JABAR EKSPRES – The U.S. dollar strengthened against a basket of major peers in late Wednesday (8/2) trading, boosted by higher yields on long-term U.S. bonds, despite Fitch’s downgrade of U.S. sovereign debt.
The dollar index, which measures the greenback against six major rivals, lifted 0.28 percent to 102.5877 in late trade.
Fitch cut the U.S. credit rating from AAA to AA+ on Tuesday (8/1/2023), citing an expected fiscal downturn over the next three years as well as a high and growing general government debt burden. It had put the rating on watch for a possible cut in May.
With Tuesday’s decision, Fitch joined S&P in rating the United States one notch below its strongest rating, but Moody’s, another member of the big three American ratings firms, still gave the country its highest assessment.
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Two smaller firms, Kroll Bond Rating Agency and DBRS Morningstar, also maintained the US government’s AAA rating.
Fitch’s downgrade raised concerns, but markets reacted calmly, as yields on long-term US government bonds rose on Wednesday after strong private employment data and the announcement of a refunding of maturing US government debt.
The yield on 10-year US government bonds rose to 4.077 percent from 4.048 percent on Tuesday (1/8/2023).
Investors also focused on positive economic data. U.S. private-sector companies added far more jobs than expected in July, driven higher by a boom in leisure and hospitality jobs, payroll processing firm ADP reported Wednesday (8/2/2023).
Job gains for the month totaled 324,000, driven by a 201,000 surge in hotels, restaurants, bars, and affiliated businesses, which was well above expectations.
In late New York trading, the euro fell to 1.0943 US dollars from 1.0974 US dollars in the previous session, and the British pound fell to 1.2721 US dollars from 1.2772 US dollars.
