflationhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-01t021745z1lynxmpej5011artroptp4us-global-forex-1736813948125-compressed.jpg) # Dollar rises as U.S. debt bill passes House, euro slides ahead of inflation By Rae Wee and Joice Alves SINGAPORE/LONDON (Reuters) – The dollar rose on Thursday after a vote of approval from the U.S. House to suspend the debt ceiling, though the greenback drifted from a two-month high as [investors trimmed bets the Federal Reserve will raise interest rates](https://www.financedigest.com/investors-trim-bets-for-peak-bank-of-england-rate.html "Investors trim bets for peak Bank of England rate") this month. The euro fell ahead of euro [zone inflation](https://www.financedigest.com/stocks-under-pressure-as-euro-zone-inflation-hits-13-year-high.html "Stocks under pressure as euro zone inflation hits 13-year high") data due at 0900 GMT, which is expected to show price pressure in the block has eased. A divided U.S. House of Representatives on Wednesday passed a [bill to suspend the $31.4 trillion debt](https://www.financedigest.com/medical-debt-management-negotiating-and-managing-healthcare-bills.html "Medical debt management: negotiating and managing healthcare bills") ceiling, and the focus now turns to how it will fare in the Democratic-led Senate just days before the federal government is expected to run out of money to pay its bills. “Our view is that … the U.S. government will avoid a default that could potentially derail the U.S. and also the [global economy,”](https://www.financedigest.com/imfs-georgieva-sees-darkening-outlook-for-global-economy-rising-recession-risks.html "IMF’s Georgieva sees ‘darkening’ outlook for global economy, rising recession risks") said Carol Kong, a currency strategist at Commonwealth Bank of Australia. I think the [dollar can gain](https://www.financedigest.com/u-s-dollar-gains-ahead-of-fed-swedish-crown-falls-after-hike.html "U.S. dollar gains ahead of Fed; Swedish crown falls after hike") a little bit more support on a successful vote today. The dollar index, which measures the currency against a basket of six peers rose 0.22% to 104.38, and was off a two-month high of 104.7 touched on Wednesday as traders pared back their [expectations of another Fed rate hike](https://www.financedigest.com/dollar-slips-before-expected-fed-rate-hike.html "Dollar slips before expected Fed rate hike") this month. [Fed officials including the vice chair-designate pointed towards a rate hike](https://www.financedigest.com/fed-officials-still-leaning-to-75-basis-point-rate-hike-in-july.html "Fed officials still leaning to 75-basis-point rate hike in July") “skip” in June, giving time for the U.S. [central bank](https://www.financedigest.com/marketmind-rba-shock-hike-starts-huge-week-for-central-banks.html "Marketmind: RBA shock hike starts huge week for central banks") to assess the impact of its tightening cycle thus far against still-strong inflation data. Markets are now pricing in a roughly 37% [chance that the Fed will raise](https://www.financedigest.com/med-tech-innovators-pitch-for-the-chance-to-raise-funding-to-save-lives.html "Med tech innovators pitch for the chance to raise funding to save lives") rates by 25 basis points at its upcoming meeting, as compared to a near 67% chance a day ago, according to the CME FedWatch tool. [EURO ZONE](https://www.financedigest.com/euro-zone-downturn-deepened-in-oct-winter-recession-likely-pmi.html "Euro zone downturn deepened in Oct, winter recession likely -PMI") INFLATION The euro fell 0.12% to $1.0675, towards a two-month low of $1.0635 touched on Wednesday, as the European [Central Bank](https://www.financedigest.com/central-banks-opt-for-shock-and-awe-to-tame-inflation.html "Central banks opt for shock and awe to tame inflation") (ECB) could be under less pressure to extend its monetary tightening much further as inflation shows signs of subsiding. The [inflation data](https://www.financedigest.com/hot-u-s-inflation-data-reignites-global-selloff.html "Hot U.S. inflation data reignites global selloff") from Spain and Germany for May has already suggested that price pressure is easing notably. That means the [euro zone inflation rate](https://www.financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressure.html "Euro zone yields fall as US payrolls seen easing rate-hike pressure") due for publication today might also come in slightly weaker than expected,” said Antje Praefcke, FX Analyst at Commerzbank. Money markets are pricing in a 85% chance of a 25 [bps hike by the ECB](https://www.financedigest.com/ecb-to-go-big-again-on-oct-27-with-75-bps-rate-hike-reuters-poll.html "ECB to go big again on Oct. 27 with 75 bps rate hike: Reuters poll") when it meets on June 15. Commerzbank said the [market is no longer certain whether there really will be two 25 bps rate](https://www.financedigest.com/atomic-spectroscopy-market-market-is-expected-to-show-the-highest-growth-rate-during-the-forecast-period-2022-to-2025.html "Atomic Spectroscopy Market market is expected to show the highest growth rate during the forecast period 2022 to 2025") steps. “That makes life difficult for the euro at present,” said Praefcke. ECB Vice-President Luis de Guindos said on Thursday that the [central bank](https://www.financedigest.com/two-speed-economy-in-sweden-central-bank-business-survey-shows.html "Two-speed economy in Sweden, central bank business survey shows") has already gone through most of its monetary policy tightening though the cycle is not quite over yet. [Sterling slipped](https://www.financedigest.com/sterling-slips-as-boost-from-new-china-covid-rules-fades.html "Sterling slips as boost from new China COVID rules fades") 0.2% to $1.2421, the Japanese yen fell 0.38% to 139.81 per dollar. Japan’s financial authorities met earlier this week in the wake of the yen’s [slide to a six-month low against the dollar](https://www.financedigest.com/dollar-slides-from-near-two-year-high-amid-hawkish-signals-from-fed.html "Dollar slides from near two-year high amid hawkish signals from Fed"). The country’s top diplomat said that [Japan will closely watch currency moves and won’t rule](https://www.financedigest.com/japans-ruling-party-is-set-for-likely-bruising-in-weekend-election.html "Japan’s ruling party is set for likely bruising in weekend election") out any options. The Chinese offshore [yuan last bought 7.1320 per dollar](https://www.financedigest.com/u-s-dollar-climbs-to-two-year-peak-as-risk-appetite-tumbles-yuan-drops.html "U.S. dollar climbs to two-year peak as risk appetite tumbles; yuan drops"), after touching a six-month low in early London trading. It had briefly gained some [support after a private business survey on Thursday showed China’s factory activity unexpectedly swung to growth](https://www.financedigest.com/new-chief-financial-officer-joins-clusterseven-to-support-business-growth.html "New Chief Financial Officer Joins ClusterSeven to Support Business Growth") in May from a decline in April. The yuan had fallen nearly 3% against the dollar in both the onshore and offshore markets in May, as [China’s post-COVID](https://www.financedigest.com/budweiser-apac-bets-on-post-covid-china-thirst-for-premium-beer.html "Budweiser APAC bets on post-COVID China thirst for premium beer") economic recovery struggles to gain steam.\[CNY/\] (Reporting by Rae Wee in Singapore and Joice Alves in London; Editing by Simon Cameron-Moore) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---