By Gertrude Chavez-Dreyfuss and Samuel Indyk
NEW YORK/LONDON (Reuters) -The U.S. dollar advanced on Thursday after three days of losses, as the House of Representatives narrowly passed President Donald Trump’s bill for huge tax and spending cuts, even as the euro stumbled after data painted a bleak economic picture for the euro zone.
Bitcoin, meanwhile, pushed to a new all-time high, partly as investors sought out alternatives to U.S. assets
But Trump’s sweeping tax bill has been the market’s focus and its passage has been met partly with relief and partly with caution. The bill is set to add to the country’s ballooning debt pile. The market is now looking at weeks of debate in the Republican-led Senate on it.
The non-partisan Congressional Budget Office estimates the bill will add $3.8 trillion to the $36.2 trillion in U.S. debt over the next decade.
“The dollar’s up a touch today, but market nerves are pretty clearly quite frayed and all movements over the last few sessions have been very cautious,” said Helen Given, director of trading at Monex USA in Washington.
“The House’s passage of the Trump administration’s tax and spending bill is giving the buck a bit of a boost, but most of the flow we’re looking at is more a reversal of substantial dollar shorts than anything else.”
In late morning trading, the dollar edged up 0.1% to 143.75 yen after earlier dropping to 142.80, its weakest level since May 7.
A low weekly jobless claims reading gave the dollar a bit of a lift as the labor market continued to show stability. The weekly report showed unemployment rolls approaching levels last seen in late 2021.
Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 227,000 for the week ended May 17. Economists polled by Reuters had forecast 230,000 claims for the latest week.
Meanwhile, a lacklustre 20-year bond sale on Wednesday reinforced the “Sell America” narrative and weighed on the dollar overnight. The soft auction also put some pressure on Wall Street as well, with traders already jittery after Moody’s cut its triple-A U.S. credit rating last week.
The euro, meanwhile, fell 0.3% against the dollar to $1.1293, after rising on Wednesday for a third straight session.
Euro zone business activity unexpectedly contracted this month, HCOB’s preliminary composite Purchasing Managers’ Index showed on Thursday.
“The underwhelming release bodes poorly for the near-term economic prospects on the continent, with the effects of Donald Trump’s tariffs slowly feeding through and the spectre of a trade deal seemingly unlikely at this juncture,” said Harry Woolman, analyst at Validus Risk Management.
Sterling was up 0.1% at $1.3434 but remained close to a three-year peak reached on Wednesday after hot inflation dampened expectations for rate cuts from the Bank of England.
The dollar index, which measures the U.S. currency against six peers, rose 0.2% to 99.844, a little above yesterday’s two-week low of 99.333.
Bitcoin climbed as high as $111,862.98, a fresh all-time peak and a 3.3% increase from Wednesday’s close.
“Investor sentiment has clearly shifted in favour of Bitcoin over traditional assets, with capital flows into BTC accelerating sharply,” wrote Hina Sattar Joshi, director at TP ICAP – Digital Assets. “This week saw another surge in demand for bitcoin ETFs (exchange traded funds), reinforcing the broader trend.”
Currency
bid
prices at
22 May
02:53
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 99.924 99.594 0.34% -7.90% 99.946 99.4
index 38
Euro/Doll 1.1277 1.133 -0.46% 8.93% $1.1345 $1.1
ar 275
Dollar/Ye 143.76 143.68 0.06% -8.63% 144.165 142.
n 815
Euro/Yen 162.12 162.75 -0.39% -0.67% 163.37 161.
82
Dollar/Sw 0.8286 0.8252 0.4% -8.71% 0.829 0.82
iss 35
Sterling/ 1.3418 1.342 0% 7.29% $1.344 $1.3
Dollar 392
Dollar/Ca 1.3875 1.3861 0.1% -3.52% 1.3889 1.38
nadian 48
Aussie/Do 0.6414 0.6438 -0.35% 3.68% $0.6459 $0.6
llar 411
Euro/Swis 0.9344 0.9348 -0.04% -0.52% 0.9353 0.93
s 31
Euro/Ster 0.8402 0.8441 -0.45% 1.57% 0.8449 0.84
ling 03
NZ 0.5903 0.5939 -0.58% 5.52% $0.5941 0.58
Dollar/Do 95
llar
Dollar/No 10.2055 10.1188 0.86% -10.21% 10.2185 10.1
rway 539
Euro/Norw 11.5088 11.524 -0.17% -2.24% 11.54 11.4
ay 989
Dollar/Sw 9.6257 9.5632 0.65% -12.63% 9.6403 9.55
eden 8
Euro/Swed 10.8591 10.8406 0.17% -5.3% 10.8797 10.8
en 3
(Reporting by Gertrude Chavez-Dreyfuss in New York and Samuel Indyk in London; Additional reporting by Kevin Buckland; Editing by Ed Osmond and Hugh Lawson)
