US dollar muted amid US debt ceiling uncertainty
Philip McHugh May 23rd 2023 - 2 minute read
The US dollar wavered on Monday, amid conflicting reports over progress in US debt ceiling talks.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR muted at €1.1492 and GBP/USD slipping to $1.2407. GBP/CAD is subdued at CA$1.6770, while GBP/AUD and GBP/NZD hold steady at AU$1.8709 and NZ$1.9791, respectively.
Looking ahead, will a robust UK services PMI help to propel Sterling higher this morning?
What’s been happening?
The US dollar fluctuated at the start of this week, as US debt ceiling talks remained in focus.
Reports on Sunday spoke of of a ‘productive’ call between President Joe Biden and Republican House Speaker Kevin McCarthy.
However, the prospect of US debt talks resuming on Monday still failed to inspire confidence, while Goldman Sachs warned the US could run out of available funds by 8 June.
The euro, meanwhile, was subdued on Monday as the Eurozone’s latest consumer confidence index printed below forecast, reporting only a very modest improvement in sentiment this month.
Finally, the pound was left to trade in a narrow range through yesterday’s European trading session amid a lull in notable UK data.
What’s coming up?
In the spotlight today will be the latest PMIs from the UK and Eurozone.
Up first are the Eurozone releases. May’s preliminary figures may pull the euro lower as they are expected to report the bloc’s manufacturing sector continued to contract, while growth in the service sector slowed.
A similar story is expected to play out with the UK’s PMI releases. However, the pound may fare a little better than the single currency as a moderation of growth in the UK’s vital service sector will still see it print close to the one-year high struck in April.
On the other side of the Atlantic, the latest US PMIs may also drive movement in the US dollar. While the S&P PMIs aren’t as influential as the ISM releases, signs of slowing private sector growth could still infuse some volatility into USD exchange rates.