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U.S. Dollar Retreats from 5-Week Peak Amidst Economic Concerns

The U.S. Dollar slipped from its five-week high on Monday, reacting to a disappointing manufacturing index in New York state and concerns about the American debt ceiling and overall economic health.


Turkish Lira Plummets and Thai Baht Surges Following Election Results

Turmoil was also evident in emerging markets. The Turkish lira took a nosedive, moving towards a record low as election results predicted a runoff. On the other hand, the Thai baht enjoyed a surge thanks to a more conclusive election outcome.

Empire State Manufacturing Index Shows Significant Decline

The greenback started its downward trajectory early when data revealed that the New York Federal Reserve's Empire State manufacturing index had dropped drastically to -31.8 in May from 10.8 in April. According to Action Economics, this decrease is the most significant since April 2020 and the lowest since January's three-year trough of -32.9.

U.S. Dollar's Recent Highs and Lows

The Dollar's slump comes after its best weekly performance since September of the previous year, recorded last Friday. "We're just consolidating today after a big move in the Dollar last week," Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, explained. He also pointed out that factors like the debt ceiling, dampening the Dollar, remain unresolved.

U.S. President Joe Biden to Discuss Debt Ceiling with Congressional Leaders

President Joe Biden had planned a meeting with congressional leaders on Tuesday for face-to-face discussions, one day before he departed for a G7 summit in Japan. While agreement seems distant, the White House hasn't dismissed the annual spending caps that Republicans insist must accompany any increase in the nation's $31.4 trillion debt limit.

Dollar Index Slips, but U.S. Bond Yields Show Promise

The Dollar index, a measure of the greenback's value against six major currencies, dipped 0.2% to 102.48 in late morning trading. The Dollar had earlier touched a five-week high of 102.75.

Factors Affecting Dollar Strength: Inflation Concerns and Safe-Haven Buying

Analysts suggest factors behind the Dollar's recent strength, including U.S. inflation worries, safe-haven buying prompted by fears about the debt ceiling standoff, and global economic growth.

Rise in U.S. Bond Yields Supports Dollar Strength

Alvin Tan, head of Asia FX strategy at RBC Capital Markets, noted that the rise in U.S. bond yields in the past two days supported the currency. On Friday and Monday, U.S. yields climbed as a University of Michigan survey showed that consumers' long-term inflation expectations reached their highest since 2011.

Euro, Yen, and Sterling Rally Against the Dollar

The euro gained 0.2% against the Dollar after a 1.54% decrease last week. The Dollar increased 0.3% against the yen, while sterling advanced by 0.5%, recovering from last week's 1.45% drop.