By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — The U.S. dollar gained against major rivals on Monday during Asian morning hours, after Washington lawmakers struck a deal to raise the debt ceiling and narrow the deficit.
In Washington, President Barack Obama and Senate leaders announced Sunday night that they had reached agreement on a framework deal that will cut spending and increase the federal debt ceiling. Read more about the debt deal.
Against the Japanese yen, the dollar rose USDJPY +0.48% back above ¥78.00 after President Barack Obama’s remarks on the debt-ceiling deal, though it later eased back slightly to ¥77.83, still well above ¥77.01 in North American trade late Friday.
“Currencies bounced back up [following U.S. the debt deal] — it was a positive dollar reaction,” Daniel Barnes from City Index in Sydney said.
“If the [U.S. debt] agreement goes through, it could be risk-on, and possibly a weaker dollar due to the risk-on trade. They need to finalize the details,” Barnes said.
The euro EURUSD +0.05% traded at $1.4389, up from $1.4380 late Friday and recovered from losses over the weekend.
The dollar index DXY +0.15% , which tracks the U.S. unit against a basket of six other major currencies, rose to 73.871, from 73.846 late Friday.
The Australian dollar traded at $1.105 AUDUSD +0.56% after an official reading of China’s Purchasing Managers’ Index slipped by a smaller-than-expected margin in July. Read more about Chinese PMI.
On Tuesday the Reserve Bank of Australia (RBA) August policy meeting.
Economists widely expect the central bank keep rates steady at 4.75% at the meeting, according to a survey by Dow Jones Newswires.
Strategists at TD Securities expect the RBA will leave rates on hold, however adding “there is a possibility that tightening language might return after just one month’s absence, signalling that a hike is still planned for some time in the next few months.”
Virginia Harrison is a MarketWatch reporter based in Sydney.
