LONDON—The U.S. dollar hit a seven-week peak on Thursday after President Joe Biden and top U.S. congressional Republican Kevin McCarthy worked towards avoiding a damaging debt default, while investors scaled back Federal Reserve easing expectations.
Biden and McCarthy on Wednesday underscored their determination to strike a deal soon to raise the government’s $31.4 trillion debt ceiling, having agreed a day earlier to negotiate directly after a months-long standoff.
“In the short-term, the debt ceiling is win-win for the dollar,” said Viraj Patel, global macro strategist at Vanda Research.
“If it gets worse, you’re going to see a global hard landing and you will want to be owning dollars. If it gets resolved, people shift their expectations for the Fed and we could see another hike,” he added….